Economic Development Financing
How to finance a multi-year Municipal Construction Project (“MCP”), Preserving cash equity, using a Bullet Payment structure option. No bank is willing to provide more than 60% of the loan amount. Project does not qualify for SBA or USDA loan programs.
Project does not qualify for SBA or USDA loan programs. Contractor has Hollywood Studio production contracts for 24 months. But income, tax credits and incentives will not pay out for 3-5 years. So, six months of operating capital will be needed up front to cover start up costs.
Investors are uncomfortable to commit without seeing the facility constructed. Municipality desires the jobs from the production and the hospitality Services Involved in movie production. History shows that due to up-front cash needs, Movie Studio production projects are often not built as promised. Municipality wants to see the building project up and operating before they provide support.
Understandably, they fear a lack of performance as agreed and control after the Municipal aid is provided. Politically, taxpayers are not going to be thrilled with the grants and aid requested.
Contractor proposes a Five (5) year $60 million bonded construction contract to “MCU”, with one single, guaranteed payment on the 60th month of $98million (“zero coupon loan” or “bullet payment”) in the form of a “put” option bond offering or term debt bank loan.
|Please note: We respect the confidentiality of our clients’ transactions. The purpose of this example is to illustrate the unique features and benefits of our financing structures. Key details are not disclosed or may be changed to protect confidentiality. Every university will be different, but payments will be structured so that the university will receive an infinite return on payment from energy savings, as long as an acceptable investment grade guarantee and “waiver of appropriations risk” has been delivered.|