Public Bond Sales


Typically the most feasible for bond issues in excess of $5 million.

In a public sale, investment banks purchase tax-exempt bonds from the Commission then market the bonds to retail and institutional investors. This type of financing is often most feasible for borrowings that exceed $5 million. Bonds sold at public sale generally carry lower interest rates than bonds placed privately with a single investor. Publicly sold tax-exempt bonds issued by the Commission must receive at least an “A” rating from a major rating agency such as Moody’s, Standard & Poor’s, or Fitch.  Information on smaller bond issues.


A team made up of the borrower and its attorney, the Commission and its financial advisor and bond counsel, the lender and its attorney, bond underwriters, and a trustee all work to put together the bond issue.

Washington State Housing Finance Commission Staff:
Commission staff coordinate bond financings, provide avenues of information to the parties, and assist in ensuring that all required tax-exempt criteria are met and that the interest on bonds will be tax-exempt.

Bond Counsel:
Attorneys specializing in tax-exempt bonds ensure that all the required tax-exempt criteria are met by the nonprofit organization and that funds are being expended for the tax-exempt purpose.

Borrower’s Counsel:
Borrowers do not hire bond counsel; however, they will need an attorney to review financial and real estate documents and to prepare an opinion regarding the nonprofit’s eligibility for tax-exempt financing.

Bond Underwriter:
Investment banking firms act as bond underwriters who market and sell Commission-issued bonds. The bond underwriters can help find credit enhancement and analyze financing options. They will often make presentations to organizations’ boards and answer questions about bond financing. List of underwriters approved by the Commission (PDF)

Credit Enhancement:
Credit enhancement guarantees bondholders of timely payments on their bonds. Bonds are rated based on the strength of the credit enhancement. To ensure low interest rates and to provide adequate security to bondholders, the Commission requires that bonds have at least an “A” rating. Forms of credit enhancement include letter of credit, corporate guarantee, or bond insurance. Most of the bonds the Commission issues for nonprofit organizations use a letter of credit from a commercial bank. 

The lending institution is either a commercial bank or savings and loan that originates the mortgage. Often, the lender is the same institution that provides the credit enhancement on the bond. When this is the case, the lender sets the underwriting criteria for the loan.

Financial Advisor:
The financial advisor has expertise in structuring and developing bond transactions and in working with nonprofit organizations. The Commission’s financial advisor ensures that the bond structure is sound and that the underwriting team prices bonds competitively. The financial advisor may also assist the borrower in finding and evaluating credit enhancement.

The trustee manages the funds that the bond issue creates, including paying the bondholders.

Rating Agency:
The rating agency evaluates security investment and credit risks. They give the bond its rating. Either Moody’s, Standard and Poor’s, or Fitch will rate the bonds. Typically, the Bond Underwriter provides the agency with bond and finance documents as well as credit enhancer information.


Bond financing takes approximately two to four months to complete and includes the following steps:

The Nonprofit contacts the Commission staff early to explore financing options. The board of the Nonprofit passes a resolution approving tax-exempt financing of the project and a reimbursement resolution.

Selection of Underwriter and Credit Enhancement:
The Nonprofit researches various credit enhancement options and chooses an underwriter. The Nonprofit works with the underwriter to select and receive a commitment from a credit enhancer. Occasionally, this step occurs after the nonprofit has applied to the Commission.  List of underwriters approved by the Commission (PDF)

Application and Due Diligence:
The Nonprofit completes and submits a Washington State Housing Finance Commission Nonprofit Facilities Financing Application.  After the Commission staff review the application, the Nonprofit submits follow-up documentation regarding their 501(c)(3) status to bond counsel.  Early in the project timeline, the Nonprofit also applies for all zoning and environmental approvals, required permits, and certificates of need, if applicable. Permits must be secured in time for closing on the bonds.

Scoping Meeting:
The first meeting that the Commission requires is the scoping meeting, which is when all of the involved parties come together to meet to describe the transaction. The purpose of this meeting is to: Identify and address any issues that could affect the issuance of the bonds; outline and agree on the structure of the transaction; identify each party’s responsibilities; and develop a timeline for closing the transaction.  The scoping meeting is generally scheduled by the Bond Underwriter. Before or at the scoping meeting, the Nonprofit must submit a deposit of 0.5% of the total bond amount to cover initial costs and document preparation. The deposit is capped at $50,000. This deposit is returned to the borrower less expenses incurred if the project fails to close.  Parties that generally should attend the scoping meeting include the Nonprofit Borrower and its designated board representative(s), counsel, and financial advisor (if necessary); Lender and its attorney; Bond Underwriter and its attorney; Commission Staff, bond counsel to the Commission, financial advisor to the Commission (if needed) and a trustee.

Public Hearing:
A public hearing, required by the Federal tax code, is held for each project prior to financing. The Commission considers public opinion in approving projects for bond financing. (Issues unrelated to the financing, such as the environmental impact of the project, are not considered by the Commission. The applicable land-use jurisdiction hears these issues.)  The public hearing notice identifies a project's potential owner, its location, the type of project proposed, the amount of requested financing, and the population the project will serve. The public hearing notice is published in the local paper and is also forwarded to the executive of the local jurisdiction in which the project is located (such as the mayor, county executive, or city manager). At the hearing, the borrower makes a brief project presentation to the Commissioners and should be prepared to answer questions. The lender may attend the public hearing to speak in support of the project and answer questions, but is not required. The Commission sends a summary of the public hearing to the Governor for review. The Governor must approve the issuance of bonds. See Commission staff for more information about the hearing.

Document Preparation and Review:
After the scoping meeting, Bond Counsel, the credit enhancer’s attorney and the Underwriter’s attorney draft documents and distribute them via email to all parties. The documents are generally commented upon via email, but two or more conference calls are scheduled during this phase to discuss the status of the financing approvals, any pending issues, any major changes to the documents, and any roadblocks to closing. The Underwriter schedules these calls. The Underwriter also sends copies of documents to a rating agency for a rating.

The Finance Resolution:
The Commissioners make the final approval of the project for bond financing at one of their regularly scheduled monthly meetings. Generally, neither the borrower nor the lender needs to be present for this meeting.

Pre-Closing and Closing:
At pre-closing, documents are signed; therefore, all document signers must be present. Authorization for signers needs to be completed before closing. The closing takes place at the offices of the Commission’s bond counsel. All fees related to the issuance of the bonds and the Commission pre-paid annual fees are due at closing. Generally, the pre-closing and closing are scheduled with a day or two in-between. Funds are distributed, and documents are recorded on the day of closing.


Please feel free to contact our staff to discuss program costs.


We prefer to start working with nonprofits during the preliminary capital campaign planning stage and encourage you to contact our staff. Many decisions made early on will affect your financing flexibility. We are here to help you through the bond financing process. The process outlined above may sound difficult, but we make it easy. If you are a nonprofit who needs to borrow funds for your capital project, you deserve a lower interest rate. By helping you save money on your debt service, you can put those valuable dollars toward serving the mission of your organization.

Nonprofit Facilities Financing Application


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