Institutional Debt Capacity Methodology

 

- In order to receive Design/Development Approval from the Board of Regents, the Office of Finance must provide a "Finding of Fact," which consists of qualitative analysis of the project as well as debt capacity analysis.

 

- Debt capacity is largely determined by an institution's ability to meet at least two of three minimum standards:

  • Debt Service Coverage of at least 1.8x
  • Debt Service-to-Operations ("Debt Burden") not greater than 5.0%
  • Expendable Resources-to-Debt of at least .80x

- Other non-quantitative aspects of the institution are also taken into consideration when determining debt capacity.

 

- The definitions of these debt capacity ratios are generally defined as:

 

 

- For projects that are self-supporting (i.e., revenue-generating, such as parking, student housing, etc...), a 1.30x debt service coverage is required on the project itself. The two-out-of-three test described above does not apply. Please note that the debt service coverage ratio formula for self-supporting projects is slightly different than the debt service coverage formula presented above.  Please contact the Office of Finance for further detail. 

 

The Seal of the University of Texas System

  • © 2006 The University of Texas System
  • Office of Finance
  • 201 W. 7th Street
  • Suite 418
  • Austin, TX 78701
  • Phone: (512) 499-4374
  •