| Question: |
What is the first
step to borrow money for a capital project? |
| Answer: |
The first step
in funding a capital project is to complete a Project Authorization
Request (PAR). The PAR begins the process to making sure the
project is properly planned, proper authorizations are received and university procedures are followed. Included
in the PAR is Section 7 that identifies the financing of the capital
project. The Finance Manager of the Unit should complete Section
7 of the PAR. Additional questions concerning the PAR process can be directed
to the Director of Capital Budget Space Planning.
|
| Question: |
My unit cannot
afford to purchase new equipment. Should we enter into a lease with
an external organization? |
| Answer: |
The University
implemented a lease program that would permit units to purchase
equipment and pay for the equipment over a predetermined amount
of time. Please refer to our web page at: http://risk.cornell.edu/Default/Treasury/debt/equipment_loans.html. In
most cases, it would be more beneficial for units to purchase
the equipment and enter into an agreement with the university instead
of using an external party.
|
| Question: |
If I receive a
restricted gift for a capital project that is financed by debt, do
I have to use it to pay off the debt? |
Answer:
 |
Yes. If the
University receives a restricted gift to fund the construction of a
capital project and the project was funded by tax-exempt debt, the
university is required to retire those bonds. Please contact
the Director of Debt.
|
| Question: |
If my unit has
surplus funds, can I pay back a loan early? |
| Answer: |
Yes. If
a unit desires to pay off a loan early or pay an additional payment
on a loan, please contact the Plant Accounting Department in Division
of Financial Affairs.
|
| Question: |
Can our department
refinance a loan? |
| Answer: |
The university's debt is pooled (except for the Cornell Technology Park
and the Cornell Club)and the borrowing rate is updated annually. Therefore, all
units are charge the same interest rate. This rate is based
on the University’s prior year cost of capital (interest expense
and fees). There is a possibility to extend the term of the loan
if there is a financial need. Please contact the Director of
Debt.
|
| Question: |
What is the current
borrowing rate? |
| Answer: |
The University
borrowing rate can be found on our web site: http://risk.cornell.edu/Default/Treasury/debt/int_borrowing_rate.html
|
| Question: |
Can I project interest rates for long term purposes? |
| |
For long-term planning purposes, the University Treasurer's Office recommends budgeting a rate of 6%. Therefore, when the cost of borrowing is below the 6%, you will be able to reserve the savings for future years if the pooled rate rises above that level. |
