Tax-Exempt Financing for Charter Schools
Charter schools often utilize tax-exempt bonds to finance the acquisition, development and construction of the school facility in which the charter school is housed. The issuer of the bonds typically requires a letter of credit serve as credit enhancement for the bonds. In a number of these transactions in the Washington, D.C. area, Miles & Stockbridge has represented the letter of credit bank. These transactions are unique because collateral for the letter of credit consists, not only of real estate, but of the per pupil payment stream paid by the governmental chartering authority to the charter school. Such representation entails drafting and negotiating construction loan and letter of credit documents and intercreditor documentation; reviewing and negotiating bond documentation; undertaking due diligence with respect to the Charter School, including confirming its status as a charter school and the payments, as well as construction-related due diligence and real property due diligence.
