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Law change may cut costs for financing

The tax bills signed into law by President Clinton on August 5 repealed the $150 million cap on tax-exempt bond financing by private universities, effective immediately.

While this will not affect the timetable for MIT projects already scheduled, including the electrical engineering and computer science building and the new swimming pool, it could reduce the overall cost of these projects.

"It will make it less expensive in the long run," said Allan S. Bufferd, deputy treasurer and director of investments. "The interest rate on tax-exempt bond financing is less than on taxable debt."

The total amount of tax-exempt debt issued by MIT has been less than the $150 million cap. However, MIT has had recent financings on the taxable market since the amount available under the cap was too small to finance various projects, such as the Building 56 renovation. The cap was enacted in 1986.

A version of this article appeared in MIT Tech Talk on August 13, 1997.

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