USF Board of Trustees December 3, 2009

Transcription

1 III. Agenda item: (to be completed by Board staff) USF Board of Trustees December 3, 2009 Issue: Athletic District / Sports Complex Project Proposed action: Authorize Issuance of Debt by USF Financing Corporation and Request Approval by the Florida Board of Governors Background information: The USF Athletics Department proposes to construct a new basketball practice facility, improvements to the existing baseball stadium, a new softball stadium, new football practice fields and the relocation of the existing recreational fields. The Athletic District / Sports Complex Project is on the approved master plan of the Tampa campus of the University and any minor modifications will be incorporated in the 2010 update, currently underway. The cost for this Project is approximately $30,000,000. The principal long-term source of funding for this Project will be private gifts obtained from an athletics capital campaign by the USF Foundation; today, approximately $6,500,000 in gift agreements have been closed. The remaining balance of the Project cost will be funded by a long-term bank loan; today, approximately $23,500,000 will be needed from the bank. The long-term bank debt is expected to be reduced by future private gifts. Florida Statutes Section (7)(a) provides legislative approval for DSO financing of projects relating to the student activities of the state university. Strategic Goal(s) Item Supports: Provide necessary student athletic facilities and promote student athlete success Workgroup Review: Finance & Audit, 10/15/09, approval of DSO debt at $23.5 million Board of Trustees Review: Board of Trustees, 6/25/09, approval of Project at $31 million Board of Trustees, 6/12/08, approval of Project at $24 million Supporting Documentation: BOT and BOD Resolutions and Appendices Prepared by: Fell L. Stubbs, University Treasurer (813)

2 A RESOLUTION AUTHORIZING THE ISSUANCE OF DEBT AND REQUESTING THE FLORIDA BOARD OF GOVERNORS TO APPROVE THE ISSUANCE OF SUCH DEBT TO FINANCE THE CONSTRUCTION OF CERTAIN ATHLETIC FACILITIES ON THE CAMPUS OF THE UNIVERSITY OF SOUTH FLORIDA, PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE BOARD OF TRUSTEES OF THE UNIVERSITY OF SOUTH FLORIDA: Section 1. The Board of Trustees of the University of South Florida (the Board of Trustees ) as the governing body of the University of South Florida (the University ) hereby authorizes the issuance of debt by the USF Financing Corporation (the DSO ) and requests the Florida Board of Governors (the Board of Governors ) to approve the issuance of debt in an amount not to exceed $23,500,000 (the Debt ) for the purpose of financing the construction of certain athletic facilities (the Project ) to be located on the Tampa campus of the University. Section 2. The Project will consist of a new basketball practice facility, improvements to the existing baseball stadium, new softball stadium, new football practice fields and the relocation of the existing recreational fields. The Project is reflected on the approved master plan for the University and is consistent with the mission of the University because it will provide needed student athletic facilities. Construction of the Project is expected to begin in October of 2009 and to be completed by April of Proceeds of the Debt are not anticipated to be sufficient to complete the construction of the Project without the use of additional funds. Additional necessary funding in the amount of $6,500,000 will be obtained from a capital campaign by the USF Foundation. Legislative approval of the Project has been obtained pursuant to section (7)(a), Florida Statutes. No proceeds of the Debt will be used to finance operating expenses of the University or the DSO. Section 3. The Debt is to be secured by a gross lien on ticket sales revenue, National Collegiate Athletics Association and Big East Conference distribution revenues, corporate sponsorship revenues, athletic event revenues, game guaranty payments, bowl game revenues and capital campaign revenues. The University is legally authorized to secure the Debt with the revenues to be pledged pursuant to section , Florida Statutes. The University is also committed to ensuring that sufficient revenues will be generated to fulfill the University s obligations with respect to the Debt. Section 4. The Debt will mature not more than 25 years after issuance, including any extensions or renewals thereof. The Project has an estimated useful life of 40 years, which is beyond the anticipated final maturity of the Debt. The Debt will bear interest at a fixed interest rate. Section 5. The Debt will be sold through private placement. A private placement is necessary to reduce the cost of financing by entering into a loan agreement with a bank versus issuing bonds in the public market. An analysis showing that a private placement is desirable is {0060/00/ DOCv2} 1

