Debt Financing Alternatives

Non-traditional financing involving a private, non-profit 501(c)3 corporation La R.S. 17:3361 A(1-4) provides authority to execute long-term leases with organized national or local college or university fraternity, sorority, religious, quasi-religious, benevolent or other non-profit associations or corporations, military organizations, or public bodies. La R.S. 17:3361 B permits these organizations to construct facilities on the leased premises and exempts such construction from the public bidding law generally regulating State construction projects. However, the University of Louisiana System believes it is in the best interests of the System and its member universities to award such leases and construction contracts through a competitive process. If such process is not appropriate in a particular project, La R.S. 17:3365 authorizes financing and mortgaging agreements on such projects. La R.S. 17:3366 authorizes additional means of financing such projects.

Projects with non-profit organizations that require Bond financing and/or contracts between the non-profit and for-profit entity to construct and/or maintain facilities will by incorporation in the UL System policy be subject to the procedures required by law for the for-profit corporations, Section B, unless otherwise specified by the Board through written policy or waiver.

Non-traditional financing involving private, for-profit corporations This alternative, for example, may involve the leasing of University property to a for-profit corporation to develop capital improvements which are owned, operated and maintained by the corporation.

La R.S. 17:3361 authorizes management boards of higher education to lease property under their control to either a non-profit or a for-profit corporation. If property is leased to a for-profit corporation the requirement is that capital improvements be constructed. (The financing is usually done on a taxable basis through a lender loaning money to the for-profit corporation).