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Resolution to Approve the Issuance of $17 million in State Institutional bonds for the Construction of the Lois Rhame West Health and Physical Education Center

STATE OF SOUTH CAROLINA
WINTHROP UNIVERSITY

A RESOLUTION REQUESTING THE ISSUANCE OF NOT EXCEEDING SEVENTEEN MILLION DOLLARS ($17,000,000) OF GENERAL OBLIGATION STATE INSTITUTION BONDS FOR WINTHROP UNIVERSITY PURSUANT TO CHAPTER 107, TITLE 59, CODE OF LAWS OF SOUTH CAROLINA 1976, AS AMENDED.

April 8, 2005

TABLE OF CONTENTS

Section 1. Findings of Fact
Section 2. Application for Issuance of State Institution Bonds
Section 3. Use of Proceeds
Section 4. Tuition Fees Received in Previous Fiscal Year
Section 5. Current Schedule of Tuition Fees
Section 6. Maturity Schedule for Bonds
Section 7. Debt Service on Outstanding State Institution Bonds
Section 8. Debt Service on Outstanding Bonds Including Bonds Authorized Hereby
Section 9. Covenant to Impose Tuition Fees Sufficient to Pay Bonds
Section 10. Tax Covenants
Section 11. Secretary to Present Resolution to State Board
Section 12. Execution of Closing Documents and Certificates
Section 13. Reimbursement Declaration
Section 14. Law and Place of Enforcement of the Resolution
Section 15. Effect of Section Headings
Section 16. Repeal of Inconsistent Resolutions
Section 17. Effectiveness of this Resolution
Exhibit A Schedule of Tuition and Fees
Exhibit B Pro Forma Debt Service Table
Exhibit C Debt Service Requirements on Outstanding Debt
Exhibit D Combined Debt Service Table
Exhibit E Proof of Compliance

A RESOLUTION

REQUESTING THE ISSUANCE OF NOT EXCEEDING SEVENTEEN MILLION DOLLARS ($17,000,000) OF GENERAL OBLIGATION STATE INSTITUTION BONDS FOR WINTHROP UNIVERSITY PURSUANT TO CHAPTER 107, TITLE 59, CODE OF LAWS OF SOUTH CAROLINA 1976, AS AMENDED.

BE IT RESOLVED BY THE BOARD OF TRUSTEES OF WINTHROP UNIVERSITY IN MEETING DULY ASSEMBLED:

SECTION 1. Findings of Fact. As an incident to the adoption of this Resolution, the Board of Trustees (the “Board of Trustees”) of Winthrop University (the “University”) hereby finds and determines as follows:
(a) This Resolution is adopted by the Board of Trustees pursuant to Title 59, Chapter 107, Code of Laws of South Carolina 1976, as amended (the “Enabling Act”).
(b) Pursuant to Section 59-107-40 of the Enabling Act, the Board of Trustees is authorized to make application to the South Carolina State Budget and Control Board (the “State Board”) for funds: (i) to construct, reconstruct, maintain, improve, furnish, and refurnish the buildings of and other permanent improvements to the University, (ii) to defray the costs of acquiring or improving land needed as sites for such improvements or for the campus of the University, and (iii) to reimburse the University for expenses incurred in anticipation of the issuance of such bonds.
(c) The Board of Trustees has determined to construct the Lois Rhame West Health, Physical Education and Wellness Center (the “Project”) The Project includes the demolition of the existing 1915 Peabody Building structure, the construction of a new Health, Physical Education and Wellness building, and all site work associated with the new building as well as the new Campus Center, which will be constructed after the completion of the West Center. The Lois Rhame West Center is a 137,000 square feet building. The building will house the academic departments of Physical Education, Sport Management and some dance studios. The second floor will house all the faculty offices and classrooms. The lower areas will include an eight-lane, 25-yard pool with seating for 300, four racket ball courts, a two story climbing wall, extensive locker room facilities, an 8,000 square feet weight room, two multipurpose aerobics/dance studios, four full size basketball courts, a suspended jogging track, and treadmills. The building will ultimately be connected to the new Campus Center facility via a covered plaza. The estimated total cost of the Project is $24,900,000.
(d) Of the projected costs of the Project as described above, Capital Improvement Bond proceeds in the amount of $6,400,000 have been appropriated by the State of South Carolina and $1,500,000 has been identified from the institution’s capital project funds to fund a portion of the project. The Board of Trustees, in order to fund the remaining projected costs of the Project, and having exhausted all other sources, now desires to make application to the State Board to issue not exceeding Seventeen Million Dollars ($17,000,000) principal amount State Institution Bonds (Issued on Behalf of Winthrop University) of the State of South Carolina (the “Bonds”) pursuant to the Enabling Act, on the basis that a definite and immediate need exists for acquiring, constructing, reconstructing, maintaining, improving, furnishing, and refurnishing the Project, and therefore for issuing such Bonds. The proceeds of the Bonds shall be applied to defray a portion of the costs of the Project and to pay the costs of issuance of the Bonds.
(e) Accordingly, this Resolution is adopted pursuant to Section 59-107-40 of the Enabling Act, in order to make formal application to the State Board for the issuance of the Bonds, the proceeds of which will be used for the purposes set forth in paragraph (d) of this Section 1.