3 attached in Appendix A. Section 6. It is anticipated that the Debt will be structured as a privately placed bank loan and designated as Build America Bonds thus bearing a taxable interest rate. The issuance of the Debt on a taxable basis is in the best interest of the University because the DSO will receive a 35% subsidy from the United States Treasury offsetting the interest cost of the loan. Section 7. The Board of Trustees will comply, and will require the University and the DSO to comply, with all requirements of federal and state law relating to the Debt, including but not limited to, laws relating to maintaining the exemption for the Build America Bond subsidy payments on the Debt. Because the debt is a bank loan, the continuing secondary market disclosure of information does not apply to the Debt. Section 8. The Senior Vice President and CFO of the University and the Chair and Executive Director of the DSO and other authorized representatives of the University, and the Board of Trustees, and the DSO are hereby authorized to take all actions and steps, to execute all instruments, documents, and contracts, and to take all other actions as they may deem necessary or desirable, in connection with the execution, sale and delivery of the Debt. Section 9. In making the determination to finance the Project, the Board of Trustees has reviewed the information attached to Appendix A and finds that the issuance of the Debt is in compliance with the Debt Management Guidelines, the university s debt management policy, and applicable law. Section 10. This Resolution shall take effect immediately upon its adoption. Adopted this day of, {0060/00/ DOCv2} 2

4 Appendix A The following documents have been reviewed by the Board of Trustees prior to the execution of this Resolution: a. The project summary; b. A draw schedule for the project; c. Sources and uses of funds for the project; d. An estimated debt service schedule; e. A description of the security supporting repayment and the lien position the debt will have on that security; f. A five year history, if available, and a five year projection, of the pledged revenues and the debt service coverage; and g. The negotiated sale analysis. {0060/00/ DOCv2} 3

5 A RESOLUTION AUTHORIZING THE ISSUANCE OF DEBT AND REQUESTING THE BOARD OF TRUSTEES OF THE UNIVERSITY OF SOUTH FLORIDA TO APPROVE THE ISSUANCE OF SUCH DEBT TO FINANCE THE CONSTRUCTION OF STUDENT ATHLETICS DISTRICT / SPORTS COMPLEX PROJECT ON THE CAMPUS OF THE UNIVERSITY OF SOUTH FLORIDA, PROVIDING AN EFFECTIVE DATE. BE IT RESOLVED BY THE BOARD OF DIRECTORS OF USF FINANCING CORPORATION: Section 1. The Board of Directors (the Board of Directors ) of the USF Financing Corporation (the DSO ) established by the Board of Trustees of the University of South Florida (the Board ) as the governing board of the University of South Florida (the University ) hereby authorizes the issuance of debt by the DSO and requests the Board to approve the issuance of debt in an amount not exceeding $23,500,000 (the Debt ) for the purpose of financing the construction of certain athletic facilities (the Project ) to be located on the Tampa campus of the University. Section 2. The Project will consist of a new basketball practice facility, improvements to the existing baseball stadium, new softball stadium, new football practice fields and the relocation of the existing recreational fields. The Project is reflected on the approved master plan for the University and is consistent with the mission of the University because it will provide needed student athletic facilities. Construction of the Project is expected to begin in October of 2009 and to be completed by April of Proceeds of the Debt are not anticipated to be sufficient to complete the construction of the Project without the use of additional funds. Additional necessary funding in the amount of $6,500,000 will be obtained from a capital campaign by the USF Foundation. Legislative approval of the Project has been obtained pursuant to section (7)(a), Florida Statutes. No proceeds of the Debt will be used to finance operating expenses of the University or the DSO. Section 3. The Debt is to be secured by a gross lien on ticket sales revenue, National Collegiate Athletics Association and Big East Conference distribution revenues, corporate sponsorship revenues, athletic event revenues, game guaranty payments, bowl game revenues and capital campaign revenues. The University is legally authorized to secure the Debt with the revenues to be pledged pursuant to section , Florida Statutes. The University is also committed to ensuring that sufficient revenues will be generated to fulfill the University s obligations with respect to the Debt. Section 4. The Debt will mature not more than 25 years after issuance, including any extensions or renewals thereof. The Project has an estimated useful life of 40 years, which is {0060/00/ DOCv1} 1

6 beyond the anticipated final maturity of the Debt. The Debt will bear interest at a fixed interest rate. Section 5. The Debt will be sold through private placement. A private placement is necessary to reduce the cost of financing by entering into a loan agreement with a bank versus issuing bonds in the public market. An analysis showing that a private placement is desirable is attached in Appendix A. Section 6. It is anticipated that the Debt will be structured as a privately placed bank loan and designated as Build America Bonds thus bearing a taxable interest rate. The issuance of the Debt on a taxable basis is in the best interest of the University because the DSO will receive a 35% subsidy from the United States Treasury offsetting the interest cost of the loan. Section 7. The Board of Directors will comply, and will require the DSO to comply, with all requirements of federal and state law relating to the Debt, including but not limited to, laws relating to maintaining the exemption for the Build America Bond subsidy payments on the Debt. Because the debt is a bank loan, the continuing secondary market disclosure of information does not apply to the Debt. Section 8. The DSO will comply with the Debt Management Guidelines and the debt management policy of the University. Section 9. The Chair of the Board of Directors and the Executive Director and other authorized representatives of the Board of Directors and the DSO are hereby authorized to take all actions and steps, to execute all instruments, documents, and contracts, and to take all other actions as they may deem necessary or desirable, in connection with the execution, sale and delivery of the Debt. Section 10. In making the determination to finance the Project, the Board of Directors has reviewed the information attached to Appendix. Section 11. This Resolution shall take effect immediately upon its adoption. Adopted this day of, {0060/00/ DOCv1} 2

7 Appendix A The following documents have been reviewed by the Board of Directors prior to the execution of this Resolution: a. The project summary; b. A draw schedule for the project; c. Sources and uses of funds for the project; d. An estimated debt service schedule; e. A description of the security supporting repayment and the lien position the debt will have on that security; f. A five year history, if available, and a five year projection, of the pledged revenues and the debt service coverage; and g. The negotiated sale analysis. {0060/00/ DOCv1} 3

8 BOARD OF GOVERNORS STATE UNIVERSITY SYSTEM OF FLORIDA Project Summary University of South Florida Student Athletics District / Sports Complex Project Project Description: The Project includes the construction of a new basketball practice facility, improvements to the existing baseball stadium, the construction of a new softball stadium, new football practice fields and the relocation of the existing recreational fields. The new basketball practice facility is planned to provide two practice gymnasia and team support facilities including locker rooms, offices, meeting rooms, athletic training, strength training and equipment management facilities with internal student athlete access to the event level of the existing Sun Dome via controlled access stair and corridor. The improvements to the existing baseball stadium are planned to include a natural grass sports field, new step down team dugouts, bullpens, covered batting cages, two party pavilion canopies, a press box and a 1,500 seat spectator grandstand with an elevated, shaded entertainment or hospitality deck and service amenities. The softball stadium is planned to include a new lighted natural grass sports field, step down team dugouts, bullpens, covered batting cages, a press box and a 700 seat spectator grandstand with an elevated, shaded entertainment or hospitality deck and service amenities. The new football practice field complex is planned to include one lighted synthetic turf field, two natural grass lighted sports fields and a service building, all enclosed by a perimeter security and privacy fence. The relocation of the existing recreational fields is planned to include rebuilding the fields and related improvements, including utilities, turf, storage building, etc. in a new location. The scope of the Project also includes site work, utilities, infrastructure, storm water management, walks, plazas, lawns and plantings, site lighting, signage and site accessories. In addition, design features such as ornamental fences with masonry columns, graphics, display lighting, banners or pennants and special paving or plantings to enhance the spectator experience inside and outside of the facilities are required as part of the Project {0060/00/ DOCv1} 1

