In 2011, Buck Financial helped Alliance with an innovative New Market Tax Credit (NMTC) financing that utilized direct-pay Qualified School Construction Bonds (QSCBs) as the source of leverage.\u00a0 With the expiration of the NMTC in 2018, Buck Financial assisted Alliance to analyze the best approach for taking out the NMTC leverage.\u00a0 The best option turned out to be the remarketing of the QSCBs instead of refinancing on a tax-exempt basis.\u00a0 Buck Financial served as FA to Alliance on the remarketing of the QSCBs, which was completed in late November 2018, and, like the original transaction, was also a first.\u00a0 \u00a0Others involved in this transaction on behalf of Alliance include Robert W. Baird and GVC Capital as remarketing agents, and Musick Peeler & Garret LLP as borrower’s counsel.\u00a0 Ballard Spahr served as bond counsel.<\/p>\n
The original transaction constructed a facility for two Alliance schools, a new high school and a 2-year old middle school, and currently houses about 950 students total near the Lincoln Heights region of Los Angeles.\u00a0 Of a total $22 million NMTC financing, about $15 million in QSCBs were used as leverage, with about $9.8 million of that amount on a senior basis and $5.2 million subordinate.\u00a0 The taxable QSCBs originally carried an average interest rate of 7.46% and had a 4.91% QSCB subsidy for a net borrowing cost of about 2.55%.\u00a0 Sequestration subsequently took about 32 bps off the subsidy, and the remarketed QSCBs carry a 4.59% subsidy rate.\u00a0 With the remarketing, which was purchased by several CDFIs, the coupon rate was lowered to 6.6%, so the net borrowing cost of the remarketed QSCBs is about 2% through September 2030.\u00a0 Between the lower coupon rate and the collapse of some sinking\/reserve funds, this transaction will save Alliance approximately $400K in lease payments.\u00a0 Congratulations to Alliance and the students at these two schools!<\/p>\n","protected":false},"excerpt":{"rendered":"
In 2011, Buck Financial helped Alliance with an innovative New Market Tax Credit (NMTC) financing that utilized direct-pay Qualified School Construction Bonds (QSCBs) as the source of leverage.\u00a0 With the expiration of the NMTC in 2018, Buck Financial assisted Alliance to analyze the best approach for taking out the NMTC leverage.\u00a0 The best option turned… read more<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-162","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts\/162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/comments?post=162"}],"version-history":[{"count":2,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts\/162\/revisions"}],"predecessor-version":[{"id":165,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/posts\/162\/revisions\/165"}],"wp:attachment":[{"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/media?parent=162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/categories?post=162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.buckfinancial.net\/blog\/wp-json\/wp\/v2\/tags?post=162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}