May require establishment of Special Purpose Entity (SPE) to hold real estate
Other NMTC Options
NMTC structured deals can offer very favorable terms outside of existing programs such as “Healthy California”
In the most recent funding round (2006), 19 organizations that serve California were awarded a total of $1.44 billion in tax credits.
For more information, please visit the following website: www.cdfifund.gov and search on NMTC
Deciding What’s Best for Your Center: Factors to Consider
Urban or Rural?
330 or not?
NMTC or Empowerment Zone-eligible or not?
Size of Loan
Interest rate and “all-in” rate
Credit Strength/Need for Credit Enhancement
Spotty financial performance?
Much larger loan than clinic could have supported historically?
Relative need for long-term vs. shorter term financing and/or fixed vs. variable
Interface with capital campaign
Weighing the Options 1.25% - 1.0 to 2.0% plus closing costs 1% Fees 3% 4.5% + 5/10Treasury plus 2- 4.% w/resets 3% Interest Rate 15 years 40 years 7 to 10 years 5 years Max. Term Up to $500,000 No maximum up to $5.0 million Up to $600,000 Loan Size Help II (CHFFA) USDA Banks CPCA Loan Programs OPTIONS
Weighing the Options 1.5% plus closing costs 6% fixed; Const. loans @ 7% 25 years $1.5-$3 million Healthy California (NMTC) 2% (rough est.) 2-3% below conventional 20 years $1-$7 million IHCP (T/E Bonds) 3% of total P&I plus 3-5% for closing costs 2% Fees 4 to 5+% fixed Fixed T/E rates Interest Rate 30 years 15-20 Years Max. Term $5 - $20+ million $1-$5 million Loan Size Tax-Exempt Bonds (Public Offering) Tax-Exempt Bonds (Private Placement) OPTIONS
Special Issues: Debt Financing and Capital Campaigns
Timing is critical!
Expenses must be matched with cash resources
Multi-year campaigns can create challenges
“ Trust me” doesn’t work well with banks!
May be able to obtain “bridge financing” to cash-flow multi-year campaigns
Negotiate “equity in first” provisions
Watch out for “no call provisions” and/or prepayment penalties (sometimes you can’t avoid them!)
Debt Financing and Capital Link: Services Supported by CCI
Preliminary Project Planning
Preliminary Feasibility Analysis
Financial strengths and weaknesses, debt capacity analysis
Capital Project Work Plan
On-site visit to map necessary steps to completing a capital project
Process, TA resources, Timeline and Budget
Provided by Capital Link or Capital Incubator
Debt Financing & Capital Link: Services available on fee basis (continued)