9 development. The Project will be located on the Tampa campus. The Project is reflected on the approved master plan for the University and is consistent with the mission of the University because it will provide necessary student athletic facilities. Construction of the Project is expected to begin in October 2009 and to be completed in phases over a 12 to 19 month period. Proceeds of the Debt, as hereafter defined, together with other available University funds are anticipated to be sufficient to complete the construction of the Project which is estimated to be approximately $30,000,000, of which approximately $23,500,000 of proceeds of the Debt together with approximately $6,500,000 of funds will be obtained from an athletics capital campaign by the USF Foundation. Legislative approval of the Project has been obtained pursuant to Section (7) (a), Florida Statutes. No proceeds of the Debt will be used to finance operating expenses of the University or the USF Financing Corporation (the DSO ). Project Cost and Financing Structure: The proposed Project will be financed with proceeds of a bank loan in the amount not to exceed $23,500,000 (the Debt ). Financing for the Project will be fixed rate. The DSO intends to enter into a loan agreement with the bank and issue a promissory note designated as a Build America Bond. The Debt will be structured with a final maturity not to exceed 25 years with the first interest payment from pledged revenues being July 1, 2010 and the first principal to be paid with respect to the Project will be July 1, When complete the project will be leased to the University pursuant to which the University will make lease payments to the DSO which will be pledged to the bank to secure the bank loan. Cost of construction and associated soft costs of the Project will be approximately $30,000,000 of which approximately $23,500,000 of proceeds of the Debt together with approximately $6,500,000 of funds to be available from an athletics capital campaign. Type of Sale: The Debt will be structured as a privately placed bank loan with the DSO. {0060/00/ DOCv1} 2

10 Facility Site Location: The proposed Project will be located on the Universityʹs Tampa campus. The University received four proposals to provide financing for the Project. Security/Lien Structure: Pledge Revenues and Debt Service Coverage: The fixed rate for the Debt will be secured by a lien on lease payments to be made by the University to the DSO to include ticket sales revenue, National Collegiate Athletics Association and Big East Conference distribution revenues, corporate sponsorship revenues, athletic event, game guaranty payments, bowl game revenues and capital campaign revenues. For Fiscal Year , the first year of operation of the Project, total revenues are expected to equal $37,261,121 which would produce a debt service coverage ratio of 1.31x. Revenues are projected to grow approximately 4% per year over a 10 year period. The debt service coverages have been calculated using an assumed interest rate of 5.00% 5.25% on the Debt. Project Start and Opening Date: It is anticipated that construction of the Project will commence in October 2009 and the Project will be available for occupancy as each project component is completed with the final component expected to be completed in 12 to 19 months. {0060/00/ DOCv1} 3

11 USF Financing Corporation USF Athletics District / Sports Complex Project Project Account Draw Schedule $ 30,000,000 Jan-10 $ 1,875,000 28,125,000 Feb-10 1,875,000 26,250,000 Mar-10 1,875,000 24,375,000 Apr-10 1,875,000 22,500,000 May-10 1,875,000 20,625,000 Jun-10 1,875,000 18,750,000 Jul-10 1,875,000 16,875,000 Aug-10 1,875,000 15,000,000 Sep-10 1,875,000 13,125,000 Oct-10 1,875,000 11,250,000 Nov-10 1,875,000 9,375,000 Dec-10 1,875,000 7,500,000 Jan-11 1,875,000 5,625,000 Feb-11 1,875,000 3,750,000 Mar-11 1,875,000 1,875,000 Apr-11 1,875,000 0 TOTAL $ 30,000,000

12 USF Financing Corporation USF Athletics District / Sports Complex Project Estimated Sources and Uses of Funds Sources of Funds Basis for Amounts Loan Proceeds: Par Amount $ 23,500,000 Anticipated amount of bank loan to be issued by USF Financing Corporation Gifts / Donations $ 6,500,000 USF Foundation closed capital gift commitments Total Sources of Funds $ 30,000,000 Uses of Funds Project Fund Deposits: Deposit to Construction Fund $ 29,900,000 Cost of design, construction, and equipment Delivery Date Expenses Cost of Issuance $ 100,000 Includes bond counsel, other legal fees, other expenses Total Uses of Funds $ 30,000,000 Debt Service Coverage - Fiscal Year Total Revenue - USF Athletics Department $ 37,261,121 Total revenues include student athletic fees, ticket sales, NCAA/Big East Conference distributions, corporate sponsorships, development/fundraising, event and nonevent revenue, game guarantees, bowl game revenues, etc. Total Operating Costs - USF Athletics Department $ (33,085,870) Total operating costs include compensation & benefits, scholarships, team travel & recruiting, event-related, administrative, operations & maintenance, etc. Revenue Available for Debt Service $ 4,175,251 Debt Service: Prior Debt - Series 2003A COPs $ 1,053,463 Variable rate demand bonds - Interest at pay-fixed swap 3.343%, 12 Year remaining amortization Proposed Debt: Foundation Loan $ 139, %, principal amortized via Gifts Bank Term Loan (Basketball Center) $ 627, Year Loan, 5.25%, plus principal Bank Term Loan (Other Facilities) $ 1,355, Year Loan, 5.00%, plus principal TOTAL $ 3,175,537 Debt Service Coverage: Athletics Gross Revenue Coverage Athletics Net Revenue Coverage 1.31