SECTION 2. Application for Issuance of State Institution Refunding Bonds. The Board of Trustees hereby makes formal application to the State Board for funds through the issuance of the Bonds pursuant to the provisions of the Enabling Act, in order that the proceeds thereof may be used for the purposes set forth in paragraph (d) of Section 1 hereof.

SECTION 3. Use of Proceeds. All of the proceeds of the proposed issue of the Bonds will be applied for the purposes set forth in paragraph (d) of Section 1 hereof.

SECTION 4. Tuition Fees Received in Previous Fiscal Year. The aggregate sum received by the University from tuition fees available to pay debt service on State Institution Bonds for the preceding fiscal year (July 1, 2003 through June 30, 2004) is not less than $3,299,296.

SECTION 5. Current Schedule of Tuition Fees. The schedule of tuition fees as defined in the Enabling Act and as now in effect at the University is as set forth as Exhibit A to this Resolution, which schedule is hereby reaffirmed and approved.

SECTION 6. Maturity Schedule for Bonds. The suggested maturity schedule for the Bonds requested to be issued pursuant to this Resolution is set forth as Exhibit B to this Resolution. Said Exhibit B assumes that the principal amount of the Bonds will be Seventeen Million Dollars ($17,000,000), as set forth above.

SECTION 7. Debt Service on Outstanding State Institution Bonds. A statement showing all State Institution Bonds heretofore issued on behalf of the University now outstanding and not defeased, together with the annual interest and principal payments to become due thereon, is set forth as Exhibit C to this Resolution.

SECTION 8. Debt Service on Outstanding Bonds Including Bonds Authorized Hereby. A table showing debt service on all State Institution Bonds to be outstanding for the University following the issuance of the Bonds (at an assumed principal amount of the Bonds of Seventeen Million Dollars ($17,000,000) and an average interest rate on the Bonds of 4.38%) is set forth as Exhibit D to this Resolution. Upon the issuance of the Bonds, the maximum annual debt service on all State Institution Bonds secured by tuition fees of the University will not be greater than 90% of the tuition fees received by the University for the fiscal year ended June 30, 2004.
A calculation establishing the right of the University to seek the issuance of Bonds to the extent set forth in this Resolution is set forth as Exhibit E to this Resolution.

SECTION 9. Covenant to Impose Tuition Fees Sufficient to Pay Bonds. The Board of Trustees hereby covenants and agrees that the schedule of tuition fees now in effect at the University will be revised from time to time and whenever necessary in order to provide the annual principal and interest requirements of all State Institution Bonds now or hereafter to be outstanding, which have been or will be issued on behalf of the University.

