The Authority’s Board members, who are appointed by the Governor for a five-year term, are drawn from many of the industries or professions we work with including healthcare, educational institutions, banking, insurance, and two ex-officio members, the State Treasurer and the Secretary of the Office of Policy and Management. The Board members provide their insight and guidance to Staff on market segment trends, establish credit policy, ensure that established underwriting guidelines and practices are followed, determine public policy goals, and approve requests by Staff for bond issue authorization. The Board is committed to providing access to tax-exempt financing for qualified institutions while maintaining credit quality and the favorable market perception and acceptance of CHEFA bonds, which we believe translates into lower borrowing costs for our clients.
Conditions that must be met prior to the presentation of an institution’s credit package to the CHEFA Board include: a written commitment for credit enhancement, if applicable; substantially final form of legal documents; results of the public hearing on the issuance of tax-exempt bonds (the TEFRA hearing); completion of the “due diligence” process by CHEFA Staff and its Bond and Special Counsel; and the finalization of the financing structure.
Representatives of the financing team meet for due diligence sessions, where every aspect of the client in relation to the issuance of tax-exempt bonds is addressed. This process is intended to address any matters that must be disclosed to the public before the bonds can be sold.
CHEFA staff prepares a detailed memo and credit analysis that is submitted to the Authority Board for its review prior to the Board meeting. If a transaction is unusually complicated, staff must present a credit to the Board for a preliminary review at one meeting and then seek bond issue authorization at a subsequent meeting. The staff memo usually contains an executive summary including information on the borrower, the financing structure and the borrower’s strengths and credit concerns or weaknesses. Also included in the staff memo is a more detailed discussion of the borrower, its management, financial and credit analysis, detailed information on the project to be financed, financial projections assessing the borrower’s ability to meet future annual debt service obligations, and detailed information on the financing structure. Staff analysis may also include a comparison of key financial ratios to comparable institutions and to Moody’s and Standard and Poor’s ratios.
Staff provides recommendation for approval in its memo and makes a verbal presentation of the credit at the Board meeting. The Board then has an opportunity to ask CHEFA staff any questions about the proposed credit. If the Board is not satisfied with the terms of the transaction or it has further questions, the financing could be tabled and referred to a future meeting for consideration. Once the Board is satisfied that all of its questions have been answered, a motion is made to approve and a vote is taken. At this point the resolution is approved and staff is directed to complete the transaction, issue the bonds and deliver bond proceeds.
