Whitman College to use $38 million in bonds to finance housing project

The Washington Higher Education Facilities Authority has issued $38 million in bonds on behalf of Whitman College to help pay for a new residential village on campus.

The residential village for juniors and seniors, announced by the college last year, will accommodate 212 students in 69 apartment-style units with kitchens. The project is expected to cost between $70 million and $80 million, according to Vice President for Finance and Administration Jeff Hamrick.

So far, the college has collected about $18.5 million for the project through donations and philanthropy efforts, including the Upward Together campaign. Hamrick said the vast majority of college residential construction projects in the state issue debt financing through WHEFA to help with the cost.

WHEFA is a state-sponsored agency that allows Washington nonprofit colleges to access lower interest, tax-exempt bond financing.

“The primary benefit is that it is cheaper debt,” Hamrick said. “If it were taxable financing — Whitman has a bit of its debt portfolio that is taxable bond debt — we would not go through WHEFA.”

Hamrick said the average cost of the debt over the life of the entire bond issuance is about 4.38%. The bonds will be paid back by Whitman over several years, with the final payment expected in 2049.

For the first 18 months of borrowing, as the residential village is being built, the college will capitalize interest, meaning interest will accrue but not be paid until later on.

After the residential village is built, the college will begin paying a mixture of interest and principal, which is the face value of the loan.

Hamrick said that later on, likely from about 2034 to 2049, the college will make payments mostly toward the principal cost until the entirety of the loans and interest have been paid.

Some of the bond money also will be used to update two fraternity houses on campus, adding two one-bedroom and two two-bedroom cottages.

In addition to the bonds and gifts from donors, Whitman College will spend accumulated operating surpluses to help pay for the project. Accumulated operating surplus is the difference between revenues and expenses for the college each year.

“If we realize revenues that are slightly in excess of expenses, we can kind of save those excesses and accumulate them up through time,” Hamrick said. "And then we can put those — in some sense — like a down payment on a home toward a residential village project such as this one.”

Hamrick emphasized that this project and the bonds being issued through WHEFA would not cost local taxpayers anything.

“This program costs taxpayers of the city of Walla Walla nothing,” Hamrick said. “WHEFA acts as a kind of clearinghouse for this and there’s no net cost to taxpayers in the state of Washington.”

The college is expected to break ground on the residential village on Thursday, May 2, and plans to complete construction by August 2025.