Lexington's financial backing could help Transylvania University transform its residential campus.
On Thursday, the Urban County Council is scheduled to hear the first reading of a proposal for the city to issue $14.5 million in industrial revenue bonds to finance two new dormitories. Under the deal, Transylvania must repay the debt using revenue generated by the dorms.
The groundbreaking for one of the dorms — set to open next fall — is scheduled Sept 5. The site for the four-story dorm is a former parking lot on the west side of North Broadway, just behind the William .T. Young Campus Center and next to two other dorms, Clay and Davis halls. Most of Transy's academic campus sits on the other side of Broadway.
"We're moving forward, we're investing in Transy, we're investing in the Lexington community," said Marc Mathews, the liberal arts school's vice president for finance. "We want our students on campus. They learn so much in this block, equal to what they learn across the street."
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About 76 percent of students live on campus, and school officials would like to increase that to 80 percent.
As part of the school's strategic plan, which includes increasing Transy's enrollment from 1,040 to 1,500, Clay and Davis would be torn down eventually. The Board of Adjustment has approved construction of three new dorms in the same block of Fourth Street, but it's not clear whether the school would build two or three.
Transy officials will consider the timetable for other dorms as they move forward with a residential master plan, Mathews said.
The first new dorm, with 144 beds in a four-bed suite configuration, is projected to cost $7 million. Each floor is planned to have common study space.
"This will be the start of the total renovation of our residential facilities," Mathews said. "Ours are dated; they're not what today's students expect."
The city has helped issue revenue bonds for several other projects at Transy in recent decades, including athletic fields on Fourth Street.
Bill O'Mara, the city's finance commissioner, said it was common for the city to help nonprofits issue bonds. As a private nonprofit, Transy would not be able to issue tax-free bonds on its own.
The bonds don't weigh on the city's debt capacity, O'Mara said, and they must be paid back solely by Transy.
"As long as there is community benefit, then we don't mind doing it," O'Mara said. "It's up to the bondholders to evaluate the credit of Transy."
Brett Construction of Lexington has been contracted to build the dorm.