The Authority typically issues bonds on a stand-alone basis. "Stand-alone" refers to the fact that the transaction is structured for one borrower at a time. Stand-alone bond issues can be structured with fixed or variable interest rates and with or without credit enhancement and/or ratings.
Bond issues can be sold with or without a rating from one or more of the three primary rating services. When it is not cost effective to secure a rating, or when a rating is not available, the Authority may issue non-rated bonds.
The Authority's stand-alone financing programs can be completed using several different methods of sale. For large projects, a public offering of bonds is the most commonly used option. For smaller projects, the private placement of bonds is the most common approach.
A negotiated public sale of bonds is appropriate for sales of complex financing structures, large issue size, variable rate bonds, those with programs or financial techniques that are new to investors, or is offered under volatile market conditions. To complete a negotiated issue, a managing underwriter, approved by the Authority, is selected to work with other members of the financing team to establish contractual terms, obtain credit ratings and enhancement, if available and cost effective, and to structure a repayment schedule for the issue. The managing underwriter tests the interest rates and bond structure in the bond marketplace during the marketing of the bonds.
A private placement is considered for issues in which a public sale is either too expensive (e.g. smaller dollar volume) or likely to be ineffective (e.g. a borrower with a complicated history that requires direct contact with investors). To complete a private placement, the financing team structures the financing, develops a credit package and then drafts documents, which are distributed to the interested investors. Either a private placement agent is appointed to work on the transaction or, if requested by the borrower, the Authority will consider directly placing the bonds with a specified investor. The borrower, with the assistance of a placement agent or the Authority, negotiates the lowest interest cost and covenant requirements. Recent federal legislation revised laws that allow local community banks to purchase bonds at favorable rates.
The Stand-Alone Program requires the borrower to send correspondence to the Authority describing the project and requesting an application. Once the application is completed, the staff will present it to the Authority Board for approval.
The Authority will make direct loans applicable to the credit of the borrower, the type of financing, and the term of the loan. Eligible projects include construction and renovation, facility acquisition, refinancing of qualified outstanding debt, the purchase of equipment and financing costs.
The Master Loan Program enables qualified borrowers to access the tax-exempt capital markets at investment grade interest rates. Documents are standardized and bonds can be marketed for more than one borrower at a time, reducing the costs of issuance for each.
A fee schedule has been established taking into consideration the duration of the enhancement, the structure of the bond issue, and the organizational entity (governmental or not-for-profit). That fee is paid to the Montana Board of Investments when the bond issue is closed and has averaged between 115-135 basis points (1.15% - 1.35%) of the principal amount of the bond issue.
The Master Loan Program is an attractive financing vehicle for your particular project and requires the borrower to send correspondence to the Authority describing the project and requesting an application. Once the application is completed, the Authority Staff will present it to the Authority Board and to the Montana Board of Investments for approval. Staff will provide additional information or clarification on the process.
Loans from the Trust Fund Loan Program (TFLP) are made from the Permanent Coal Tax Trust Fund managed by the Montana Board of Investments. Short and long term loans are both available under this program as they are applicable to credit of the borrower, the type of financing, and the term of the loan. Authority Board approval is required.
Usually these loans can be processed in 60 days or less. Documents generally consist of a loan agreement and a security agreement. Contact the Authority for application. Staff may approve the loan, or present to the Authority Board for consideration. The Authority staff will draft the loan documents and the closing will occur through the mail.
The purpose of the Montana Capital Assistance Program ("MCAP") is to assist Critical Access Hospitals (CAH), small rural hospitals (those with less than 50 beds), or other eligible health care facilities with the development of a Capital Improvement Plan (CIP) to assess the feasibility of proposed capital expenditures or for energy efficiency audits.
The following hospitals and health care facilities are eligible to apply for and receive MCAP assistance:
An eligible healthcare facility interested in obtaining technical assistance through MCAP should reach out to the MFFA and complete an application.
MCAP provides technical assistance support in five areas – Scope of Service Review, Facility Master Plan, Capital Financing Plan, Legal Assistance, and Energy Efficiency Audits. Approved technical assistance projects must be completed within 12 months of MCAP award.
Each eligible hospital or health care facility may apply for up to $25,000 in MCAP funding for assistance with Scope of Service Review, Facility Master Plan, Capital Financing Plan, Legal Assistance, and/or Energy Efficiency Audits. Approved applications require a 20% cash match from the facility. MCAP is a reimbursement program. After the project has been completed and all pertinent invoices have been paid by the facility, MCAP will reimburse the facility 80% of the costs of the project, up to a maximum of $25,000. Once the maximum award is reached, eligible facilities may not reapply for MCAP funding for five years.
Due to limited funds under this program the MFFA reserves the right to deny applications if sufficient need is not shown. Technical assistance is provided through consultants selected by the facility and approved by the MFFA.
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