We encourage prospective clients to contact the Authority to arrange a meeting once the project is defined and before any financial commitments have been made. In addition, an institution should adopt an authorizing official intent resolution which allows for reimbursement of capital expenditures for the project prior to issuance of the bonds. In the absence of this resolution, the Internal Revenue Service may disallow certain expenditures.
There are several topics discussed at the initial meeting to assist an institution in making an informed decision whether or not to pursue tax-exempt financing. These topics include: the proposed project, financing alternatives, financing schedule, the role of members of the financing team, the financing costs (including cost of issuance, credit enhancement cost, etc.), and restrictions to capital campaigns planned for the proposed project. The borrower should consider the project(s) to be financed and the potential impact on the institution's master plan and/or strategic goals, including an appropriate level of debt and the allocation of resources. In some cases, CHEFA advises the client not to proceed with tax-exempt financing and recommends a conventional bank loan. The evaluation of financing alternatives is provided free of charge.
The key point that CHEFA staff makes during the initial meeting is that the project drives the financing, not the reverse. A project should be evaluated by the institution in terms of its existing operations and furtherance of its strategic mission.
CHEFA staff offers each client assistance in completing the application, and throughout the entire financing process. Initially, the client will be asked for historical financial information and key operating data, as well as detailed information on the project. This data allows CHEFA to conduct an internal credit review and to assess available financing options to provide the lowest cost of borrowing. An explanation of the rating agency process, credit enhancement requirements and availability, tax code diligence process, as well as environmental requirements are also reviewed at the initial meeting.
