The Massachusetts State College Building Authority said yesterday that state officials have forced the agency to cancel an advance refunding of almost $100 million planned for sale later this month.
The authority had sent out a request for proposals for the deal last month, and responses were due tomorrow.
But in a letter mailed to underwriters on Tuesday, Oct. 5, officials in the state Executive Office of Education and the state Office of Administration and Finance said they were not prepared to approve or authorize any refundings of authority debt.
The letter says the two offices are devising a new way for higher education facilities to sell debt, and that they want to wait until the plan is finalized before new bond issues come to market. Officials in the two agencies said details of the financing plans would be released next week.
The authority builds dormitories for the University of Massachusetts and other universities in the state.
Although the letter from the authority was sent shortly after Gov. William F. Weld and state Treasurer Joseph D. Malone said they intended to ban most negotiated financings, state officials said the timing was coincidental.
"The two things are totally unrelated," said Christopher Alberti, director of debt finance for the state Department of Administration and Finance. "We simply felt it was premature to send out the RFP."
Alberti said his office, in conjunction with the Executive Office for Education and the state Higher Education Council, is putting the final touches on a five-year capital spending plan for the University of Massachusetts system and other schools in the state. The plan will include details of the agencies' new bond financing plans.
"This plan will allow the state and the institutions to borrow together for these projects," said Regina Spazziani, budget director for the Office of Administration and Finance. "This plan will help larger projects move along."
Spazziani said that although there was a five-year plan enacted in 1988, the regional recession thwarted many college and university construction projects.
"This really needs to get done," she said.
Colleges and universities are among Massachusetts' main generators of economic activity.
Although the specifics of the educational financings have not been revealed, there are a $200 million University of Massachusetts financing in the works and another $200 million in bonds that the state may sell for community colleges and smaller school projects.
"This will allow the state to consolidate some financings for our institutions," Alberti said.
Although neither state official would comment on the particulars of the College Housing Authority refunding, one underwriting official said concerns about negative arbitrage may have also contributed to the state's decision.
The bond sale was scheduled to refund all or part of the authority's $62 million of outstanding Series 1986A bonds and $35 million of its Series 1988A bonds. The average yield of the bonds in the two series is 7.20%.