13 USF Financing Corporation USF Athletics District / Sports Complex Project Total Project Debt Service Assumptions Notes Bank Term Loan $23,278,080 Total Debt Service on all Loans Related to Project $34,912,696 Gifts Applied $6,721,920 Rate (%) 5.00% % Term (Yrs.) Calendar Year Beg. Balance Borrowing Principal Interest Annual Debt Service Gifts Applied End. Balance $0 $9,816,913 $0 $102,571 $102,571 $5,858,224 $3,958, $3,958,689 $20,183,087 $1,043,770 $1,078,305 $2,122,075 $863,696 $22,234, $22,234,310 $0 $1,096,629 $1,231,059 $2,327,688 $0 $21,137, $21,137,681 $0 $1,152,168 $1,147,962 $2,300,130 $0 $19,985, $19,985,513 $0 $1,210,521 $1,062,102 $2,272,623 $0 $18,774, $18,774,992 $0 $1,271,830 $973,983 $2,245,813 $0 $17,503, $17,503,162 $0 $1,336,246 $887,390 $2,223,636 $0 $16,166, $16,166,916 $0 $1,403,925 $801,629 $2,205,554 $0 $14,762, $14,762,991 $0 $1,475,035 $720,593 $2,195,628 $0 $13,287, $13,287,956 $0 $1,549,749 $643,987 $2,193,736 $0 $11,738, $11,738,207 $0 $1,628,246 $563,500 $2,191,746 $0 $10,109, $10,109,961 $0 $1,710,724 $478,932 $2,189,656 $0 $8,399, $8,399,237 $0 $1,797,381 $390,080 $2,187,461 $0 $6,601, $6,601,856 $0 $1,313,093 $311,108 $1,624,201 $0 $5,288, $5,288,763 $0 $522,572 $263,943 $786,515 $0 $4,766, $4,766,191 $0 $550,007 $235,787 $785,794 $0 $4,216, $4,216,184 $0 $578,883 $206,154 $785,037 $0 $3,637, $3,637,301 $0 $609,274 $174,965 $784,239 $0 $3,028, $3,028,027 $0 $641,261 $142,138 $783,399 $0 $2,386, $2,386,766 $0 $674,927 $107,588 $782,515 $0 $1,711, $1,711,839 $0 $710,361 $71,225 $781,586 $0 $1,001, $1,001,478 $0 $747,655 $32,952 $780,607 $0 $253, $253,823 $0 $253,823 $6,663 $260,486 $0 $ $0 $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $0 $0 Totals: $30,000,000 $23,278,080 $11,634,616 $34,912,696 $6,721,920

14 USF Financing Corporation USF Athletics District / Sports Complex Project Debt Service on Foundation Loan (Total Future Gift Stream) Assumptions Notes Borrowing of Future Gift Stream $4,412,858 Assumes full borrowing in January 2010 Rate (%) 3.25% Principal amortized via Gifts Term (Yrs.) 7 Calendar Year Beg. Balance Principal Interest Annual Debt Service Gifts Applied End. Balance $4,412,858 $0 $71,709 $71,709 $0 $4,412, $4,412,858 $0 $139,483 $139,483 $242,143 $4,170, $4,170,715 $0 $122,473 $122,473 $804,643 $3,366, $3,366,072 $0 $96,322 $96,322 $804,643 $2,561, $2,561,429 $0 $70,293 $70,293 $797,143 $1,764, $1,764,286 $0 $45,036 $45,036 $757,143 $1,007, $1,007,143 $0 $24,491 $24,491 $507,143 $500, $500,000 $0 $8,125 $8,125 $500,000 $0 Totals: $0 $577,932 $577,932 $4,412,858

