Pub. 3 2013-2014 Issue 2

22 I n achieving a Charter School’s mission, owning a facility can add stability and also provide for additional growth. There are several means of financing the costs of acquiring, constructing and equipping a facility. This article pertains to financing through the means of a tax-exempt municipal bond issue. One advantage to financing through a tax-exempt bond issue is typically interest rates are lower than taxable rates. An established Charter School with strong student demand may be a good candidate for bond financing. The Utah Charter School Finance Authority (Author- ity) acts as an Issuer of municipal bonds. The Authority has a process for determining whether a Charter School is eligible for bond financing. When issuing bonds, a Finance Team is organized by the Issuer which includes the Charter School, a Financial Advisor, an Underwriter, a Trustee, Bond Counsel and counsel for each party. In issuing bonds, the Authority agrees to loan the proceeds from the sale of the bonds to the Charter School, as the Borrower, to assist in financing the facility costs. Bond investors purchase bonds which provides funding for the loan. Issuers will provide to bond investors information to assist them in making informed investment decisions. In connection with a public issuance of municipal bonds, this may be provided in the form of an official statement (OS). An OS provides a description of the transaction and describes the essential terms of the bonds. It includes a detailed description of the terms and features of the bonds including, but not limited to, the terms under which the bonds can be redeemed prior to maturity, financial infor- mation and economic characteristics of the Issuer and con- duit borrower, operating data, the security for the bonds and the source of money pledged to repay the bonds. Municipal bonds that are sold to the public are subject to Rule 10b-5 of the Securities Exchange Act which requires the disclosure by the Issuer of all material facts and pro- hibits the omission of facts which could cause the OS to be misleading. As part of the bond financing, the Issuer may enter into a Trust Indenture with a Trustee. The bond indenture sets forth the terms and conditions of the bonds and prescribes the duties and responsibilities of a Trustee. The Trustee is responsible for processing the monetary transactions which includes collecting and processing the Borrower’s loan payments, paying the interest and principal on the bonds as scheduled, registration and transfers of the Charter School University sponsored by Zions Bank presents Financing Ownership of Your Facility BY SANDI KINNEY, CCTS, VICE PRESIDENT ZIONS BANK CORPORATE TRUST