Columbia Issues First Green Bonds
On April 6th and 7th, Columbia University sold $50 million of ten-year, tax-exempt green bonds, becoming the first Ivy League university to do so. The University issued the green bonds to help finance the Jerome L. Greene Science Center on the Manhattanville campus. Green bonds are debt instruments that can be sold by the University to finance a variety of projects; however, the proceeds need to be spent on projects that support environmentally friendly principles.
For construction projects, the requirements of a green bond would include that the building be LEED (Leadership in Energy and Environmental Design) certified by the U.S. Green Building Council. The Manhattanville campus in West Harlem earned the LEED Platinum® certification under the LEED green building program rating system for Neighborhood Development (“LEED-ND”) – the highest designation and the first LEED-ND Platinum certification in New York City, as well as the first Platinum certification in the nation for a university campus plan. LEED-ND certification commits the Manhattanville development to incorporate the use of natural light, energy efficiency, clean construction and “green” building design principles.
The specific project financed, the Jerome L. Greene Science Center, will feature many sustainable design features. Highlights include chilled beam technology, which will significantly reduce the building’s mechanical cooling and heating requirements; a curtain wall system, which is comprised of a double-skin, aluminum-glass facade that acts as an insulated blanket for the building; and an open air space, consistent with the University’s mission in creating networked public space that will actively engage, and be accessible to, the community at large. Additionally, more than 20% of the building materials will be extracted, processed and manufactured within 500 miles of the project site, promoting the local economy while at the same time reducing the carbon footprint resulting from transporting materials from further afield.
The green bond market has grown rapidly worldwide, from $1.0 billion of issuance in 2009 to $4.6 billion in 2012 and $45.9 billion in 2015. Columbia issued a portion of its new money bonds (total issuance $180 million) specifically as green bonds to allow investors to invest directly in projects that the University has identified as promoting environmental sustainability. Several other higher education institutions, such as MIT, the University of Virginia, Arizona State University and the University of Texas System, have likewise issued green bonds to raise new capital or to refund prior bonds issued to finance LEED-certified projects. The University has a responsibility to advise the bond holders that proceeds of the green bonds have been applied to the appropriate project and upon receipt of the LEED certification.
For more information on Columbia’s green bonds, please reach out to Colin Redhead, Deputy Treasurer, or George Curtis, Assistant Director, Bond Issuance & Compliance.