M E M O R A N D U M


								March 28, 2012

To:		Members of the Board of Trustees

From:		Nancy L. Zimpher, Chancellor 

Subject:	State Personal Income Tax Revenue Bonds 


Action Requested

	The proposed resolution authorizes the issuance of bonds by the Dormitory Authority of the State of New York to finance State University educational facilities and the State share of the cost of capital facilities for community colleges, in amounts determined by the Division of the Budget for the 2012-13 fiscal year, consistent with enacted appropriations.

Resolution

	I recommend that the Board of Trustees adopt the following resolution:

	Whereas pursuant to State Finance Law Art. 5-C, enacted by Ch. 383, Pt. I, L. 2001, Public Authorities Law Art. 8, Title 4, a State Personal Income Tax Revenue Bonds (Education) General Bond Resolution, adopted by the Dormitory Authority on July 24, 2002, and a State Personal Income Tax Revenue Bonds (General Purpose) General Bond Resolution, adopted by the Dormitory Authority on April 29, 2009, the Dormitory Authority is authorized to issue bonds, from time to time, the debt service of which is payable from a portion of the State’s personal income tax revenues, to finance State University educational facilities, the State share of the cost of capital facilities of community colleges under the program of the State University, and capital facilities of other entities; and 

	Whereas by Resolution 2002-90, adopted August 8, 2002, the State University Board of Trustees authorized the execution and delivery of a proposed Disbursement and Use Agreement with respect to the State University educational facilities, among the State University, the State University Construction


Fund, and the Dormitory Authority; and, with respect to the State share of the cost of capital facilities of community colleges under the program of the State University, approved the form of a disbursement and use agreement between each community college under the program of the State University, the local sponsor of each such community college, and the Dormitory Authority; and

	Whereas it is necessary to finance the cost of State University educational facilities as hereinafter provided; and 

	Whereas it is necessary to finance the State share of the cost of capital facilities of community colleges under the program of the State University as hereinafter provided; and 

	Whereas the Dormitory Authority proposes to issue State Personal Income Tax Revenue Bonds, in one or more series, from time to time, for the acquisition, construction and improvement of State University educational facilities, to finance the State share of the cost of capital facilities of community colleges under the program of the State University, and to finance capital facilities of other entities; now, therefore, be it

	Resolved that the Chancellor, or designee be, and hereby is, authorized to execute, deliver and otherwise provide any and all certifications, approvals, assurances or other documents, and to take steps necessary and appropriate to enable the Dormitory Authority of the State of New York to issue State Personal Income Tax Revenue Bonds, from time to time,  for the acquisition, construction and improvement of State University educational facilities and to finance the State share of capital facilities of community colleges under the program of the State University, in amounts authorized by the State Division of the Budget to support expenditures with respect to the State’s 2012-13 fiscal year, consistent with the provisions of the State’s Multi-year Capital Financial Plan and enacted multi-year capital financing plan appropriations.

Background
       
	Financing for State University educational facilities and for the State’s share of the cost of capital facilities of community colleges under the program of the State University is provided, in large part, through a revenue bond financing structure enacted in 2001, the State Personal Income Tax Revenue Bond program (commonly referred to as “PIT bonds”).  PIT bonds finance capital projects previously financed by State-appropriation bonds under twenty separate financing programs for many State entities, including the State University.  DASNY is one of five PIT bond issuers.  The PIT bond program specifically excludes issuance of PIT bonds for State University dormitories.  Under the PIT capital financing structure, debt service on DASNY bonds is appropriated by the State directly to DASNY from a “lock-box” fund, the revenue bond tax fund established by State Finance Law §92-z, into which as much as one-quarter of the State’s personal income tax revenues are deposited.  

	The State has changed procedures for bond financing of the State University educational facilities and community colleges capital programs from the project-specific sale of bonds in advance of expenditures to a program-wide disbursement-based financing approach intended to avoid unnecessary debt service costs.  As a result of this change, periodic (mostly annual) bonding amounts are based on overall projected disbursement levels for the educational facilities and community colleges capital programs during a certain timeframe, and are not intended to support the total project costs of specific individual projects.

	The Dormitory Authority is expected to issue State Personal Income Tax Revenue Bonds, in one or more series, from time to time, to support capital expenditures with respect to the State’s 2012-13 fiscal year.  This resolution authorizes State University participation in Dormitory Authority bond sales to support State University educational facilities and community college capital projects, in amounts consistent with the State’s Multi-year Capital Financial Plan and enacted capital appropriations, and as determined from time to time by the State Division of the Budget.  Bond issuances during the State fiscal year 2012-13 in support of State University educational facilities and community college capital projects are expected to total 
$932 million.
Board Resolution				-3-			March 28, 2012