A financial transaction similar to a home mortgage but on a larger scale is how the state of Colorado closed deals to finance a $247 million bill for higher education health care projects, including the University of Northern Colorado’s school of osteopathic medicine.

State Treasurer Dave Young, a Greeley resident, said: financing It was finalized earlier this month through a financing instrument known as certificate of participation agreements.

“The work we do at Treasury is very similar to the work most people do with their family finances,” Young said. “We have some savings. Most people can’t save all the money they need to buy a home, right? They go to a bank or a lender, negotiate an interest rate, and go through the whole closing process.”

In the spring, state lawmakers passed House Bill 24-1231, which appropriated money to pay for capital costs associated with the construction and renovation of facilities at Metropolitan State University of Denver, Colorado State in Fort Collins and Trinidad State College, in addition to UNC. Northern Colorado is allocated the majority of the bill’s total package to build and develop the university’s proposed osteopathic medical school.

The university will build a 100,000-square-foot academic center for $127.5 million on land currently occupied by Bishop-Lehr Hall on the west side of campus. UNC is in the process of being demolished Bishop-Lehr.

Metro State and Colorado State will receive $50 million, respectively, for a health institute tower and veterinary training complex. Trinidad State will use $19.3 million to renovate the Valley Campus main building.

“The allocation to the University of Northern Colorado will support the construction, start-up and accreditation costs necessary to establish our new College of Osteopathic Medicine,” UNC President Andy Feinstein said in a news release from the Colorado Treasury.

The university expects construction of the new building to begin in early 2025. First-year students will be able to enroll in 2026.

State Rep. Mary Young, D-Greeley, who is also Dave Young’s wife, was one of the four primary sponsors of the bill that approved funding for four schools. Other primary sponsors are Sen. Barb Kirkmeyer, R-Weld County; Rep. Lindsey Daugherty, D-Arvada; and You. Kyle Mullica, D-Adams County.

Mary Young and Kirkmeyer spoke earlier this year about the bill’s strength because of the different training programs it addresses at a time when there is a need to invest in the statewide healthcare workforce.

The certificate of participation is a tax-free lease-purchase agreement. The government generally uses COPs to finance the construction of new facilities rather than issuing bonds or other long-term debt. The certificate represents the investor’s proportionate interest in the state’s lease payments.

Frequently used by school districts in Colorado to finance capital projects, bonds are a fixed-income instrument that represents a loan made by an investor to a borrower. These borrowers are usually corporate or government entities.

While a bond requires a popular vote under the Colorado Constitution, the COP does not.

Investors bought certificates of participation, then owned the buildings on the site and leased them back to the universities, Dave Young said. Payments are made annually through appropriations from the state legislature until the money and interest are repaid.

The government negotiated a 4 percent interest rate on COPs.

“When everything is sold, it becomes the property of the universities,” Young said.

He said the interest rate is “very important” to the state; however, this rate is higher than the rates set a few years ago.

“Most people right now, if they’re borrowing for a mortgage, it’s well above 4 percent,” Young added.

The money is transferred to the custodian bank from institutional investors, who can be individuals or large investment firms. US Bank is the custodial bank for the UNC project. As the custodian bank, US Bank oversees and distributes funds through a legal process when the money is needed.

He said the COP deal is similar to the process of buying a home, from appraisal, inspection and securing a mortgage to closing.

“The money is not coming directly to the institutions or directly to the Treasury,” Young said. “It’s in the storage bank.”