The Chapel Hill Town Council unanimously approved up to $98 million in bonds Wednesday to fund old and new athletic construction projects on UNC's campus.
Kristen Kirby represented McGuireWoods, the firm working with The Rams Club to establish the bonds, at the Town Council meeting on Wednesday.
The bond is essentially a loan approved by the Town of Chapel Hill that will provide The Rams Club the funds for improving UNC athletic facilities through BB&T bank. The Rams Club will have to pay back the money it receives from the Town with interest.
“We're here before you tonight because the federal tax code requires that there be an approval in principle of the issuance of the bonds by the highest elected body having jurisdiction over the issuer and over the location of the project,” Kirby said at the meeting.
Additionally, she said the town approving the issuance of the bonds doesn't have an impact on the town's liability and isn't necessarily an endorsement of the bonds.
The Educational Foundation, Inc., more commonly known as The Rams Club, previously had interim construction financing from BB&T and now will convert to permanent financing through the issuance of these tax-exempt bonds. BB&T will purchase the bonds immediately after they're issued, according to a letter McGuireWoods submitted on behalf of The Rams Club to the town.
The type of tax-exempt bonds being issued are commonly issued by municipal, county or state governments for infrastructure projects like school buildings and roads.
The Rams Club is a nonprofit whose mission is "to offer financial aid to worthy young men and women seeking an education at the University of North Carolina at Chapel Hill, and to support University programs by providing services and funds for the construction of facilities or purchase of equipment.”
Diane Aldridge, chief financial officer and general counsel for The Rams Club, confirmed the bonds are tax-exempt because federal tax law allows nonprofit entities with a 501(c)(3) letter to borrow on a tax-exempt basis.
“BB&T will be issuing the bonds at a tax-exempt rate, which means the interest rate on the bonds will be slightly lower than if it were a taxable rate,” said Aldridge.
The interest rate for a bond is the additional amount The Rams Club will pay back in exchange for receiving the money now.
The money from the bonds will be used to pay off current lines of credit for completed or in-progress projects and to fund future projects, Aldridge said.
Over the past few years, The Rams Club has started construction on projects, such as a new indoor practice field on Ridge Road, a new field hockey stadium on the former Ehringhaus Field site, a new soccer and lacrosse stadium on the current Fetzer Field site and a track complex and various athletic fields adjacent to Finley Golf Course.
“We’re financing every project that was on that list," said Aldridge. "We have existing taxable lines of credit out right now on most of those projects, so the bond proceeds will, number one, take out the taxable lines of credit we have, and then secondly, provide us with the money necessary to complete the projects that are still being constructed."
Katie Loovis is vice president of external affairs for the Chapel Hill-Carrboro Chamber of Commerce and a former UNC women's lacrosse player. She spoke at the Town Council meeting and strongly supported the issuance of the bonds.
“Helping make this happen with this low-interest possibility is a benefit to not just the University and the student-athletes, but our community," she said.
The bonds are expected to be issued within the first quarter of 2019.
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