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WHEREAS, The Board of Trustees of The California State University
("the Board" or "the Trustees") finds it appropriate and necessary to
use various debt financing programs afforded to it through the methods statutorily established
by the legislature, and to use to its advantage those programs available to it through debt
financing by recognized auxiliary organizations of the California State University; and
WHEREAS, The Board wishes to establish and maintain policies that provide a framework
for the approval of financing transactions for the various programs that enable appropriate
oversight and approval by the Trustees; and
WHEREAS, Within a policy framework the Board desires to establish appropriate
delegations that enable the efficient and timely execution of financing transactions for the
CSU and its recognized auxiliary organizations in good standing; and
WHEREAS, The Board recognizes that there is a need from time to time to take advantage
of rapidly changing market conditions by implementing refinancings that will lower the cost of
debt financing for the CSU and its auxiliary organizations and that such refinancings could be
better implemented by reducing the time required to authorize such refinancings; and
WHEREAS, The Board finds it appropriate to establish the lowest cost debt financing
programs for the CSU, and to use the limited debt capacity of the CSU in the most prudent
manner; and
WHEREAS, There are certain aspects of the tax law related to the reimbursement of
up-front expenses from tax-exempt financing proceeds that would be more appropriately satisfied
through a delegation to the Chancellor without affecting the Trustees' ultimate approval
process for such financings; now, therefore be it
RESOLVED, by the Board of Trustees of The California State University as follows:
Section 1. General Financing Policies
1.1 The State University Revenue Bond Act of 1947 (Bond Act) provides the Board of
Trustees with the ability to acquire, construct, or refinance projects funded with
debt instruments repaid from various revenue sources.
1.2 The long-term debt programs of the Board of Trustees established pursuant to the
Bond Act shall be managed by the Chancellor to credit rating standards in the "A"e
category.
1.3 The intrinsic rating of any debt issued by the Trustees shall be at investment
grade or better.
1.4 The Trustees debt programs should include the prudent use of variable rate debt
and commercial paper to assist with lowering the overall cost of debt.
1.5 The Trustees programs shall be designed to improve efficiency of access to the
capital markets by consolidating revenue bond programs where possible.
1.6 The Chancellor shall develop a program to control, set priorities and plan the
issuance of all long-term debt consistent with the five-year non-state capital outlay
program.
1.7 The Chancellor shall annually report to the Trustees on the activity related to the
issuance of long-term debt.
Section 2. Financing Program Structure of the CSU's Debt Program
2.1 To use the limited debt capacity of CSU in the most cost effective and prudent
manner, all on-campus student, faculty and staff rental housing, parking, student union,
health center, and continuing education capital projects will be financed by the Trustees
using a broad systemwide multi-source revenue pledge under the authority of the Bond Act
in conjunction with the respective authority of the Trustees to collect and pledge
revenues.
Other revenue-based on-campus and off-campus projects will also be financed through this
program and the Bond Act unless there are compelling reasons why a project could not or
should not be financed through this program (see Section 3 below).
2.2 The Chancellor shall establish minimum debt service coverage and other requirements for
Bond Act financing transactions and/or for the related campus programs, which shall be used
for implementation of the Trustees' debt programs. The Chancellor shall also define and
describe the respective campus program categories.
2.3 The Chancellor, the Executive Vice Chancellor and Chief Financial Officer, the Assistant
Vice Chancellor Financial Services, the Senior Director of Financing and Treasury, and each
of them (collectively, "Authorized Representatives of the Trustees"), are hereby
authorized and directed, for and in the name and on behalf of the trustees, to take any and
all actions necessary to refinance any existing bonds issued pursuant to the Bond Act of 1947
if the refinancing transaction will result in net present value savings, as determined by an
Authorized Representative of the Trustees and which determination shall be final and
conclusive. Authorized Representatives of the Trustees are authorized to execute, acknowledge
and deliver, and to prepare and review, as each of them deems appropriate, all bond
resolutions, bond indentures, official statements and all other documents, certificates,
agreements and information necessary to accomplish such refinancing transactions.
Section 3. Other Financing Programs
3.1 The Board recognizes that there may be projects, or components of projects, that a campus
wishes to construct that are not advantaged by, or financing is not possible, or is
inappropriate for the Bond Act financing program. A campus president may propose that such a
project be financed as an auxiliary organization or third party entity financing if there is
reason to believe that it is more advantageous for the transaction to be financed in this
manner than through the Bond Act financing program.
3.1.1 Such financings and projects must be presented to the Chancellor for approval early
in the project's conceptual stage in order to proceed. The approval shall be obtained prior
to any commitments to other entities.
