Government Capital Corporation

Government Capital Corporatoin is a leading public finance firm offering its clients a broad range of financing solutions.

Private Schools

ROSEHILL CHRISTIAN SCHOOL REALIZES SUBSTANTIAL BENEFITS THROUGH A TAX-EXEMPT REFUNDING

Rosehill Christian School logoTomball, Texas (February 2023) – The Rosehill Christian School announces the closing of a $6.9 million tax-exempt refunding note. This refunding note replaces the original taxable loan which was used for facility construction, land acquisition, and multiple campus renovations. The refunding converted the school’s taxable loan to a tax-exempt note by utilizing a conduit financing structure specifically designed for 501(c)(3) entities. This structure not only reduced the school’s interest costs, but also allowed the school to secure a long-term fixed-interest rate which eliminates the school’s risks associated with the previous loan’s adjustable interest rate.

Government Capital, Southlake, Texas, provided the tax-exempt refunding structure to meet the specific needs of the school. Additionally, Government Capital handled all of the conduit structuring required by IRS provisions along with analyzing the current market conditions to provide the most optimal financial structures.

“The tax-exempt refunding will provide significant benefits to our school and positions us to obtain more competitive financing options in the future as our school continues to grow,” commented Lauren Dyal, Head of School, Rosehill Christian School. “Prior to our introduction to this conduit structure, our school was unaware a tax-exempt financing option was available to schools such as ours.”

“I’d like to congratulate Lauren Dyal and the entire Rosehill Christian School staff on a successful closing,” stated Zac Saldi, Vice President, Governmental Capital Corporation.  “We take great pride in serving Texas private and parochial schools and assisting them in meeting their financial goals and objectives.”

About Rosehill Christian School

Rosehill Christian School (RCS) was founded in 1990 and is located northwest of Houston in Tomball. RCS is a college-preparatory school currently educating over 470 students from Pre-K through 12th grade. The faculty to student ratio of 15:1 enables a small class setting which provides an environment for in-depth instruction to inspire, educate and transform each student (Isaiah 40:31). The school’s mission is to provide excellence in Christ-centered education as an extension of the Christian home. For more information, visit www.rosehillchristian.org.

About Government Capital Corporation

Government Capital Corporation (GCC) is a leading public finance firm providing professional financial services to all local governments and 501(c)(3) entities. Our affiliate company, Government Capital Securities Corporation (GCSC) has created multiple conduit issuers which are specifically designed to enable qualified 501 (c)(3) organizations access to tax-exempt financial markets statewide. Since our founding in 1992, GCC and GCSC have successfully completed thousands of tax-exempt financings exceeding $5 billion in Texas and across the country. For more information, visit www.govcap.com.

Government Capital Corporation is an official partner of TAPPS logo

EFFICIENT FINANCING AVAILABLE FOR PRIVATE & PAROCHIAL SCHOOLS

Surprisingly, many qualified 501(c)(3) private and parochial schools are not aware they may issue debt at lower, tax-exempt interest rates. Additionally, many don’t realize how substantial the interest savings may be on a tax-exempt obligation, especially in the case of longer (e.g. 10 to 25-year) terms. Although tax-exempt debt has traditionally been issued most frequently by state and local governmental units for traditional government functions, certain “private” organizations, including private and parochial 501(c)(3) schools can take advantage of the same tax-exempt benefits. These benefits include not only the lower tax-exempt interest rates, but also longer financing terms, generally less and more flexible loan covenants, and in most instances, access to more competitive capital market participants.

Pursuant to applicable state and federal regulations, qualified nonprofit organizations (including private and parochial schools) can borrow on a tax-exempt basis by involving a state or local government unit which serves as a conduit issuing the debt on behalf of the nonprofit borrower. Using this structure to finance a new school construction or remodeling project, the conduit enters into a separate loan with the school, where the loan terms substantially mirror the terms of the conduit issuer’s tax-exempt obligation. Traditionally, the conduit’s debt is secured by the underlying real property and/or revenues generated by the school’s facility. At the end of the finance term, ownership of the real property being financed is transferred to the private school.

As an example, a preparatory academy in Keller, Texas recently completed a 25-year, $3.7 million conduit financing for a new facility. The conduit structure saved the school over $400,000 in interest costs over 25 years as compared to the cost of a taxable financing. In another situation, a charter school in Beaumont, Texas completed a similar tax-exempt conduit financing to include not only the $3.6 million construction cost of a new middle school, but also the refinancing of an existing $2.3 million taxable loan obligation. The combined $5.9 million conduit financing saved the school over $700,000 in interest costs over the 20-year term. These schools along with many other private, parochial and charter schools as well as private universities, have been taking advantage of the tax-exempt conduit debt market since 1986. It is worth emphasizing the flexibility of the conduit structure to provide “new money” to fund new construction projects and/or refinance existing debt at more favorable terms.

While the fact private and parochial schools can borrow at lower, tax-exempt rates is great news, the structure of the financings can be complex. Accordingly, issuers wanting to take advantage of these tax-exempt financings should consult Municipal Advisors or bond attorneys who are intimately familiar with the conduit borrowing authorities and Internal Revenue Code rules.