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Members of Kutak Rock’s national public finance practice have an intensive understanding of the Internal Revenue Code of 1986 (the Code), which allows government agencies to issue private activity bonds, the proceeds of which are used by private entities. 501(c)(3) nonprofit organizations, including independent schools that are nonprofit organizations, are allowed to use those bond proceeds to finance capital facilities on a tax-exempt basis and ultimately at a lower cost of funds when compared to conventional financing.

Tax-exempt financing can provide significant benefits to private schools looking to finance capital improvements, including serving as an integrated financing vehicle that can fund construction and development phases, provide long-term financing and fund future capital expenditures, all while lowering the borrowing cost to the nonprofit. These financings can be structured in a variety of different ways, including a bond offering on the public market, private placement with a bank, a letter-of-credit secured bond issue or three-party loan agreement. The flexibility of tax-exempt financing allows us to find a satisfactory solution to our clients’ complex issues that may be difficult to accomplish through traditional financings.

Our firm has extensive experience serving as bond counsel, issuer counsel, bank counsel and borrower counsel in connection with tax-exempt financings for private schools throughout the nation. We have experience structuring sophisticated and flexible transactions, including the creative use of multi-modal rate structures and variable amortization schedules, to accommodate particularly complex financings. Our extensive experience allows us to carefully advise and counsel private schools regarding the opportunities and limitations associated with a tax-exempt financing.