3.1.2 These projects must have an intrinsic investment grade credit rating, and shall be
presented to the Trustees to obtain approval before the financing transaction is undertaken
by the auxiliary organization or other third party entity.
3.1.3 If a project is approved by the Trustees, the Chancellor, the Executive Vice
Chancellor and Chief Financial Officer, the Assistant Vice Chancellor Financial Services,
the Senior Director of Financing and Treasury, and each of them (collectively,
"Authorized Representatives of the Trustees") are hereby authorized and directed,
for and in the name and on behalf of the Trustees, to execute, acknowledge and deliver, and
to prepare and review, as each of them deems appropriate, any and all documents and
agreements with such insertions and changes therein as such Authorized Representatives of
the Trustees, with the advice of the General Counsel, may require or approve, such approval
to be conclusively evidenced by the execution and delivery thereof, in order to assist with
the planning, design, acquisition, construction, improvement, financing, and refinancing of
the projects.
3.2 The Chancellor may require campus presidents to establish campus procedures applicable to
campus auxiliary organizations for the issuance of debt instruments to finance or to
refinance personal property with lease purchase, line-of-credit, or other tax-exempt
financing methods. The procedures issued by the Chancellor need not contain a requirement
for approval of the Trustees or the Chancellor but may include authority for campus
presidents to take all actions to assist the auxiliary organization on behalf of the Trustees
to complete and qualify such financing transactions as tax-exempt.
Section 4. State Public Works Board Lease Revenue Financing Program
4.1 The authorizations set forth in this section shall be in full force and effect with respect
to any State Public Works Board project which has been duly authorized by the Legislature in a
budget act or other legislation and duly signed by the Governor and which is then in full force
and effect.
4.2 The Chancellor, the Executive Vice Chancellor and Chief Financial Officer, the Assistant
Vice Chancellor Financial Services, the Senior Director of Financing and Treasury, and each of
them (collectively, "Authorized Representatives of the Trustees") are hereby authorized and
directed, for and in the name and on behalf of the Trustees, to execute, acknowledge and
deliver, and to prepare and review, as each of them deems appropriate, any and all construction
agreements, equipment agreements, equipment leases, site leases, facility leases and other
documents and agreements with such insertions and changes therein as such Authorized
Representatives of the Trustees, with the advice of the General Counsel, may require or
approve, such approval to be conclusively evidenced by the execution and delivery thereof, in
order to provide for the planning, design, acquisition, construction, improvement, financing,
and refinancing of the projects.
Section 5. Credit of the State of California
5.1. The delegations conferred by this resolution are limited and do not authorize the
Chancellor or other Authorized Representatives of the Trustees to establish any indebtedness of
the State of California, the Board of Trustees, any CSU campus, or any officers or employees of
any of them. Lending, pledging or otherwise using the credit established by a stream of
payments to be paid from funds appropriated from the State of California for the purpose of
facilitating a financing transaction associated with a capital project is permitted only if
specifically authorized by a bond act or otherwise authorized by the legislature.
Section 6. Tax Law Requirement for Reimbursement of Project Costs
6.1 For those projects which may be financed under the authority of the Trustees, the
Chancellor, the Executive Vice Chancellor and Chief Financial Officer, the Assistant Vice
Chancellor Financial Services, the Senior Director of Financing and Treasury, and each of them
(collectively, "Authorized Representatives of the Trustees"), are hereby authorized
to make declarations on behalf of the Trustees solely for the purposes of establishing
compliance with the requirements of Section 1.150-2 of the U.S. Treasury Regulations; provided,
however that any such declaration:
6.1.1 Will not bind the Trustees to make any expenditure, incur any indebtedness,
or proceed with the project or financing; and
6.1.2 Will establish the intent of the Trustees at the time of the declaration to use proceeds
of future indebtedness, if subsequently authorized by the Trustees, to reimburse the Trustees
for expenditures as permitted by the U.S. Treasury Regulations.
Section 7. Effective Date and Implementation
7.1 Within the scope of this financing policy, the Chancellor is authorized to further define,
clarify and otherwise make and issue additional interpretations and directives as needed to
implement the provisions of this policy.
7.2 This resolution supercedes RFIN 11-98-18 and shall take effect immediately. However, the
Chancellor shall have the authority to authorize on a individual basis, auxiliary organization
projects that are in the planning stage as of the adoption of this policy to proceed under the
previous policy in order to prevent situations that would result in additional project costs or
additional time-to-completion.
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