The University of Massachusetts is growing.
In December UMass Boston entered a preliminary agreement to purchase the Bayside Exposition Center. The 20-acre property on Columbia Point near the UMass Boston campus was put up for sale after being foreclosed upon in March of last year, according to DeWayne Lehman, UMass Boston’s Director of Communications.
He added that the current owners, a Florida based holding company called LNR Property Corporation, put the Center up for auction in May but had to remove it due to a lack of bidders.
“Right now we are still in the preliminary stage,” Lehman said. UMass Boston signed a letter of intent in December and is currently negotiating the purchase. He said that the purchase will enable UMass Boston to fulfill its plan for the site.
The plan, finalized in 2007, calls for the construction of new academic and even some residential buildings.
“Right now we don’t have any residential facilities,” Lehman said, adding that the addition of facilities enabling 2,000 beds is part of the reasoning for the purchase. UMass Boston also intends to use portions of the property for athletic fields, parking and as “swing space” while buildings are being constructed or renovated.
UMass Boston is part of a larger trend. According to the Chronicle of Higher Education, some institutions of higher learning are taking advantage of foreclosures and declining property values to expand their real estate holdings. Some schools are seeking more space for academic and residential facilities, while others see the acquisitions as investments in the future. When real estate values recover, the schools can sell the land and buildings at a profit or they can form partnerships with start up companies, trading space and access to research facilities for stakes in the businesses.
The University is financing the purchase through the University’s Building Authority, which is a state agency that funds construction projects and real estate deals throughout the whole UMass system. Its officers and members are appointed by the governor to oversee its operations.
“Our sole purpose is to issue long-term debt for capital projects at the request of the University trustees,” said Steven Dansby, the Chief Financial Officer of the Building Authority.
The Building Authority, Dansby said, sells federal and state taxation exempt bonds to individuals, organizations and companies through underwriters every fall, who assess the eligibility of the potential customers based on risk. The money raised is then used for the purpose for which the trustees requested it. The building constructed with the money, or the piece of land bought with it, then belongs to the Building Authority.
Dansby said that the Building Authority signs a contract where the campus gets all the rights and responsibilities of ownership in exchange for paying back the bonds with interest.
“We’ll be making the payment,” Lehman said. He added that the agreement between the campus and the Building Authority is like that of taking out a car loan.
According to the Building Authority’s report to the University’s Board of Trustees in Sept. 2008, they have issued bonds through Lehmnn Brothers, Citigroup, Bank of America and Ambac. In October of last year, the Building Authority issued $512.5 million worth of bonds through Citigroup.
Matthew M. Robare can be reached at [email protected].
