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Financing Methods:
Private Placement/STEP
Public Sale
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Information for Bond Lenders
- American Recovery and Reinvestment Act (ARRA)
- List of Nonprofit Facilities Financed (PDF)
- Nonprofit Facility Participating Lenders (PDF)
- List of Approved Underwriters (PDF)
BACKBROUND INFORMATION
The Commission does not make loans. Through you, we provide your customers with
below-market financing options. The Commission does not have additional
underwriting requirements. Loans involving bond financing remain your loans. You
determine the amount of the loan according to your policies and underwriting
criteria. The interest savings to the borrower often increases the
borrower's financial strength and in turn creates a stronger more viable
project.
The Commission is a self-funded state entity that neither uses tax dollars nor
the good faith of the state of Washington. Commission bonds stand alone. The
Commission has developed several programs and financing policies that ensure the
integrity of Commission bonds.
TWO FINANCING METHODS
Letter of Credit
To provide a letter of credit the bank does not
necessarily have to be the bank who is making the loan. The bank underwrites
the project and determines the amount of the letter of credit. The bank will
work with the Commission, the Commission's bond counsel, investment bankers,
the bond trustee, and the Commission's financial advisor in issuing and
selling bonds to fund the loan to be made by the bank. The borrower will
make mortgage payments to the bank as in any other loan transaction. The
trustee will draw on the letter of credit to pay the bond holders. The
Commission requires that the letter of credit achieve at least an "A" rating
from a rating agency approved by the Commission such as Moody's, Standard
and Poor's, or Fitch.
Purchasing a Commission-issued bond/loan
For a bank funding a loan
to a borrower, the Commission has developed the
STEP (Streamlined Tax-Exempt Placement) program for
nonprofit 501(c)(3) organizations and STEP Home for for-profit
multifamily developers, which allow the bank to earn tax-exempt interest on
the loan.
11/18/2009