It's hard to believe that a Wisconsin agency with a coveted tax-exempt bond status, a nationwide client list and no employees has easily become one of the most profuse issuers within the $3.7 trillion worth municipal market.
Last year, the Public Finance Authority was able to issue bonds for over 30 charter schools, senior living facilities, universities, and even real estate developers, all in 15 states, none of which were from Wisconsin.
The University of Kansas was able to sell $327 million of tax-exempt bonds through the authority for the first time just last week.
Apparently, getting aid from the institution was a big help for the university, which didn't have to wait on the legislature's approval to raise money for a 285,000 square foot science building, student union, and housing.
"We're expecting a larger class in 2017," said the university's chief business and financial planning officer Theresa Gordzica. "We needed to keep the project moving so we can get the residence hall done."
The newest deal has further showcased a controversial practice that involves the market of state and local government debt. Bloomberg reports:
"The deal highlights an obscure corner of the state and local-government debt market where pass-through agencies rent out their ability to sell tax-exempt bonds to out-of-state companies and non-profits in exchange for a fee. The practice has drawn criticism from some public officials, who say it can allow debt issuers to skirt their oversight by financing projects through authorities beyond their jurisdiction."
"The university is owned by the state, both the facilities as well as the good faith and credit," noted Representative Mark Hutton, a Wichita Republican, who also deemed the university's decision as a "dangerous" instance. He continued, "The reality is that they answer to the taxpayers of the state of Kansas, and we're that voice."