SECTION 10. Tax Covenants.
(a) Federal Guarantee Prohibition. The University shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations promulgated thereunder (the “Regulations”).
(b) Private Business Limitation. The University shall ensure that (i) not in excess of ten percent of the face amount of the Bonds, plus accrued interest and premium, if any (“Net Proceeds”) or of the facilities financed or refinanced thereby (which, for purposes of this covenants in this Resolution, shall be included within the definition of “Net Proceeds”), is used directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a state or local governmental unit and use as a member of the general public (“Private Business Use”), if, in addition, the payment of more than ten percent of the principal or ten percent of the interest due on the Bonds during the term thereof is, under the terms thereof or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for a Private Business Use or in payments in respect of property used or to be used for a Private Business Use or is to be derived from payments, whether or not to the State, in respect of property or borrowed money used or to be used for a Private Business Use; and (ii) in the event that both (a) in excess of five percent of the Net Proceeds are used for a Private Business Use, and (b) an amount in excess of five percent of the principal or five percent of the interest due on the Bonds during the term thereof is, under the terms thereof or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for said Private Business Use or in payments in respect of property used or to be used for said Private Business Use or is to be derived from payments, whether or not to the State, in respect of property or borrowed money used or to be used for said Private Business Use, then said excess over said five percent of Net Proceeds used for a Private Business Use shall be used for a Private Business Use related to the governmental use of a portion of the facilities financed with the proceeds of the Bonds and shall not exceed the proceeds used for the governmental use of the portion of the undertaking to which such Private Business Use is related.
(c) Private Loan Limitation. The University shall ensure that not in excess of 5% of the proceeds of the Bonds will be used, directly or indirectly, to make or finance a loan to persons other than state or local government units.
(d) No Arbitrage. The University represents that it does not expect any portion of the proceeds of the Bonds to be used directly or indirectly to acquire higher yielding investments, or to replace funds which were used directly or indirectly to acquire higher yielding investments for other than a “temporary period” as defined in the Code and the Regulations. The University further covenants that it will not intentionally use any portion of the proceeds of the Bonds to acquire higher yielding investments or to replace funds which were used directly or indirectly to acquire higher yielding investments. In making the foregoing representation and covenant, the University understands and intends that words or phrases contained herein have meanings provided therefore under Section 148 of the Code and under the Regulations.

SECTION 11. Secretary to Present Resolution to State Board. The Secretary of the Board of Trustees is hereby directed to present a certified copy of this Resolution, together with the Exhibits, to the State Board, as evidence of the Board of Trustees’ formal request for the issuance of the Bonds on behalf of the University, and as evidence that all conditions precedent to the issuance of such Bonds have been met prior to the issuance of the Bonds.

SECTION 12. Execution of Closing Documents and Certificates. The Chairman and the Secretary of the Board of Trustees, and all other officers of the University, are fully authorized and empowered to take such further action and to execute and deliver such closing documents as may be necessary and proper in order to complete the borrowing herein authorized and the action of such officers or anyone or more of them in executing and delivering any of such documents in such form as he or they shall approve, is hereby fully authorized. In particular, such officers of the University are authorized to abide by covenants made by or on behalf of the State Board in connection herewith relating to Sections 9, 10, 11, and 12 hereof or relating to Rule 15c2-12 of the United States Securities and Exchange Commission or relating to Section 11-1-85 of the Code of Laws of South Carolina 1976, as amended.

SECTION 13. Reimbursement Declaration. The University hereby declares its intention to reimburse itself for a portion of the costs of the Project with the proceeds of the Bonds requested to be issued herein. To that end, the Board of Trustees determines and declares as follows:
(a) no funds from any sources other than the Bonds are, or are reasonably expected to be, reserved, allocated on a long-term basis or otherwise set aside by the University pursuant to the budget or financial policies of the University for the financing of the portion of the costs of acquisition, construction, and equipping of the Project to be funded with the Bonds;
(b) the University reasonably expects that all or a portion of the expenditures incurred for the Project and the issuance of the Bonds will be paid prior to the issuance of the Bonds;
(c) the University intends and reasonably expects to reimburse itself for all such expenditures paid by it with respect to the Project prior to the issuance of the Bonds from the proceeds of the Bonds and such intention is consistent with the budgetary and financial circumstances of the University;
(d) all of the costs to be paid or reimbursed from the proceeds of the Bonds will be for costs incurred in connection with the issuance of the Bonds or will, at the time of payment thereof, be properly chargeable to the capital account of the Project (or would be so chargeable with a proper election) under general federal income tax principles; and
(e) this resolution shall constitute a declaration of official intent under United States Department of the Treasury Regulation Section 1.150-2.

