tax-exempt bond financing - Private Activity Bonds

Tax-exempt bond financing typically provides higher investment leverage than a typical commercial bank financing or institutional placement because the bond financing is based upon the demonstrated debt service coverage the investment provides. That's right. The bond financing is based upon a stated debt service coverage ratio (e.g.: 1.25:1.00 for a multifamily housing transaction) being applied to current capital market rates for similar projects. The lower the interest rate in fact is, the higher the borrowing leverage.

Most floats take a minimum of 90 days to close because:

Initial hearing. An initial hearing of a bond inducement resolution must be conducted by the regulatory entity (usually the state's bond commission); then
First Approval Hearing. The financing plan is reviewed and an initial vote is made. If approved, the next step is the final hearing. This step requires at least 30 days from the date of the initial hearing.
Final Hearing. The financing plan is submitted and a final vote is taken. If approved, the investment bankers can then syndicate the bond offering (sell into the capital markets). This meeting is scheduled at least 30 days after the first approval meeting and then requires another 15 to 30 days to complete.

To learn more about the efficacy of this type of financing being applied to your business, please contact RMC.

Rainmaker Marketing Corporation is a consulting firm that focuses on providing the due diligence services on a business to business (B2B) basis. Rainmaker Marketing Corporation can trace its roots back to the late '80's and was formally incorporated in 1994.

Over the years, Rainmaker Marketing Corporation consultants have completed hundreds of assignments across the United States (45 states), Mexico, Canada and the Caribbean Basin. RMC's new construction project due diligence documentation services have led to the successful development of income-producing properties valued (in the aggregate) in the billions of dollars.

Take a few minutes and learn more about RMC. This website is designed to provide a wealth of planning information pertaining to the capitalization, operations, and organizational program tenets today's savvy entrepreneurial company must embrace for continued growth and success...

Tax-Exempt Bond Financing - Commercial Real Estate Development Projects & Programs