All fees and expenses associated with the issuing of tax-exempt debt may be paid using bond proceeds. Currently, up to 2.0% of the tax-exempt bond issue may be used for paying the cost of issuance. Cost of issuance fees in excess of the 2.0% may be paid from borrower’s equity or from a separate taxable financing.
VEHBFA charges three types of fees for its services:
- Agency Issuing Fees: Used to offset the costs the Agency incurs to approve a financing and see it to closing. Issuing fees include the cost of the Agency’s financial advisor and legal counsel. Fees are set at 0.15% of par amount issued with a minimum fee of $11,000 and a maximum fee of $75,000. For pooled transactions, each member of the pool is assessed Agency issuing fees on their individual loan amount (Contact the Agency’s Executive Director for more information). In most cases, the borrower only pays Agency issuing fees if the financing closes.
- Bond Counsel Issuing Fees: Used to defray the cost of bond counsel fees and expenses. Fees can vary from $15,000 for a simple financing to $100,000 and over for a complex one. In most cases, the borrower only pays bond counsel issuing fees if the financing closes. Click on the following link for more information on Bond Counsel Fees Expectations.
- Annual Fees: Used to help defray the Agency’s annual administrative costs. Borrowers are assessed a calendar year Annual Fee equal to 0.0065% of the borrower’s outstanding loan balance as of December 31 of the prior calendar year.
Other potential Consultants (selected by the borrower):
- Borrowers Counsel: Assists the borrower in legal matters related to the financing. Borrower should consider appointing a special counsel if their regular counsel is not experienced with issuing tax-exempt debt
- Borrower’s Financial Advisor: Assists the borrower with assessing its financial objectives, exploring alternative financing methods, and determining the economic feasibility and affordability of the financing
- Investment Banker/Underwriter: Responsible for structuring and marketing a public financing. The borrower is encouraged to engage a banker/underwriter with experience in the tax-exempt healthcare or education (whichever is appropriate) financing market
- Trustee: Insures that the financing is administered according to the deal structure as envisioned by the issuer and the original financing team and memorialized in the financing documents
- Rating Service: Private and independent organization that assesses (rates) the creditworthiness of the borrower
- Credit Enhancer: Provides bond insurance or a letter of credit facility to the borrower to improve the credit rating of the financing
- Miscellaneous: Printing, document delivery, travel costs, etc. that can vary from financing to financing