March 30, 2004  
Volume 97, Issue 94  

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Concordia bonds fund buildings

By Marshall Bellamy
Gazette Staff

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 program.

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 it.”

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



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