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$40 Million Bond Issue For UWF Project Collapses Day After Century Approval, But Project Is Not Dead
June 28, 2013
A $40 million bond issue for expansions at the University of West Florida collapsed Thursday, just one day after the Town of Century signed off on the deal, but officials say the project is not dead.
The $40 million was to come from the Capital Trust Agency, a bond conduit partnership between Century and Gulf Breeze, for a hotel, conference center, new student housing and more at the Davis Highway entrance to UWF. The college’s development arm, University of West Florida Business Enterprises, Inc., has entered into an affiliation agreement with Vieste, LLC, for the project.
Thursday marked the second time financing for the project failed. Vieste originally approached the Escambia County Housing Authority looking for a bond issue, the authority declined to finance the development because the bonds were not investment grade, Matt Dannheisser, attorney for both Century and Gulf Breeze, said.
Wednesday afternoon, Dannheisser said backers had hoped to close on the deal within a week, but he said rapid and recent changes in the bond market might be an issue. On Thursday, CTA decided the bond market was not acceptable to make the bond issue work. The bonds were to be underwritten by Raymond James & Associates of St. Petersburg.
The $40 million UWF project will include 356 student housing beds plus 54 beds dedicated to guest housing, a conference and academic center and parking amenities. The 18 acres at the east entrance of the campus on Davis Highway will also include space for retail development.
Under the agreement with Vieste, UWF was to have received a percentage of the gross revenue from the project, with UWF BEI owning the improvements after 50 years.
Now, Dannheisser said Friday morning, the deal is being restructured to be presented once again to CTA and ultimately to Gulf Breeze and Century for approval. Under the new plan, a subsidiary of UWF BEI will be formed. The now tax-free bonds will be issued to the subsidiary, which will in turn hire Vieste as the contractor to build the project. UWF BIE or the subsidiary will own and operate the facility or hire a a management company.
“UWF will build this project without the developer sharing in the profits,” he said. “UWF will ultimately have more responsibility.”
With a tax-free bond issue, the tax savings will lower the debt service, making the project more attractive to developers. The new financial structure is expected to be approved by the CTA board in the coming days and presented to the Century and Gulf Breeze councils on July 15 for their final approval.
Century entered into the Capital Trust Agency with Gulf Breeze in 1999 with Century essentially serving as the “second signature” for CTA. entury has received over $650,000 in fees since the inception of CTA. Tuesday’s approval of a $40 million bond issue for UWF would have earned Century about $14,000 in fees upon closing.
The CTA is structured in such a way to indemnify Century from any financial risk, whether it be from a company that defaults on repayment or any other legal liabilities, according to Dannheisser. The funds used for the bonds are from the CTA’s coffers, not from Century or Gulf Breeze
UWF will receive a certain percentage of gross revenue from the annual income generated from the student housing, hotel, conference center, restaurants and retail.
The private developer will fund,design, construct and develop the project. There will be no state or university funds utilized. UWF will continue to own the land and will execute a 50 year lease with the development partner. After the 50 years lease term, UWF BEI will own the improvements.
Pictured top: Development plans for the east entrance of the University of West Florida. Pictured inset: Attorney Matt Dannheisser explains the project to the Century Town Council Tuesday afternoon. Pictured below: (L-R) Dannheisser, Century Clerk Leslie Gonzalez, and Century council members Gary Riley, Ann Brooks and Sandra McMurray Jackson. Council member Annie Savage participated in the meeting by phone. NorthEscambia.com photos, click to enlarge.
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