Prairie Crossing Charter School
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
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
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.
Longhouse was able to work
with the School's existing operating bank to
achieve the following:
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Restructuring of the existing Letter of
credit-backed tax-exempt facility into a less complicated,
tax-exempt direct placement structure with the same community
Identification of a local municipality willing to lend
its tax-exempt issuing ability to the PCCS.
the credit commitment to 5 years (the
bank's prior commitment had been 3
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%.