May 22, 2020
By: Tiffany Razzano
TAMPA – Due to the unstable economy — a result of the global COVID-19 pandemic — the interest rate on a $147.5 million University of Tampa bond will increase to 5 percent.
The city of Tampa is a conduit issuer of the bond and council members originally approved an interest rate not to exceed 4 percent in April. They approved the 1 percent interest rate hike at their Thursday meeting.
“Unfortunately, the financial markets have been volatile and interest rates on bonds have increased over the not-to-exceed rate that was in the original resolution,” said Justin Vaske, assistant city attorney.
The city has no financial liability regarding the loan or changes to the interest rate, he added.
Eric Cárdenas, UT’s director of public information, said the rate increase is a reaction to market conditions. “At the time the original resolution was prepared and submitted to the city, it was expected that interest rates would be less than four percent for our bond sale,” he said. “Since market conditions have changed, we asked the city to update the resolution to increase it to a maximum of five percent to accommodate potential changes in market pricing. The actual interest rates on the bonds are determined in the financial marketplace at the time the bonds are sold.”
The funds will be used to support the university’s growth, he said.
“The University of Tampa is preparing for a bond issuance to refinance some of its debt and add additional bond proceeds in support of needed projects for the university’s growth,” Cárdenas said. “These projects included support for construction of new academic buildings in arts and technology, as well as a new parking structure and expansion of UT’s Fitness and Recreation Center.”
Plans are delayed due to the pandemic, he added.
“Given the dynamic financial markets we’ll defer further commentary on specific projects until they’re closer to being launched,” he said.