YSU to refinance debt on apartments
By Denise Dick
Students who live there shouldn’t see any change, but Youngstown State University is expected to refinance the debt on the University Courtyard Apartments.
Gene Grilli, YSU vice president for finance and administration, said a resolution from the board of trustees is expected at its next meeting.
Construction on the 408-bed facility on the east side of the Wick Oval in Smoky Hollow began in 2002. The building opened in 2003. University Housing Corporation was formed in 2001 to develop and own housing for YSU.
Back then, there was a lack of housing for students developed by private entities, and the university pursued the project to improve housing opportunities.
Initially, both YSU and UHC anticipated development of multiple housing-projects through UHC, but Courtyard is the only one.
The YSU Foundation also played a role in construction of the building.
“Our role is the guarantor, which means it wouldn’t have been built without a guarantee,” said C. Reid Schmutz, president of the foundation.
University officials say that more recently, student housing needs have been met by private developers including the Flats at Wick apartment complex.
The Courtyard project has outstanding debt of about $20.8 million. Right now, the interest rate is fixed, but that will expire in May 2012, leaving the possibility of its converting to a variable rate.
That’s why the issue is coming up now, Grilli said.
“We’re preparing for a process to take that debt responsibility and put it under the university,” he said.
From a bond rating perspective, UHC debt is considered YSU debt anyway since UHC is a component of the university, Grilli said.
The university likely would refinance the debt by selling long-term bonds, and the foundation no longer would be involved as the guarantor.
That would alleviate the risk for the foundation.
“If we had to cough up the money to refinance this, student scholarships would be at risk,” Schmutz said.
The university’s budget would be better able to absorb that than the foundation, he said.
UHC has a contract with Ambling Management Co., which operates the building. Jack Fahey, interim vice president for student affairs, said that contract will continue.
Students shouldn’t see a change.
“It should totally be behind the scenes other than — because the financing is better and stronger over time — they’ll save some money on the room rates,” he said.