A Preliminary Exploration of the Differences between Two Financing Options for University Real Estate Projects under Public-Private Partnerships: A Case Study of 501(c)3 and 63-20 Tax-exempt Bond Processes

Abstract

The thesis discusses the differences between two financing options for university real estate projects under Public-Private Partnerships: 501(c)3 and 63-20 tax-exempt bond processes. Prior to the case interviews, this thesis identifies and compares the differences between two tax-exempt bond programs, their historical backgrounds, conceptions, legal regulations and constraints. This thesis also formulates a project process model, a cash flow model, and a financing structure model for P3 practitioners using 501(c)3 and 63-20 tax-exempt bond financing. A series of interviews was designed and conducted with project managers, non-profit organization directors, financing professionals, and University Real Estate Office staff. These interviews compared financial outcomes, types of bond issuers, project types, capital limits, issuing duration, P3 party involvements, post-construction financials and ownership issues, as well as decision making processes for each bond program. Beyond the case studies, this paper summarizes the advantages and disadvantages of these two bond programs and provides financing suggestions for future P3 university real estate projects.