The University of Utah plans to issue $17.7 million in revenue bonds to pay off debt, buy equipment, remodel facilities and upgrade the main computer of the U. Medical Center.
The U. Institutional Council, the school's governing body, approved the bonds Monday. They will be issued sometime after May 1 when rates are favorable. The bond issuance, however, must first be approved by the state Board of Regents April 26.It's expected that the bonds will have an average coupon interest rate of about 6.9 percent and will mature at various dates over the next 15 years. The average bond maturity will be about 12.1 years. The bond debt will be repaid entirely from hospital-generated revenue, said Walter P. Gnemi, U. vice president for administrative services.
"It's a lot like a guy going to the bank and borrowing money, in this case for 15 years," said Gnemi.
The U. had a great credit reference - Salt Lake City. The U.'s bonds will be issued through Municipal Finance Cooperative, which was established by the Utah League of Cities and Towns. A participating member of the cooperative, Salt Lake City agreed to provide the U. access to that financing. The U. Medical Center qualifies because it provides a substantial amount of health care for the city, the vice president said.
Under the agreement, the city accepts no liability for repayment of the bonds, Gnemi said.
Gnemi said the bonds issuance is rather routine, adding that the U. had a similar issuance a couple of years ago.
Among the programs funded by the $17.7 million:
- $1.5 million is designated for the U.'s new bone marrow transplant program. The program, which now has three patient rooms but will eventually have 10, recently accepted its first two patients.
Gnemi said the bonds will be used to repay U. hospital funds used to establish the bone marrow program. That money will be pumped into other programs.
- $4.1 million will be used to reimburse capital equipment expenditures for FY 1991 and 1992, so that money can also be used to purchase other equipment in the future when necessary, he said.
- $3.5 million will go to the Moran Eye Center, which isn't officially under construction yet. The center will bring together under one roof the clinical and research components of the ophthalmology department.
- $1.8 million will purchase a second CT scanner and remodel space to accommodate it. For years, the U. Medical Center had two CT scanners, but it has operated only one for the past four or five years.
- $1 million will spent to upgrade the medical center's main computer, which is used in admitting and discharging patients, billing and for various clinical uses.
- $3.1 million will go to the Wasatch Clinics. Located in the old Red Cross building on Foothill Boulevard, the outpatient clinics are run by the U. family practice and sports medicine departments. Health services for U. students are also offered there.