SECTION 14. Law and Place of Enforcement of the Resolution. This Resolution shall be construed and interpreted in accordance with the laws of the State of South Carolina. All suits and actions arising out of this Resolution shall be instituted in a court of competent jurisdiction in the State.

SECTION 15. Effect of Section Headings. The heading or titles of the several Sections hereof are solely for convenience of reference and shall not affect the meaning, construction, interpretation or effect of this Resolution.

SECTION 16. Repeal of Inconsistent Resolutions. All resolutions of the Board of Trustees, and any party of any resolution, inconsistent with this Resolution are hereby repealed to the extent of such inconsistency.

SECTION 17. Effectiveness of this Resolution. This Resolution shall become effective upon its adoption.

Done in meeting duly assembled this 8th day of April, 2005.

BOARD OF TRUSTEES OF
WINTHROP UNIVERSITY

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EXHIBIT A

WINTHROP UNIVERSITY
SCHEDULE OF TUITION FEES IN EFFECT FOR PURPOSES OF
SECTION 59-107-10 ET SEQ., CODE OF LAWS OF
SOUTH CAROLINA 1976, AS AMENDED


In-State Out-of-State
Undergraduate $3,908 $7,205
Graduate 3,764 6,922
Graduate-Certification 3,764 5,427

For the fiscal year ended June 30, 2004, the amount of receipts designated as tuition fees for state institution bonds purposes is $3,299,296. The tuition and fees generated for the 2004 summer term are not included.

The maximum principal and interest debt service payment prior to the issuance contemplated herein is $1,317,741, which occurs in the fiscal year ending June 30, 2007.

The maximum principal and interest debt service payment after the issuance contemplated herein is anticipated to be $2,611,811, which occurs in the fiscal year ending June 30, 2007.

EXHIBIT B

WINTHROP UNIVERSITY
PRO FORMA DEBT SERVICE TABLE ON THE PROPOSED ISSUE OF
SEVENTEEN MILLION DOLLARS ($17,000,000)
GENERAL OBLIGATION STATE INSTITUTION BONDS
PRINCIPAL AND INTEREST PAYABLE AS INDICATED
COMPUTED AT AN ASSUMED AVERAGE INTEREST RATE OF 4.38%

EXHIBIT C

DEBT SERVICE REQUIREMENTS
ON ALL GENERAL OBLIGATION STATE INSTITUTION BONDS ISSUED BY
THE STATE OF SOUTH CAROLINA ON BEHALF OF WINTHROP UNIVERSITY

EXHIBIT D

COMPOSITE PRO FORMA DEBT SERVICE
ON ALL GENERAL OBLIGATION STATE INSTITUTION BONDS
ISSUED BY THE STATE OF SOUTH CAROLINA ON BEHALF OF WINTHROP UNIVERSITY
INCLUDING THE PROPOSED ISSUE OF SEVENTEEN MILLION DOLLARS ($17,000,000)
OF GENERAL OBLIGATION STATE INSTITUTION BONDS
COMPUTED AT AN ASSUMED AVERAGE RATE OF INTEREST OF 4.38%

EXHIBIT E

WINTHROP UNIVERSITY
PROOF OF COMPLIANCE WITH
CHAPTER 107, TITLE 59, SOUTH CAROLINA CODE OF LAWS 1976, AS AMENDED

Aggregate of tuition fees received by the University during preceding fiscal year ended June 30, 2004 $ 3,299,296
Multiplied by 90%
Produces 2,969,366
Maximum annual debt service on all State Institution Bonds of the University (including the proposed issue of Seventeen Million Dollars $17,000,000 State Institution Bonds herein requested)

2,611,811
Margin $ 357,555

April 8, 2005

IN THE HEART OF THE CAROLINAS
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