15 USF Financing Corporation USF Athletics District / Sports Complex Project Debt Service on Bank Term Loan (Basketball Center) Assumptions Notes Bank Term Loan $10,124,529 Basketball Center Gifts Applied $3,150,470 Rate (%) 5.25% Term (Yrs.) 25 Calendar Year Beg. Balance Borrowing Principal Interest Annual Debt Service Gifts Applied End. Balance $0 $2,286,774 $0 $0 $0 $2,286,774 $ $0 $10,988,226 $268,695 $358,692 $627,387 $863,696 $9,855, $9,855,835 $0 $282,801 $510,008 $792,809 $0 $9,573, $9,573,034 $0 $297,648 $494,771 $792,419 $0 $9,275, $9,275,386 $0 $313,275 $478,734 $792,009 $0 $8,962, $8,962,111 $0 $329,722 $461,856 $791,578 $0 $8,632, $8,632,389 $0 $347,032 $444,091 $791,123 $0 $8,285, $8,285,357 $0 $365,251 $425,393 $790,644 $0 $7,920, $7,920,106 $0 $384,427 $405,714 $790,141 $0 $7,535, $7,535,679 $0 $404,609 $385,002 $789,611 $0 $7,131, $7,131,069 $0 $425,851 $363,203 $789,054 $0 $6,705, $6,705,218 $0 $448,209 $340,258 $788,467 $0 $6,257, $6,257,009 $0 $471,740 $316,110 $787,850 $0 $5,785, $5,785,269 $0 $496,506 $290,693 $787,199 $0 $5,288, $5,288,763 $0 $522,572 $263,943 $786,515 $0 $4,766, $4,766,191 $0 $550,007 $235,787 $785,794 $0 $4,216, $4,216,184 $0 $578,883 $206,154 $785,037 $0 $3,637, $3,637,301 $0 $609,274 $174,965 $784,239 $0 $3,028, $3,028,027 $0 $641,261 $142,138 $783,399 $0 $2,386, $2,386,766 $0 $674,927 $107,588 $782,515 $0 $1,711, $1,711,839 $0 $710,361 $71,225 $781,586 $0 $1,001, $1,001,478 $0 $747,655 $32,952 $780,607 $0 $253, $253,823 $0 $253,823 $6,663 $260,486 $0 $ $0 $0 $0 $0 $0 $0 $ $0 $0 $0 $0 $0 $0 $0 Totals: $13,275,000 $10,124,529 $6,515,940 $16,640,469 $3,150,470

16 USF Financing Corporation USF Athletics District / Sports Complex Project Debt Service on Bank Term Loan (Other Facilities) Assumptions Notes Bank Term Loan $13,153,549 Other Facilities Gifts Applied $3,571,450 Rate (%) 5.00% Term (Yrs.) 15 Calendar Year Beg. Balance Borrowing Principal Interest Annual Debt Service Gifts Applied End. Balance $0 $7,530,139 $0 $30,862 $30,862 $3,571,450 $3,958, $3,958,689 $9,194,861 $775,075 $580,130 $1,355,205 $0 $12,378, $12,378,475 $0 $813,828 $598,578 $1,412,406 $0 $11,564, $11,564,647 $0 $854,520 $556,869 $1,411,389 $0 $10,710, $10,710,127 $0 $897,246 $513,075 $1,410,321 $0 $9,812, $9,812,881 $0 $942,108 $467,091 $1,409,199 $0 $8,870, $8,870,773 $0 $989,214 $418,808 $1,408,022 $0 $7,881, $7,881,559 $0 $1,038,674 $368,111 $1,406,785 $0 $6,842, $6,842,885 $0 $1,090,608 $314,879 $1,405,487 $0 $5,752, $5,752,277 $0 $1,145,138 $258,985 $1,404,123 $0 $4,607, $4,607,138 $0 $1,202,395 $200,297 $1,402,692 $0 $3,404, $3,404,743 $0 $1,262,515 $138,674 $1,401,189 $0 $2,142, $2,142,228 $0 $1,325,641 $73,970 $1,399,611 $0 $816, $816,587 $0 $816,587 $20,415 $837,002 $0 $ $0 $0 $0 $0 $0 $0 $0 Totals: $16,725,000 $13,153,549 $4,540,744 $17,694,293 $3,571,450

