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State Board of Regents to vote on delaying maturity date of $30 million credit for UI flood recovery

BY ASMAA ELKEURTI | APRIL 20, 2012 6:30 AM

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The University of Iowa could receive extended credit for the funding of flood-recovery projects, pending a decision by Iowa higher-education officials.

The state Board of Regents is scheduled to vote April 26 on prolonging the maturity date for a $30 million bond for UI flood-recovery projects, initially requested in 2009. The bond, designed to accommodate potential delays in insurance and Federal Emergency Management Agency funding, is set to expire this year. The new three-year extension would allow the university to hold onto the bond until 2015.

While the UI has asked for credit line and bond maturity date extensions in the past, UI spokesman Tom Moore said, the present request is the only extension presented specifically for flood-recovery projects.

"This is our standard operating business procedure," he said. "You can view it as a safety net for when we have situations like this where we know we have expenditures, but the funds that have been promised to us are not tied to a specific time frame."

The regents will also vote on April 26 to continue the UI's $5 million line of credit through Wells Fargo, extending the line from 2012 to 2015.

Moore said the university has rarely dipped into its line of credit — maintained for fallback purposes — since it received the line in 2009. The bond sales are reserved for circumstances when a cash-flow problem might occur because of a lag in funding from FEMA, he said.

"We need to meet our obligations to vendors or contractors and pay them for their services," he said.

Regent Katie Mulholland said she "felt fine" about the extension request, citing her own experience as the superintendent for the Linn-Mar School District.

"[The School District sells] bonds, and we do that frequently to back up construction costs," she said. "There are a number of different ways you could do financing, and the University of Iowa has done an exceptional job with handling its issues."

The total budget for UI flood recovery is $400 million, which the regents approved at their March meeting. Approved funding includes plans to build a new Hancher, art building, and music facility. FEMA officials have dedicated $386 million so far for these and other pending projects.

State and UI officials toured the flood sites during the March regents' meeting and were shown presentations of layouts for completed recovery projects.

Barb Sturner, regional affairs specialist for FEMA Region VII, wrote in an email that this bond extension will not affect the university's ability to receive future funding from the agency.

"I can tell you that the university's request for this bond extension does not affect the amount of money the university would receive from FEMA in the future," she said.


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