Repository: UIHistories Project: Board of Trustees Minutes - 1972 [PAGE 667]

EXTRACTED TEXT FROM PAGE:

1972]

UNIVERSITY OF ILLINOIS

657

If the program cost to the University for any fiscal year is more or less than the aggregate amount paid to the University, the excess or deficiency would be shared by both parties in accordance with terms to be negotiated. Snaring provisions are normally included in contracts of this nature. In the case of catastrophic illnesses (defined as hospitalization exceeding fortyone consecutive days or costing in excess of $5,000), the Department of Public Aid would discontinue capitation payments for that period of illness, and pay on a regular fee-for-service basis. Should such a contract be terminated, the University's responsibilities would revert to those types of care provided under the current State Plan. Reinbursement to the University for these services would then be made on a fee-for-service basis. Persons in the Valley Community who do not choose to enroll under the plan would continue to be served under the current plan. FINANCING OF THE INTRAMURAL-PHYSICAL EDUCATION B U I L D I N G . URBANA (13) T h e Board of Trustees, at its meeting on July 24, 1968, and the Executive Committee on August 20, 1968, requested the University of Illinois Foundation to finance and construct the Intramural-Physical Education Building and lease it to the University at a rental sufficient to liquidate the debt service payments. The Foundation obtained a four per cent construction loan in the amount of $9,100,000 from the First National Bank of Chicago. The loan was due on July 1, 1971, but the bank agreed to extend the loan for one year to July 1, 1972. The University was to explore the feasibility of financing the project on a permanent basis through revenue bonds or otherwise. The First National Bank of Chicago has offered a term loan to the University of Illinois Foundation in the amount of $8,500,000, which together with $600,000 available from operations during the current year and which will be payable to the Foundation as rental under the lease, will be used to liquidate the construction loan. The term loan will be due in ten years, will bear interest at a rate of 4.85 per cent per annum on a tax-exempt basis, and provide for semiannual repayments of approximately $350,000 each, to be applied first to interest and then to principal. Additionally, the net income, after providing for all operating expenses and applicable provisions for reserves, will be used to make additional payments on the principal of the loan. This is a lower interest rate than could be obtained through the sale of bonds. On June 1, 1972, the Foundation's Board of Directors authorized the above term loan, subject to approval of The Board of Trustees of the University of Illinois. While the loan is due in ten years, it will require approximately nineteen years to repay the entire principal at the proposed rate of repayment. At the end of the ten-year period, a new loan for the balance will need to be renegotiated or revenue bonds issued by the University. If the bond market should change so that revenue bonds could be issued at a more favorable rate prior to the end of the ten-year period, the University would have the right to pay off the Foundation loan and issue its own bonds. The President of the University, with the concurrence of the appropriate administrative officers, recommends that the University of Illinois Foundation be requested to borrow funds as indicated, and that the lease with the Foundation be amended accordingly. Adoption of the following resolution is requested. F i r s t S u p p l e m e n t a l R e s o l u t i o n R e F i n a n c i n g a n d C o n s t r u c t i o n of I n t r a m u r a l - P h y s i c a l E d u c a t i o n Building, Urbana-Champaign WHEREAS, T H E B O A R D O F T R U S T E E S O F T H E U N I V E R S I T Y O F I L L I N O I S , a public corporation of the State of Illinois, hereinafter referred to as " U N I V E R S I T Y , " at a meeting of its Executive Committee on August 20, 1968, authorized the Comptroller and the Secretary of this University, in the name of, and on behalf of, this University: A. T o sign, execute, and deliver a "Term Lease" with and to U N I V E R S I T Y O F I L L I N O I S F O U N D A T I O N , a not-for-profit corporation of the State of Illinois, hereinafter referred to as "Foundation," which Term Lease would provide for the leasing by University of certain therein described property to Foundation