Prairie Crossing Charter School (Grayslake, IL)

About the School

Prairie Crossing Charter School ("PCCS" or the "School") is a 12-year old public charter school with admission by application and lottery, serving two school districts in Lake County, Illinois. The School receives the majority of its revenue from the State of Illinois and supplements operations with charitable giving.

The Longhouse Challenge

Longhouse was engaged by the School to help with the refinancing of its outstanding $9.0 million Tax-Exempt Variable Rate Demand Bonds.  The Bonds carried expensive annual credit enhancement from two banks with a credit commitment that was expiring in Fall of 2011. The School wished to refinance the the Bonds for savings and simplicity.

The School faced a number of significant obstacles to completing the refinancing including a below investment grade rating, reliance on the State of Illinois per-pupil reimbursement funding, a small $3.8 million annual budget, just $500,000 of cash and investments to $9.0 million of debt resulting in a greater than 80% Loan-to-Value and a 5-year charter subject to renewal.

The Result

Longhouse was able to work with the School's existing operating bank to achieve the following:

  • Restructuring of the existing Letter of credit-backed tax-exempt facility into a less complicated, tax-exempt direct placement structure with the same community bank.
  • Identification of a local municipality willing to lend its tax-exempt issuing ability to the PCCS.
  • Extension of the credit commitment to 5 years (the bank's prior commitment had been 3 years).
  • Savings of $90,000 annually in debt service.  The School plans to use interest savings from the refinancing issue to enhance its curriculum. 
  • A 5-year rate of 3.90%.
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