17 USF Financing Corporation USF Athletics District / Sports Complex Project Projected Debt Service Coverage Actual Preliminary Projected Athletics Department Revenues * Operating Revenues 19,453,302 24,950,575 27,128,282 33,547,759 35,379,821 33,819,128 36,909,121 38,551,855 39,899,155 41,379,060 Interest & Other Revenues 399, , , , , , , , , ,000 Total Pledged Revenues 19,853,106 25,375,742 27,627,743 34,042,371 35,876,941 34,171,128 37,261,121 38,903,855 40,251,155 41,731,060 Athletics Department Expenses * Operating Expenses 19,109,059 23,307,655 26,324,427 30,914,470 32,044,930 31,987,476 33,085,870 34,469,378 35,627,499 36,871,458 Total Expenses 19,109,059 23,307,655 26,324,427 30,914,470 32,044,930 31,987,476 33,085,870 34,469,378 35,627,499 36,871,458 Net Revenues Available for Debt Service 744,047 2,068,087 1,303,316 3,127,901 3,832,011 2,183,652 4,175,251 4,434,477 4,623,656 4,859,602 Debt Service: Prior Debt - Series 2003A COPs - 687, ,143 1,001,691 1,057,462 1,051,585 1,053,463 1,059,252 1,063,889 1,067,372 Proposed - Foundation Loan , , ,473 96,322 70,293 Proposed - Bank Term Loan (25 Yr) , , , ,009 Proposed - Bank Term Loan (15 Yr) ,862 1,355,205 1,412,407 1,411,389 1,410,321 Total Debt Service - 687, ,143 1,001,691 1,057,462 1,154,156 3,175,537 3,386,941 3,364,019 3,339,995 Net Revenues After Debt Service 744,047 1,380, ,173 2,126,210 2,774,549 1,029, ,714 1,047,536 1,259,637 1,519,607 Debt Service Coverage: Gross Athletics Dept Revenue Coverage Net Athletics Dept Revenue Coverage * Notes: Based on information from USF Athletics Department

18 USF Financing Corporation USF Athletics District / Sports Complex Project Competitive versus Negotiated Sale Analysis Conclusion and Recommendation Regarding Method of Sale The USF Financing Corporation proposes to finance the USF Athletics District / Sports Complex Project which will include certain student athletic facilities. The debt issuance guidelines established by the Board of Governors Debt Management Guidelines require that prior to issuing any debt obligations an analysis be done to assess the relative benefits of a negotiated sale versus a competitive sale. The following factors were considered in making a determination for the best method of private placement of the Debt. The USF Financing Corporation is a relatively infrequent issuer and thus not a well known issuer in the national debt markets. While prior financings involving USF Financing Corporation have been rated in the highest ratings categories by all three ratings agencies due to municipal bond insurance or letters of credit securing such financings, the underlying project ratings were in the A to low A category. The USF Financing Corporation issued an RFP for a negotiated bank term loan. The RFP requested financing terms for 15 to 25 years on a fixed rate basis and other conditions and covenants. The RFP was issued to a number of substantial commercial banks, who well know the University and are active in the Florida market. The USF Financing Corporation will enter into negotiations with the bank offering the most attractive terms. It is believed that this RFP negotiation process will also result in financing terms and conditions attractive compared to the terms and conditions required by the national capital markets.

