BY JEFF CHUDZINSKI
North Country This Week

CANTON — St. Lawrence University is one step closer to securing an $80 million tax exempt revenue bond.

The St. Lawrence County Legislature finance committee approved a resolution to distribute the bond during a meeting on July 25.

Industrial Development Agency Director Pat Kelly addressed the committee and assured all involved that the county and IDA would not be on the hook in the event the university defaults on the bond.

“Our role in this process is limited. We are not lending St. Lawrence University $80 million, we are not guaranteeing $80 million. You (the county) are not guaranteeing $80 million. This is not a credit. This is not underwriting. This is not a lending scenario,” Kelly said.

According to Kelly, the IDA and county are required to assist with the initial stages of the bonding on behalf of St. Lawrence due to IRS regulations. With the two entities assisting the university, the bonds will be tax exempt.

St. Lawrence is listed as a 501(c)(3) organization by New York State.

“The IRS requires our sponsoring this municipality to approve bond issuance in order to make these bonds tax exempt,” Kelly said.

The process will require an initial issuance of bonds, which will then be sold on the open financial market by Morgan Stanley, at which point the owners of the bonds will be the lenders for the university. St. Lawrence County and the IDA will not spend any money to finance the bonds as a result of the process, Kelly said.

A public hearing was held last week, which is also legally required, and received no comment, he said.

Kelly said the bond, half of which will be used for infrastructure updates, repairs and building upgrades, is a very typical college bond. Other schools, including Clarkson University, have gone through a similar process in the past to secure bonds for similar projects that St. Lawrence plans to undertake.

Though roughly $40 million is being used for strategic upgrades around the campus, an additional $36 million will be used to refinance an existing bond that was issued in 2012.

That bond was also used for similar upgrades to the campus, Kelly said.

Kelly also highlighted the economic impact St. Lawrence has on the region, including a study from 2019 that stated the university brought $300 million to the region and $25 million in direct spending.

“This comes from the students, parents, visitors, and potential applicants that visit. St. Lawrence is a huge economic generator for the county,” Kelly said.

Kelly also spoke to the number of jobs the university creates, which presently stands at 750 full-time equivalent jobs. Over 2,300 students were enrolled at the university as of last year, he said.

Some legislators questioned whether the bonds were fair, with Legislator Joseph Lightfoot asking what other tax implications may come from approving the bonds.

“What other taxes would St. Lawrence be able to avoid, if any, with us passing this resolution and selling the bonds,” he asked.

According to Kelly, the university would not avoid any other taxes because the institution is already listed as a non-profit and is not subject to taxes.

“My particular interest would be with sales tax. There’s a lot of maintenance, repairs, new equipment, all kinds of things in any number of buildings. My concern is, does St. Lawrence pay sales tax on those purchases,” Lightfoot asked.

“No, they do not. They are a tax exempt 501(c)(3),” Kelly responded.

Legislator Rita Curran also questioned whether the university could pay off a 10 year bond, given that the previous bond from 2012 had yet to be paid off as well.

“They collect something like $218 million in tuition every year, so how big was the bond in 2012,” Curran asked.

According to Kelly, the bond was similar in size at around $40 million.

“The university is taking advantage of the current interest rates on the market right now to place themselves in a more advantageous financial position moving forward,” Kelly said.

Legislator Bill Sheridan credited the university for being so proactive in repairs and maintenance, while maintaining the original charm of the university that has and continues to attract so many students.

“I think it’s a terrific thing that St. Lawrence is going to invest all of this money to upgrade their campus. Anyone who has visited campus knows they have a lot of older buildings, a lot of historic buildings. They need a lot of maintenance, love and care to keep using them,” he said.

“750 employees and several thousand students and their families has a huge economic impact throughout the entire county,” he continued.

Legislator Larry Denesha was critical of supporting the resolution, saying the university already benefits enough as a tax exempt entity and should not require bonds to make upgrades and repairs to its campus.

According to Denesha, several businesses in the North Country are not tax exempt and could potentially benefit from bonds.

“I admit, 750 is a lot of jobs but they (St. Lawrence) are exempt from a lot of taxes. I want to point out that Alcoa is not, they pay a lot of taxes. Reynolds, Corning, they all pay a significant amount of taxes,” he said.

In 2016, Alcoa and New York struck a deal that provided a $20 million subsidy to Alcoa to continue operations at its Massena plant after officials had announced plans to shutter the facility.

The total package Alcoa received cost a total of $70 million, which was used to save nearly 500 jobs for three and a half years. Under the terms of the deal, New York taxpayers paid around $45,000 per job, per year, to keep the Alcoa plant in Massena open, according to documents related to the deal.

“Colleges are a competitive landscape. We have over 4,000 in the United States right now. We want to help St. Lawrence and any other area colleges in any way possible to ensure economic growth,” Kelly told the committee.

Legislators voted nearly unanimously, with Denesha being the lone no vote.

The full board of legislators will now have to approve the resolution before the IDA can authorize final approval of the bonds.