Combining a lease-leaseback arrangement with tax exempt bonds is a unique development and financing vehicle is available for non-profit entities. 

Under this delivery method, the client forms a strategic alliance with TGC who works on a “fee for services” basis versus equity investor. The entire program is extremely flexible.  The client can engage the project team directly or, through a lease-lease back arrangement, TGC can engage all or parts of the project team directly.  The program can incorporate the existing vendors of the client as well as in-house departments such as preferred furniture vendors and the IT Department. We will work with the Client to coordinate the bidding, selection and hiring of the project team, including the architect, consultants and contractor.  As a privately developed project, the typical cost over-runs, delays and potential litigation associated with institutional or public “low bid” work is virtually eliminated.  The project can engage the most qualified and reliable team in the market at the time.  In addition, these professionals can be involved at project conception as opposed to after construction drawings are complete, when their ability to add value is minimized or virtually non-existent. In a traditionally financed “market rate and term” project, even if the land is put into the deal by the client at a nominal cost, the client’s rent reflects a return on investor capital and the cost of permanent financing.  In addition, the investor will most likely want to sell the building soon after completion.  The client’s original building partner is gone, replaced by a new entity and the property taxes will increase.  For most non-profit clients, the cost of providing a profit to the investor and lack of control over the project’s future is unsettling and too costly.  By retaining TGC on a fee for services engagement and using tax-exempt bonds, the client pays only the actual cost of the financing without mark up or profit, all savings are passed directly through to the client.  In addition, the client is in complete control of their destiny.

The tax-exempt bond funds can be used alone, or in combination with donations, grants or the client’s capital to finance the project. These funds can be tailored to meet the needs of the client including rolling payments into the overall project financing for two to three years, variable or fixed rates are also available. TGC can secure the entire financing for the project up front, including a prudent project contingency, which eliminates any risk the funds will be available when needed.  We can capture the predevelopment costs in the bond offering as well.  Funding the entire project in advance also motivates the contracting community, as they get paid within days of submission of pay requests.  Bonding requirements and liquidated damages with the contractor ensure the project will be completed and reduce the risk of cost overruns and delays.

Just a few of the many benefits available to the client under this program include:

• Teams client and their staff with qualified, experienced professionals in all categories of the facility development process
• Extremely flexible
• Preserves capital
• Maximizes flexibility with regard to rate and terms
• Direct pass though of bond payments to client without mark-up or profit to developer
• Allows prepayment of all or part of the funding without profit to the development entity and no pre-payment penalty
• Can be combined with grants, donations and, if desired, client’s capital
• No need for subsequent take-out financing
• Eliminates investment profits/returns on equity required by a merchant builder and/or investor
• Ability to move forward immediately and plan for the future
• Builds and enhances client’s credibility
• Defers lease and/or loan payments until project completion
• Ensures commitment of construction trades; they get paid quickly

If you would like to hear more details of this creative, reliable and low-cost approach to developing your new facilities, please call or contact:

The Grazioli Company

840 E. Green Street #503

Pasadena, CA 91101

United States

Phone: (626)688-7718

al@graziolicompany.com