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The Bond Issuance Process

The length of time needed to complete a bond financing depends on the nature and timing, and the complexity of the transaction structure. The exact amount of time may vary, but is characteristically four to six months for first-time issuers for the transaction to close. A sample financing timeline is shown below.

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Eligibility

Eligible Institutions

Institutions eligible for CHEFA financing must be a Connecticut domiciled 501(c)(3) organization and provide direct services to the public. Types of these nonprofits include:

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Tax-Exempt Bond Financing

CHEFA offers a choice of tax-exempt financing programs for eligible nonprofit organizations. Bond offerings can be publicly sold or issued as a private placement, unenhanced or with credit enhancement, bear interest at fixed or variable interest rates, and have a maturity of not greater than fifty years.

PUBLIC OFFERINGS

Fixed Rate Stand Alone Issue

The Authority's general guidelines for unenhanced offerings are as follows.  Each proposed bond issue will be evaluated on a case-by-case basis.

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Financial Advisory Services

CHEFA offers a variety of financial advisory services to assist both first-time borrowers as well as existing clients in meeting their capital financing needs. In addition, CHEFA has various outside financial advisors to provide additional support. CHEFA’s involvement does not end there. After a bond issue closes, CHEFA has staff dedicated to the ongoing monitoring of the issue until the bonds are eventually paid off.

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Tax-Exempt Bond Financing

Costs of Issuance

There are costs associated with the issuance of a tax-exempt bond issue such as underwriter's fees, bond counsel, trustees and other charges which may be included in the financing.  Tax law limits the amount of these costs of issuance that can be financed with bond or loan proceeds to 2% of net proceeds.  If such costs are above this 2% limitation, an equity contribution must be paid by the borrower or from other sources.

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Applying for Financing

The Authority does not have a formal application, but requires all prospective borrowers to submit a written request stating the institution's intent to issue tax-exempt debt through the Authority.  The request should include a description of the project to be financed, and the estimated amount to be financed.  Upon receipt of the request for financing from the institution, CHEFA will send an application letter to be executed by the borrower.

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Bond Issues

The Connecticut Health and Educational Facilities Authority strives to help Connecticut's eligible nonprofits gain access to low-cost tax-exempt debt financing so they can continue to meet the needs of their clients.

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Long-Term Care Facilities

Another very important segment of the health care delivery system in Connecticut includes the services provided to our senior citizens and people with disabilities. CHEFA does provide financing to nursing homes and assisted living facilities, but only to those that are affiliated with or part of an integrated health care delivery system like Mulberry Gardens of Southington (affiliated with The Hospital of Central Connecticut) and Woodlake at Tolland (affiliated with Eastern Connecticut Health Network).

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Independent Schools

Many of Connecticut's private non-profit schools have taken advantage of low cost, tax-exempt financing through one of CHEFA's financing programs. In order to remain competitive, these schools have expanded and improved student housing, auxilliary and educational facilities.

The boards of these schools have recognized that tax-exempt debt can actually help strenghten the balance sheet by leveraging unrestricted net assets rather than using them to fund capital projects. It also allows them to focus their fundraising efforts on endowment growth.

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Human Services Organizations

The Greater Hartford YMCA was the first human service organization to finance through CHEFA. Since then many other human service organizations have used tax-exempt debt issued by CHEFA inlcuding a number of YMCA/YWCA's, adult day care centers, boys & girls clubs, community action agencies, social service agencies and other non-profits providing services to individuals with special needs.

Click here to view our current Human Service Organizations project list.

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