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- 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.
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