Concordia bonds fund buildings
By Marshall Bellamy
Issuing bonds is not confined to the realm of the federal
and provincial governments, as Concordia University has begun
selling its own bonds to complete an ambitious academic building
According to Peter Bolla, executive director of facility management
at Concordia, the university began issuing bonds last summer
to raise funds for the construction of three new buildings.
Thus far, the bonds have raised $200 million for the new facilities,
one of which is already complete, another which is half way
done and the last is set to begin construction soon, he explained.
“We took the idea that everyone else has been doing,” he
said, noting that many Canadian universities have already issued
their own bonds to build facilities, but Concordia was the
first to use them to fund academic programs as opposed to recreational
or other facilities. “I think a lot of schools are doing
Sharon Farnell, acting associate VP-financial services at
Western, said the university has been undergoing its own building
expansion. Although she could not rule out the possibility
of issuing bonds to fund the building projects, she did confirm
that Western looked into the idea several years ago.
Western’s administration is looking into the most cost-effective
method of funding its building projects, she said, adding bonds
are not the least expensive method of funding building construction. “[There’s]
a lot of hidden costs.
“A lot of people at universities look at interest rates,” Farnell
said, explaining that low rates would be six per cent for 30
to 40 years.
“Some universities have to look at what they are financing,” she
said, adding universities need to make the money work for them
so they can pay off the bonds later.
“It doesn’t surprise me they’re doing it,” said
Dave Robinson, an investment advisor at MacDougall, MacDougall
and Mactier a stock and bond brokerage in London, adding he
has not heard of university issued bonds on the market.
“It might be better for them,” he said. “It’s
a way to raise money as opposed to taking out a loan from a
bank or raising it in another way.”
“There is the cost issue,” he said, noting that
universities would have to pay for an underwriter — who
sells the bonds — which does add up. “Where are
they getting the money to pay the interest on these things?”
—with files from Allison Buchan-Terrell