About The Authority
The Minnesota Higher Education Facilities Authority (the “Authority”) was formed by the Minnesota Legislature in 1971. The purpose of the Authority is to assist Minnesota based institutions of higher education in the construction, financing and refinancing of capital projects. The legislation authorizing the Authority establishes and affirms that the Authority’s authorized power is an essential public function. The Authority is also authorized and empowered to do all things necessary or helpful to carry out its statutory purpose.
The Authority may have up to $1.3 billion of bonds or notes outstanding at any time. The Authority receives no state funding of any kind. It does not have any taxing power and does not receive any allocation of tax receipts from the state of Minnesota. Authority operations are funded 100% from fees charged to borrowers and investment earnings.
The mission of the Minnesota Higher Education Facilities Authority is to assist eligible institutions of higher education in the State of Minnesota to finance or refinance their capital needs in an efficient and cost-effective manner. An eligible institution of higher education is a nonprofit educational institution within Minnesota that is authorized to provide a program of education beyond the high school level.
The Authority assists educational institutions primarily through the issuance of tax-exempt debt obligations on their behalf. The Authority also actively seeks to develop financing programs that may be of benefit to institutions and shall make its staff and technical resources available to institutions whenever the application of those resources may prove beneficial in the development or implementation of institutional debt financing plans. The Authority actively seeks to have laws and regulations amended or revised to empower the Authority to provide such assistance.
The Authority also informs and updates representatives of the institutions on the current regulations and strategies of debt financing. The Authority holds an annual Financing Conference for this purpose as well as to educate borrower personnel about Authority services available to the institutions of higher education.
To help accomplish its mission, the Authority also provides substantial assistance to borrowers after the sale. This includes helping with Credit Rating matters, Regulatory requirements for publication of financial information for bondholders, compliance with IRS regulations, and maintenance of tax-exempt status by the borrower.
The Minnesota Higher Education Facilities Authority derives its power to finance projects from Minnesota Statutes, Section 136A.25 to 136A.42 (the “Enabling Act”). All financings of the Authority are “conduit” issues. That means that the Authority is the issuer of the bonds or notes. The Authority loans the bond or note proceeds to the borrower school, thereby functioning as a conduit to fund the borrower school project. The borrower school agrees to repay the loan on the same terms and conditions as issued by the Authority. Loan repayments are used to pay the principal of and interest on the bonds or notes as they become due. The real credit and beneficiary is the Minnesota college or university that will receive the proceeds from the sale of the bonds.
The Authority does not have any financial liability for the repayment to bondholders. The Authority’s bonds shall not be legal or moral obligations of the State, nor shall they constitute a debt for which the faith and credit of the Authority or the State, or the taxing powers of the State, are pledged. The Authority has no taxing power.
Tax-Exempt Financing Guide
The Authority has developed a guide to Tax-Exempt Financing for Not-For-Profit Organizations to assist borrowers, available for download here: