Indiana University says it is raising $66 million through green bonds to fund environmentally-sustainable efforts. The money will support projects including a new Arts and Sciences Building at IU Northwest and the renovation of Franklin Hall on the Bloomington campus.
December 9, 2014
Bloomington, Ind. — Indiana University is raising $66 million via issuance of green bonds this week, becoming one of the first higher education institutions in the nation to make use of the tax-exempt financing instrument created to encourage environmentally sustainable investments.
The 20-year bonds will include $45 million to fund construction of a new Arts and Sciences Building at Indiana University Northwest in Gary and $21 million for renovation of Franklin Hall at IU Bloomington. Franklin Hall, when renovated, will house the newly established IU Bloomington Media School.
“Indiana University's decision to issue green bonds highlights our commitment to sustainability, energy efficiency and careful stewardship of our resources,” said Don Lukes, IU associate vice president and associate treasurer. “We are pleased to be one of the first higher education institutions in the country – and the first in the Big Ten — to take this step.”
Green bonds are a new segment of the municipal bond market in the United States, allowing investors to support environmentally appropriate projects such as energy savings, clean water, brownfields restoration and transportation efficiency. Massachusetts Institute of Technology issued green bonds in September, becoming the first U.S. institution of higher education to do so. Last week, the University of Cincinnati became the first U.S. public university to sell green bonds.
The IU bonds will be secured by student tuition and fees, and repayment will ultimately come from fee replacement authorized by the Indiana General Assembly. The bonds are rated Aaa by Moody's and AA+ by Standard & Poor's. The IU Board of Trustees authorized issuing the bonds Nov. 19, via approvals from the Finance, Audit and Strategic Planning Committee. They will be sold this week with the expectation that the transactions will close in January.
Both the IU Northwest and IU Bloomington projects are expected to earn Silver certification from the U.S. Green Building Council's Leadership in Energy and Environmental Design or LEED program.
The Franklin Hall renovation, scheduled for completion by the fall of 2015, will include energy-efficient mechanical systems, high-efficiency glass windows and roofing, and efficient lighting with timer and motion-senor functionality. Asbestos and lead paint will be removed.
The IU Northwest Arts and Sciences Building will include similar energy-efficient mechanical systems, windows and lighting. Its location in a dense urban area with access to public transportation provides another rationale for green bonds financing.
Indiana University is a national leader in environmental sustainability, and it has made a commitment to pursue LEED certification for all new construction. IU Bloomington leads the Big Ten in LEED certified projects and was one of the first universities to undergo the national Sustainability Tracking, Assessment and Rating System evaluation, for which it received a silver rating.
At IU Bloomington, the Office of Sustainability works with students and with academic and operations staff on initiatives aimed at meeting long-term goals for sustainability and social responsibility. Campus Energy Challenges have saved 5.5 million kilowatt-hours of electricity and 13.5 million gallons of water since they were inaugurated in 2008.
Source: Indiana University