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Faculty Assembly

MEMORANDUM

TO: Operations Committee of

The University of Colorado Foundation, Inc. Board of Directors

FROM: Jim Barlow, Treasurer and Chief Financial Officer

DATE: January 30, 2001

RE: Faculty Housing Assistance Program

At the Operations Committee, I will provide an update on the Faculty Housing Assistance Program being developed by the Foundation and the University. Below is a brief summary of the program:

• An equity share program was initially proposed to the Foundation’s Investment Committee in February

2000 by Todd (3leeson, associate vice chancellor for faculty affairs at CU-Boulder, as a means of improving the retention and recruitment of research faculty at that campus.

• It was proposed that the Foundation and individual faculty members enter into a shared equity financing agreement whereby the Foundation contributes most or all of the down payment while the faculty member pays transaction costs and obtains a mortgage for the balance. At the end of the agreement (termination of employment or 7 years), the home is sold or refinanced and the appreciation is shared between the Foundation and the faculty member according to a formula.

• The proposal requested the Foundation to provide $4 million in funding over 7 years. A Foundation analysis proposed $11 million in funding over 6 years with the University investing 40% and the Foundation investing 60%.

• A commitment of Foundation funds was made for a four-campus program at the October 2000 Foundation Executive Committee meeting,

• At a December 2000 meeting, the Regents directed University staff to work with the Foundation to develop and implement a faculty housing assistance program by Fall 2001. In exchange for the Foundation’s management of defined aspects of the program and for providing the investment capital, an annual fee of $100,000 is to be paid to the Foundation by the University for 5-7 years.

• The University, however, does not want to provide any investment capital into the program.

• The University will be responsible for selecting the faculty members who meet eligibility requirements. The Foundation and lenders will verify that the individual participants financially qualify for the program.

• At a recent meeting with potential lenders, it was suggested that the program require a minimum 5% down payment by faculty member (making more financing options available) and a deferred interest-only note to the Foundation secured by a second deed of trust, rather than the shared equity arrangement. The note, which may be up to $50,000, is to have a 7-year balloon payment provision.

• Counsel for the Foundation is currently reviewing the deferred interest concept, which is similar to Stanford University’s program.

• The Regents will be asked to approve a program at their March meeting.