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Policies & Fees
General Policies
Public Benefits
Each project to be financed must demonstrate tangible public benefits to the community in which it resides. For more information of public benefits, please visit the respective program links.
Bond Counsel
CSCDA shall reserve the right to select bond counsel for the financing. In the event the applicant wishes to select its own bond counsel (subject to CSCDA approval) the applicant shall pay any additional costs associated with separate Authority counsel.
In most cases, the Authority uses Orrick, Herrington and Sutcliffe as Issuer’s Counsel. If the borrower chooses to use a bond counsel other than Orrick, a fee of $7,500 will apply. There are some limited instances where the fee will be higher depending on the complexity of the financing.
Internal Review
CSCDA shall use its Executive Director and Program Manager to review the proposed bond financing to ensure it meets all applicable Authority policies and procedures. The Executive Director and Program Manager may also conduct a site visit and meet with the borrower prior to final Authority consideration. No additional fee beyond the Authority fee is charged for this review.
Finance Team Approval/Independent Study
The Authority shall approve each Finance Team member proposed by the borrower and reserves right to require an independent study of the project.
Indemnity
The borrower shall be required to provide indemnification to the Authority, its members, officers, agents, program managers and employees for all costs, expenses and attorney fees, as well as any claim, judgment or settlement costs arising out of or involved in the financing, or in any documentation related thereto.
Minority and Women Owned Participation
The Authority encourages minority and women-owned business participation in all aspects of a financing including legal, trustee and underwriting services. The Authority encourages all senior underwriters to provide the opportunity for minority and women-owned underwriting firms to sell a portion of the bonds. Selection of minority and women-owned underwriting firms shall be left to the senior managing underwriter.
Issuance / Financing Policy
The CSCDA Financing Policy is intended as a guide for the Authority and for applicants. While the Authority reserves the right, in its discretion, to approve exceptions, applicants should not expect any exceptions.
I. General Requirements – All Financings
The following issuance policies relate to all financings issued through CSCDA:
- The city, county or local agency hosting the proposed project must be a member of CSCDA. Click here for a list of CSCDA member public agencies.
- Approval by the city, county or local agency hosting the proposed project as required under the Internal Revenue Code (if applicable) and as set forth in Section 9 of the CSCDA Joint Powers Agreement.
- Standard indemnification with respect to the financing and the project provided by the applicant to CSCDA in the appropriate financing documents.
- Standard indemnification with respect to the issuance and sale of Bonds provided by the underwriter to CSCDA in the purchase contract.
- CSCDA’s Counsel shall conduct a review of the financing documents for consistency with CSCDA policies and form documents.
- CSCDA’s Executve Director and Program Manager shall conduct a review of the financing and the associated public benefits.
- If offering material or a disclosure document is required, it shall contain language that CSCDA takes no responsibility for the disclosures contained therein (except for information under the sections titled “THE AUTHORITY” and “LITIGATION” to the extent such information pertains to CSCDA);
- If offering material or a disclosure document is required, the applicant shall have its counsel deliver a 10b-5 opinion covering such document at closing. The contents of such opinion shall be to the satisfaction of CSCDA and its Counsel.
- No gaming facilities are to be financed.
II. Requirements for Financings Rated “BBB- or Baa3” or Better
Financings that have been assigned a minimum of one investment grade credit rating1 by Standard & Poors, Moody’s Investors Service or Fitch Ratings will be subject to the issuance requirements below:
- Bonds may be issued and sold through a public offering, private placement or limited public offering with appropriate disclosure or offering materials.
- Bonds may be issued in $5,000 or such other minimum denominations at the discretion of the applicant and approved by CSCDA.
- Bonds not sold to an “underwriter” within the meaning of the Securities Act of 1933 (for example, by private placement) shall be sold to purchasers who have executed a sophisticated investor letter in form acceptable to CSCDA.
1 The lowest investment grade credit rating by S&P and Fitch is BBB- and by Moody’s is Baa3.
III. Requirements for Financings Rated Below “BBB-“, or Non-rated2
- Bonds must be sold to purchasers that are “qualified institutional buyers” as generally defined under Rule 144A of the Securities Act of 1933 and/or “accredited investors” as generally defined under Regulation D of the Securities Act of 1933, in each case who have executed a sophisticated investor letter in form acceptable to CSCDA.
- The offering material/disclosure document, if any, shall prominently indicate on the cover that Bonds can only be sold to qualified institutional buyers or accredited investors, as applicable.
