Westside Health Authority (Chicago, IL)
About the Authority
Westside Health Authority ("WHA" or the "Authority") is a small 22 year-old non-profit providing housing, preventative health, job training, and other services to Chicago's Austin community.
The Longhouse Challenge
In late 2010 Longhouse was engaged by WHA to advise them on a refinancing and consolidation of existing debt. WHA had been notified by it existing bank that it would not renew the letter of credit supporting the Authority's $2.45 million in tax-exempt bonds. In the meantime, to encourage the Authority to refinance with another bank, the existing bank increased the annual LOC fee from 1.5% to 3.5%. The Authority had about $525,000 in other debt with higher rates and shorter terms. The Authority was also very dependent on State of Illinois and City of Chicago funding, receiving over 60% of its revenues from these sources.
With the assistance of Longhouse, WHA ran a competitive process among 11 banks to refinance the Authority's debt. It received 4 bids from medium -sized banks. The winning bid was a 7-year tax-exempt, direct placement with a 25 year amortization and an initial 7-year rate of 3.91% resulting in annual debt service savings of $48,000 per year. The bid also featured:
Increased line of credit capacity from $100,000 to $250,000.
2 buildings previously used as collateral were released.
1.0X debt service coverage ratio.
- No liquidity covenant required.
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