With the University of Iowa pushing ahead to erect its new Stanley Museum of Art — a project that will cap a decade long flood recovery effort — it issued $30.2 million in bonds last week to help finance the $50 million building.
The university has been seeking to fund half the 63,000-square-foot, three-story project with private donations. But fundraising has been stuck $5 million shy of the goal since at least April, when the Center for Advancement reported $20 million raised.
Half that came from a $10 million commitment in 2017 from Dick and Mary Jo Stanley.
The Muscatine couple’s gift represents two generations — as a portion comes from the estate of Dick Stanley’s parents, C. Maxwell and Elizabeth Stanley, who earned UI degrees.
Dick Stanley, who earned a UI master’s degree in engineering in 1963 and died a few years ago, along with Mary Jo Stanley also have given to Hancher Auditorium and the UI College of Engineering.
With donations stalled, the university issued the $30-plus million in bonds to ensure it has enough cash to complete the work. UI officials said they would have issued the $30 million in debt regardless — in that some of the $20 million in donations are scheduled as installments, and the university has about $12 million of the commitments in hand.
The project, which celebrated a ceremonial groundbreaking over the summer, is scheduled to start construction this fall and finish in 2022.
When it announced the Stanley gift and naming in 2017, the university had planned to start work in 2018 and finish in 2020. In 2016, the project was slated for completion in 2019.
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In late 2018, though, with just $17 million raised, UI officials again postponed the project — which already had been delayed for site and cost changes — and declined to start until they had at least half the total raised.
“Every penny that we don’t raise has to come from our general education fund,” Harreld said last December at a meeting of the Iowa City Noon Rotary Club. “With 70 percent (of that fund) coming from our students, we need to be very, very, very careful about what we invest that in. It needs to be focused on students and research and the core mission of the institution.”
With the university forging ahead on construction, UI officials said they’re continuing to try to raise money for the endeavor.
But board documents associated with the bond issuance indicate that “the amount financed by the facilities corporation is approximately $30 million of the total $50 million project budget, with gift revenue providing the remainder.”
While the UI builds it a new home, much of the 16,477-piece art collection remains displaced after the historic floods of 2018 rendered the former art museum as unfit.
Traveling exhibits over the years have sent UI art across the state, nation and world. Its most famous piece, Jackson Pollock’s “Mural,” hasn’t been displayed in Iowa City for more than a decade.
In summer 2016, Harreld said he wanted most of the collection — including the donated “Mural” — back on campus.
Following Wednesday’s bond issuance, regent staffers reported a “very successful sale.”
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Eight bidders vied for the bond, with Citigroup winning with a 2.84 percent interest rate offer. Principal payments on the bonds will span 30 years — from June 1, 2021 to 2050, with the first interest rate payment due June 1, 2020.
Annual principal and interest payments on the bonds are estimated at $1.54 million, according to board documents.
The debt service payments would come from lease rentals, which the university will pay to its nonprofit supporting facilities corporation.
“When I look back over the history of University of Iowa sales, I don’t see anything that’s as long-term as that that has a rate under 3 percent,” Elizabeth Bergman from Baker Tilley financial advisers told the regents. “It was a very favorable outcome. And it was also a very competitive environment, with a second-lowest bid being at 2.855.”
The Museum of Art is not the only UI building project started without the desired private funding already in hand.
Earlier this month, the university celebrated the long-coming completion of a scaled down $11.8 million renovation of its College of Nursing building, which it had hoped to fund entirely with gifts and earnings.
But with only $3.8 million raised so far, the project largely has been funded with UI general education dollars, according to a campus spokesman.
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