- The face of each Bond shall contain a legend stating to the effect that such Bond can only be sold to qualified institutional buyers or accredited investors, as applicable.
- The bond documents shall contain provisions that restrict the ability to transfer the Bonds to only qualified institutional buyers or accredited investors, as applicable.
- Bonds may be issued and sold through a private placement or limited public offering with appropriate disclosure or offering materials.
- Bonds sold to “qualified institutional buyers” or “accredited investors” as specified above shall be sold in minimum denominations of $25,000 or greater.
2Except non-rated land secured financings that meet the authority’s minimum credit criteria detailed in Section IV.
IV. Requirements for Land Secured Bond Financings
The value of real property subject to either a special tax or special assessment to pay debt service must be at least four times the principal amount of the bonds being sold through CSCDA plus all other bonds outstanding that are secured by a special tax or assessment. All special tax or assessment bond financings must be enhanced by a reserve fund in the amount equal to the lesser of (a) 10% of the original proceeds of the bonds, (b) maximum annual debt service on the bonds, and (c) 125% of the average annual debt service on the bonds. The Authority may require additional measures to increase the credit quality of land secured bond issues. Land secured financings will be subject to the issuance requirements below:
- Bonds may be issued and sold through a public offering, private placement or limited public offering with appropriate disclosure or offering materials.
- Bonds may be issued in $5,000 or such other minimum denominations at the discretion of the applicant and approved by CSCDA.
Click here for a copy of CSCDA’s goals and policies for Mello-Roos Community Facilities Districts.
V. Criteria for Ownership (P3) Structure
- Sponsor would agree to include structural and document protections of CSCDA, set out in an outline prepared by Orrick Herrington & Sutcliffe based on its prior experience designing and implementing this structure. These protections will include (a) Disclaimers of contractual liability of any kind with respect to the bonds and all the other agreements to which CSCDA is a party, (b) Disclaimer of responsibility for information contained in any disclosure document (other than the “Authority” and “Litigation” sections), (c) Adequate indemnifications or Indenture provisions for the funding of accounts with enough revenues from the project to cover any expenses the CSCDA may incur for any reason (budgeted and unbudgeted), and (d) Delegation as much as possible to the Bond Trustee, the Manager or the Financial Consultant of any additional responsibilities CSCDA might otherwise have as a result of its ownership of the project.
- Orrick would be Issuer and Bond Counsel, and in such capacity would report to the Board any material adverse deviations prior to authorization of bonds and documents by the Board.
- In the event a disclosure document is prepared, any opinion rendered by disclosure or underwriters counsel would also be addressed to CSCDA.
- In event of private placement or limited offering, an investor letter would be required in connection with the original sale in form satisfying #1 and 2 above.
- CSCDA would select an Insurance Consultant, and the insurance required with respect to the project would meet or exceed the recommendations of the insurance consultant.
- CSCDA would not select, but would review the qualifications and concur in the selection of, the Facilities Manager.
- CSCDA would engage a Financial Consultant to act as CSCDA’s fiduciary financial consultant on the transaction, and post closing to oversee performance of the Facilities Manager, including formulation of budgets and approving disbursements, performing other tasks of the CSCDA as owner that are specified in accordance with #1d above, review post-issuance rebate and other tax and disclosure compliance, and report annually to the Board on the foregoing.
- CSCDA will, at its discretion, annually review the Insurance Consultant, Facilities Manager and Financial Consultant, and make any changes it deems appropriate, including replacement of any such party if it is in default or otherwise not performing satisfactorily, provided that CSCDA will not seek to change the Facilities Manager without concurrence of the Bond Trustee and any ground lessor, donee of the project or other holder of residential interests in the project, and subject to any conditions set out in the bond documents.
- The foregoing are in addition to the usual provisions and procedures the CSCDA applies to approving traditional conduit financings.
VI. PACE Financings
- In general, the initial purchasers of PACE bonds should be the applicable program administrator or an affiliate of the applicable program administrator. In those financings where that is not the case, the applicable program administrator will ensure that it has complied with state and federal securities laws and provide acceptable representations to CSCDA. For purposes of this Section VI, “affiliate” means any entity or person that directly, or indirectly through one or more intermediaries, owns, is owned by or is under common ownership with the applicable program administrator, in whole or in part, and any entity or person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the applicable program administrator by contract or otherwise.
