- In October 2008, Indiana University (the “University”) created the Indiana University Building Corporation (“IUBC”), an Indiana not-for-profit entity, for the sole purpose of assisting the University in financing construction of certain facilities by lease-purchase under Indiana Code 21-33-3-5.
- The University will apply Available Funds, to the extent necessary, for the purposes of satisfying its obligations under the leases related to lease purchase obligations (“LPOs”) and certificates of participation (“COPs”), collectively “Obligations”. Available Funds include all University funds legally available for lease rental payments, including unrestricted operating fund balances, auxiliary fund balances and certain other fund balances, excluding mandatory student fees or state appropriations. Obligations, Consolidated Revenue Bonds and commercial paper are payable from Available Funds.
- The leases are not subject to abatement or reduction.
- Each certificate or obligation represents an undivided proportionate interest of the owners in the lease payments (sufficient to make principal and interest payments) that the University has agreed to make to the Trustee bank to which IUBC has assigned its interest in the leasehold cash flows. All debt service payments are made directly from the University to the Trustee bank.
- The Obligations are secured by certain property pledged under the Indenture and lease payments payable by the University pursuant to a lease agreement and sublease agreement between the University and IUBC.
- The real estate on which such facilities are located is owned by the University. The University leases the real estate to IUBC. IUBC, with University acting as its agent, improves the property with the proceeds of the financing, then subleases the improved real estate and facilities back to the University.
- The leases are subject to early termination under certain circumstances, including the exercise of an option by the University to purchase the leased property or the condemnation of the leased property. When the debt obligations are fully repaid, all the leases are terminated and the real estate, facilities and all subsequent improvements revert to the ownership of the University.
Posted on February 7, 2020