Harvard's first revenue bonds went on the market Tuesday.
The $12.5 million issue will finance the Broadway and Everett Street Garages, the Science Center's cooling system, and the renovation of the old Continental Hotel at 29 Garden St.
"In each case, these things earn money which can be used to retire a debt." Hale Champion, financial vice-president said yesterday. "This way you never have to dip into funds you could use for education."
The bond issue's prospectus lists three future construction projects which may be financed by more bonds--the $13 million Shady Hill Faculty Housing Project, proposed $15 million housing for married students near the Business School, and a possible $53 million medical area power plant.
"We haven't made any decision to go this route." Champion said. "We were just listing things that might conceivably be financed this way."
Harvard decided to market the bonds in October 1968, shortly after the formation of the Massachusetts Health and Educational Facilities Authority (HEFA), a state agency which helps educational institutions and hospitals in construction, financing and refinancing of new projects.
Because the HEFA issued the bonds for Harvard, income from them is tax exempt. "It's the one break that private institutions get from the state." Champion said.
The HEFA has previously issued bonds for Brandeis. MIT, Lesley and Stonehill Colleges, and several hospitals.
A syndicate including Goldman Sachs and Morgan Guaranty bought Harvard's bonds Tuesday, asking for 4 9 per cent annual interest, about 2 per cent less than Harvard would have paid if it had borrowed money for the construction.
The syndicate will resell the bonds, which mature July 1, 2002, to other purchasers.
The Broadway and Everett garages were built to accommodate a Cambridge ordinance prohibiting large constructions like Gund Hall and the Science Center without adequate parking space.
Their initial financing came from University money, borrowed at interest from the treasurer.
Most of the Hotel Continental money went for plumbing and plaster. The Science Center's Central Refrigeration Plant is "just a very large air-conditioning system," Lafayette L. Bingham, utility man at the Science Center, said yesterday.