Bond Anticipation Notes Approved for Stem Cell Institute
Six private foundations will provide $14 million in bond anticipation notes to fund the California Institute for Regenerative Medicine until legal challenges are settled, CIRM officials Tuesday, the San Diego Union-Tribune reports (Ainsworth, San Diego Union-Tribune, 4/5).
A lawsuit has prevented CIRM from issuing $3 billion in bonds from Proposition 71, which voters approved in 2004 to fund stem cell research. Even if the court rules in favor of CIRM, appeals in the case are expected to last at least until 2007 (Los Angeles Times, 4/5).
Treasure Phil Angelides, chair of a Proposition 71 finance committee, authorized the bond notes on Tuesday and said they would carry "a favorable interest rate at or below current market levels," capped at 5% (Hall, San Francisco Chronicle, 4/5). Using current rates, the state would lose about $600,000 in interest for the first year (Vesely, Oakland Tribune, 4/5).
If the court rules against the state, the bonds will not be repaid (Pollack, New York Times, 4/5).
According to the Sacramento Bee, the committee voted to allow CIRM to borrow as much as $200 million using bond anticipation notes (Downing, Sacramento Bee, 4/5).
CIRM Chair Robert Klein said the bond notes will be used to fund the 170 fellowships already approved by the agency and the next research program the board approves.
Foundations purchasing the bond notes will not be able to influence the direction of the research or apply for grants under new rules issued by the finance committee, Klein said (San Diego Union-Tribune, 4/5). Organizations that purchased the bond anticipation notes will not receive naming rights for institute programs, Klein said (Sacramento Bee, 4/5).
Klein also said that other investors have committed to buying $31 million in bond anticipation notes but that the final details in those agreements are not yet complete. Selling up to $50 million in bond notes would provide enough money to fund CIRM for two years while litigation continues, according to Klein (San Diego Union-Tribune, 4/5).