A financial transaction similar to a home mortgage, but on a larger scale, is how the state of Colorado struck deals to fund a $247 million bill for higher education health care projects, including college of Osteopathic Medicine from the University of Northern Colorado.

State Treasurer Dave Young, a Greeley resident, said FUNDING was completed earlier this month through a financing vehicle known as a certificate of participation agreement.

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

In the spring, state lawmakers passed House Bill 24-1231 that appropriates the money to pay for capital costs related to the construction and renovation of facilities at Metropolitan State University in Denver, Colorado State in Fort Collins and Trinidad State College, in addition to UNC. Northern Colorado received the largest portion of the total package of the bill to build and develop the proposed university college of osteopathic medicine.

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 each receive $50 million for a health institute tower and a veterinary education complex, respectively. Trinidad State will use $19.3 million to renovate its main Valley Campus building.

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

The university expects construction on the new building to begin in early 2025. The first class of students could enroll in 2026.

State Rep. Mary Young, D-Greeley, who is also Dave Young’s wife, was one of four lead sponsors of the bill approving funding for the four schools. The other lead sponsors were Sen. Barb Kirkmeyer, R-Weld County; Rep. Lindsey Daugherty, D-Arvada; and Sen. Kyle Mullica, D-Adams County.

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

A participation certificate is a tax-exempt lease-purchase agreement. The state often uses COPs to finance the construction of new facilities instead of issuing bonds or other form of long-term debt. A certificate refers to an investor’s proportionate interest in the state’s lease payments.

Bonds, which are often used by Colorado school districts to finance capital projects, are a fixed-income instrument that is a loan from an investor to a borrower. These borrowers are usually corporate or government entities.

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

Dave Young said the investors buy the certificates of participation and then own the buildings on the sites and lease them back to the universities. Payments are made annually by appropriations from the state legislature until the money and interest are repaid.

The state negotiated an interest rate of 4% at COP.

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

He called the interest rate “a good deal” for the state, although it is a higher rate than might have been set a few years ago.

“Right now, most people are well over 4% if they’re borrowing money for a mortgage,” Young added.

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

He said agreeing to a COP is similar to the process of buying a home — from appraisals, inspections and securing a mortgage to closing.

“The money doesn’t come directly to the institutions, and it doesn’t come directly to the Treasury,” Young said. “It’s in this bank custody.”