What DASNY Documents Can Tell Us About YU's Finances
Recently, State Senator and chairman of the Committee on Judiciary, Brad Hoylman-Sigal, sent a letter to the New York State Inspector General Lucy Lang, asking her to investigate whether or not the Dormitory Authority of the State of New York (DASNY) purchased bonds from Yeshiva University in error. The senator asserted that YU misrepresented itself to DASNY in order to secure the bond financing.
A significant amount of background regarding YU’s relationship with DASNY can be found in the many publicly available DASNY and YU documents that address this. Drawing from the official bond agreements, the DASNY board meeting minutes, YU’s financial audits and other publicly available DASNY documents, we can begin to understand the background of what is currently happening. We will first briefly address what DASNY is, then move on to summarizing the history of YU’s relationship with DASNY before remarking on some tangentially related facts that were reported in the audits.
The Dormitory Authority of the State of New York has a somewhat misleading name, as most of its current activities have little to do with dormitories. Rather, DASNY finances construction projects within New York State for municipal, healthcare and educational facilities. DASNY provides the funding by purchasing bonds from the organization doing the construction. Once the bonds mature, the corporation that received the financing repays the bonds with interest. DASNY works with both public and private corporations to assist them in paying for the construction and maintenance of facilities. The Dormitory Authority gets its name from its original purpose in the 1940s, when it was tasked with constructing dormitory facilities at teacher’s colleges throughout New York State. Over time, the New York State government expanded DASNY to finance municipal, healthcare and educational facilities broadly.
Yeshiva University, being an educational corporation, is eligible for DASNY financing for any of its facilities. Yeshiva has taken full advantage of DASNY’s services over the last 30 years. Already in 1994, Yeshiva sold $31 million worth of bonds to finance the construction of the building located at 1859 Eastchester Road for Albert Einstein College of Medicine. In 1998, YU received another $30 million to renovate the building at 55 Fifth Ave. for the Benjamin N. Cardozo School of Law.
YU received another $65 million in 2001, a third of which was used to refinance the 1994 bonds and the rest was divided up among many purchases of new properties and renovations of existing buildings. Most of the funds went to purchasing and renovating dormitories and classroom space on the Beren Campus. The 1990s and early 2000s saw a great expansion of facilities on the Beren Campus including the purchase of the Schottenstein Residence Hall (1995), 35th Street Residence Hall (1997), 215 Lexington Ave. (1999) and 36th Street Residence Hall (2000). All of the above are listed as having been at least partially financed through the 2001 series DASNY bonds. Renovations in 245 Lexington and 253 Lexington were also financed through the DASNY bonds. Then, in 2004, YU received another $100 million from DASNY. 90 percent of this funding went to financing the construction of the Michael F. Price Center for Genetic and Translational Medicine at AECOM located at 1301 Morris Park Ave. (The debt from the 2004 bonds was transferred to the newly independent Einstein in 2016.)
YU once again received DASNY money in 2009, a total of $140 million. About $16.8 million from these bonds went to refinancing the 1998 series bonds. The rest of the money was divided up between several projects that covered all of YU’s Resnick, Wilf and Beren campuses. A large portion of the money went to financing the construction of the Glueck Center for Jewish Studies at 515 West 185th St., which began construction in 2006 and opened in fall 2009. Another portion further contributed towards the cost of building the Michael F. Price Center for Genetic and Translational Medicine at AECOM. Some $15 million went to upgrading IT and wireless internet on the Beren and Wilf campuses. In 2011, YU sold another series of bonds to DASNY, worth $90 million. $46 million went to refinancing the 2001 bonds. The other $44 million was allocated for financing maintenance on YU’s Resnick, Wilf and Beren campuses.
YU’s most recent DASNY bonds were issued in 2022, totaling just under $153 million. Over $131 million of the bonds went to refinancing the remaining debt of the 2011 and 2009 bonds. The remaining $20 million are designated for renovations to improve energy efficiency in buildings on both the Wilf and Beren campuses. These improvements involve upgrading the heating and cooling systems as well as modernizing the elevators in the following buildings: Belfer Hall, Furst Hall (Belz Building), Stanton Hall (245 Lexington), Schottenstein Residence Hall, 215 Lexington and Brookdale Residence Hall. There is nothing about these bonds that appears out of the ordinary, and YU has been able to work with DASNY to finance construction and maintenance for almost 30 years.
This quiet relationship has been brought into public discourse by the initiation of State Senator Brad Hoylman-Sigal’s investigation into bonds. In response to YU’s current litigation with the YU Pride Alliance, in which YU claims to be a religious institution, Hoylman-Sigal noted that YU was identified as a “nonsectarian” institution in the 2009 and 2011 bond agreements. The implications of this potential contradiction could mean that DASNY issued these bonds in error, since the agreement may have misidentified YU’s nature. It is worth noting that the phrase “nonsectarian” was left out of the clause identifying YU in the 2022 bond agreement, potentially signaling a shift in YU’s legal self-identification. The results of Hoylman-Sigal’s investigation remain to be seen.
The DASNY bond agreements contain much information about YU’s finances beyond the details of the bonds that are the primary purpose of the agreement. Any party entering into a bond agreement with DASNY has to disclose details about its finances to demonstrate that it will be able to repay the bonds once they mature. There are a few details of interest that we noticed while reading through these documents.
The 2022 bond agreement offers some details about how YU has responded to some of the lawsuits it is currently litigating. In a section detailing liabilities born out of litigation, YU assured DASNY that, “There is no material pending litigation against the University at this date for which adequate insurance coverage does not exist or which would have a material adverse effect on the financial resources of the University.” This section went on to specifically reference the Child Victims Act cases without mentioning any other litigation that the university was facing as of June 2022. It’s possible that this insurance information is outdated since it appears to have been taken directly from the 2021 PWC audit, which only recorded financial details for the fiscal years ending on June 30, 2021 and June 30, 2020. As such we cannot draw any conclusions about how YU is responding to more recent litigation from this bond agreement.
Further, the DASNY bond agreements lend a glimpse into how Yeshiva University has been using its assets to stabilize its finances. The 2022 bond agreement and the attached PWC financial audits reveal an arrangement that YU entered in 2017 to consolidate some of its debt. On April 21, 2017, YU transferred five of its Manhattan properties to a holding company called Y Properties Holdings LLC. These five properties are the Gottesman Library, Belfer Hall, 253 Lexington, 245 Lexington and 215 Lexington. On the same day, Y Properties, which is wholly owned by YU, entered into a 15 year, $140 million mortgage with Argentic Real Estate Finance LLC on its five properties that refinanced $137 million of pre-existing debt. The first ten years of the loan have relatively small annual payments that balloon in 2027 in order to repay the remaining $132 million principal. YU has expressed an intention to refinance the loan before 2027, which it is entitled to do at any time before 2032.
Check out https://lazymasmid.blogspot.com/2023/05/yu-dasny-bonds-bibliography.html for a bibliography of our sources.
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Photo Caption: The DASNY headquarters in Albany
Photo Credit: Matt H. Wade / Wikimedia Commons