UIW plans to use a $30M bank loan to build a student center and a new medical school, but the city of San Antonio must approve the whole thing Thursday.
Here’s why: “The IRS code requires us to actually consent to any debt that’s being issued within the jurisdictional boundaries of the city of San Antonio to a private or non-profit university through these educational facilities,” San Antonio Deputy CFO Troy Elliott told KTSA News.
Now, here’s how it works: years ago, the city created, under Texas Education Code, the San Antonio Education Facilities Corporation to provide a financing mechanism for projects on behalf of a borrower. In this case, the corporation is being used to facilitate or help UIW acquire a bank loan for these new facilities at a lower interest rate.
“Because that facility is issuing that tax exempt debt within the boundaries of the city of San Antonio, or on behalf of, then we have to give consent because of the IRS code,” Elliott said.
That consent will come from the city council in two ways, one as the board of directors of the corporation and the second as council members. They must approve the loan agreement and the tax-exempt part, per law.
But, Elliott said, the bank loan documents say “the city is not liable at all and these will be paid solely from revenues of the University of Incarnate Word.”
That means the city is not financially liable for the loan once it’s issued.