19 Competitive vs. Negotiated Sales: Analysis of Conditions Favoring Each Method of Sale USF Financing Corporation, USF Athletics District / Sports Complex Bank Term Loan Debt Structure Pledged Revenues Conditions Favoring a Competitive Sale General Obligation or Strong Revenue Stream Conditions Favoring a Negotiated Sale Non-tax based or Project Supported Revenues Sale Type Favored By Conditions N Explanation The pledged payments are classified as non-tax based, project supported revenue. Florida law does not allow the University to issue general obligation bonds and/or permit the pledging of student tuition revenues (i.e. a general receipts pledge that includes all non- State revenues of the University). Thus, the payment pledge is a weaker pledge than a general receipts or general obligation pledge of the University. Due to the limited pledge of the USF Athletics Departments, lack of a security interest in assets of the University and/or the land, and the lack of a tax based revenue pledge, this pledge is considered more speculative and vulnerable than a general obligation or general receipts pledge. Security Structure Conventional resolution and cash flow: Rate Covenant and Coverage Unusual or weak covenants C The fixed rate for the Debt will be secured by a lien on lease payments to be made by the University to the Financing Corporation to include ticket sales revenue, National Collegiate Athletics Association and Big East Conference distribution revenues, corporate sponsorship revenues, athletic event and non-event revenues, game guaranty payments, bowl game revenues and capital campaign revenues. Debt Instrument Traditional Serial and Term Bonds, Semiannual Interest and Annual Maturities Use of Innovative Structuring, Structure to Attract Particular Investors C/N It is anticipated that the Debt will be structured as a privately placed bank loan and designated as Build America Bonds thus bearing a taxable interest rate. The issuance of the Debt on a taxable basis is in the best interest of the University because the DSO will receive a 35% subsidy from the United States Treasury offsetting the interest cost of the loan. Size A transaction the size of which the market is used to and can comfortably manage. A large size which the market cannot readily handle without the need to consolidate syndicates C The anticipated $23.5 million issue can be easily absorbed in the market. Rating A or better Below Single A C/N While prior financings of the USF Financing Corporation have been rated in the highest rating categories by all three rating agencies due to municipal insurance or letters of credit securing such financings, the underlying project ratings were in the A to low A category. The Debt is anticipated to be issued as a private placement with a bank; thus, it is not anticipated that an underlying rating will be sought from the rating agencies. Outlook Stable Uncertain, Vulnerable or weak N Due to the pledge of USF Athletics revenues and the facility lease structure, the market s reaction to the Debt outlook will likely be stable. However, because the project s pro forma is based on certain growth projections, the view of the USF Athletics revenues will be somewhat uncertain.

20 Debt Structure Type of organization Conditions Favoring A Competitive Sale Well Known Broadbased General Purpose Borrower Conditions Favoring A Negotiated Sale Special Purpose, Independent Authority Sale Type Favored By Conditions N Explanation There is implied credit strength for the Financing Corporation Debt from the University. However, the Financing Corporation is the borrower, not the University, which increases the need for a negotiated private placement with a bank. Also, the Debt is not a general obligation of the State of Florida, the University or the Financing Corporation. Frequency of issuance Regular borrower in the public market New or infrequent issuer N The USF Financing Corporation is a relatively infrequent issuer and thus not a well known issuer in the debt markets. Market Awareness Interest Rates Active Secondary Market with broad Investor Base Stable/Predictable Market Little or no institutional Awareness of Issuer Volatile or declining market N N While the Financing Corporation has $319 million of debt outstanding, it is not well known in the capital market. The Debt will be issued as fixed rate debt. As fixed rate debt, the Debt s interest rate will be set for 25 years. Supply and Demand Changes or anticipated changes in the law Strong Investor Demand, Good Liquidity, Light Forward Calendar No recent changes or anticipated changes Oversold Market/heavy supply Recent changes which the market has not adapted to and which would require additional marketing efforts to explain. N/C N As interest rates change periodically, and in most cases frequently, the importance of accessing the market during favorable times of strong demand is significant. There have been recent substantial changes to Florida law regarding the issuance of debt by universities and their direct support organizations. There have also been recent changes to federal law that may provide benefits to the USF Financing Corporation.

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22 Element 3: Urban Design Figure 3-3 Long-Range Comprehensive Campus Master Plan Illustrative Existing Buildings 10-Year Proposed Buildings Long-Range Proposed Buildings Pedestrian Circulation Signature Open Space Informal Recreation Signature Landscape Feature Existing Stormwater Facilities 10-year Stormwater Facilities 10-year Alternate Stormwater Facility Long-Range Stormwater Facilities Water Feature Proposed Light Rail Alignment (Long-Range, Tampa Rail Project) Proposed Light Rail Station (Long-Range, Tampa Rail Project) Amended February 2007