Effective Date
CSCDA’s Financing Policy as set forth herein shall be effective immediately upon its adoption. (January 22, 2002; as revised on September 16, 2003, and as further revised on August 17, 2006, January 27, 2010, November 23, 2010, March 6th 2014 and April 23, 2015).
Fee Schedule
Policies for Fee Collection and Retention
- Issuance Fees and Annual Administration Fees will be assessed according to CSCDA policy.
- All Issuance Fees will be collected at the closing of the bond issue.
- An Issuance Fee Deposit of $5,000 ($2,500 for designated Small Issue Program projects) will be collected at the time of application submission for each financing application. The Issuance Fee Deposit is nonrefundable unless CSCDA, the State, or the city or county in which the project resides declines the proposed financing. The Issuance Fee Deposit is applied to the issuance fee at closing.
- No other fees will be collected unless and until the project financing closes, with the exception of projects requiring allocation of State volume cap. For projects requiring volume cap, the entire Issuance Fee is forfeited if the financing fails once the volume cap has been awarded by the State. If the application is withdrawn by the applicant, after submission to the State, but prior to the award of allocation, all fees except the Issuance Fee Deposit are refundable.
- All Annual Administration Fees will be paid at the time interest payments are due but no less than once a year. Annual Administration Fees are assessed against the original principal or outstanding principal at the required payment dates based on the financing type as noted on the Fee Schedule.
- A minimum Issuance Fee of $10,000 will be charged for any Individual Project.
An Individual Project may be defined as a project that has been awarded State volume cap in the past and requires additional volume cap for project completion within two years of original bond issuance, subject to Executive Director and Program Manager review. An Individual Project does not include the issuance of bonds for refunding purposes or phasing a project for State volume cap purposes. An Individual Project seeking an additional award of State volume cap for project completion in conjunction with a refunding of prior bonds issued will be subject to the Issuance Fee as specified on the Fee Schedule.
CLICK HERE TO DOWNLOAD FEE SCHEDULE
Local Debt Policy
CLICK HERE to download a copy of CSCDA’s Local Debt Policy
Post-Issuance Compliance
Upon the issuance of bonds, the issuer and borrower have a significant number of post-issuance responsibilities with regards to monitoring a bond issue for compliance with federal tax rules for the duration that bonds are outstanding. After issuance, bonds may be outstanding for anywhere from a few years to up to a few decades, during which time it is critical to ensure all material documents and records are maintained. Further, the Internal Revenue Service (“IRS”) recommends that material tax records be retained for the life of a bond issue, plus three years.
- A few examples of the many post-issuance compliance responsibilities a borrower may have include:
- Tracking that proceeds of a bond issuance are spent on qualified tax-exempt bond purposes.
- Keeping detailed records of all expenditures and investments related to bond funds.
- Ensuring the project financed is used in a manner consistent with the legal requirements.
- Providing necessary disclosure information regarding financial and operating status annually.
It is essential that borrowers develop and maintain a robust post-issuance compliance program to track their compliance with all applicable requirements. Borrowers that have effective post-issuance tax compliance programs in place are more likely to be able to respond to any possible IRS inquiry on a successful and cost-effective basis. In addition, borrowers with an established program will be well positioned to effectively judge the possible benefits of future refunding opportunities with this information close at hand.
In an effort to further assist borrowers with post-issuance compliance, CSCDA will send annual reminders and updates to relevant changes in post-issuance compliance requirements to all of its borrowers. Please note that the most important step in a compliance monitoring program is to consult with members of the finance team, including bond counsel, at the time of bond issuance to determine exactly what responsibilities a borrower has for the term of a particular bond issue.
K-12 Private School Policy
It is the policy of the California Statewide Communities Development Authority (the “Authority”) to consider favorably the issuance of bonds, notes or other evidences of indebtedness (the “Bonds”) for the financing or refinancing of K-12 educational facilities to be utilized by a non-profit organization (the “Applicant”) provided that the Applicant does not discriminate on the basis of a student’s national or ethnic origin, disability, race, creed, color, sexual preference or religion in the administration of its admission policies and is able to demonstrate that the community will receive a public benefit as a result of the financing or refinancing of the Applicant’s facilities, including, but not limited to, one or more of the following:
- The Applicant undertakes community outreach programs providing educational, cultural or philanthropic benefits to the community.
- The Applicant permits public access to its athletic fields, recreational facilities or other school facilities.
- The Applicant can demonstrate to the Authority that it provides reasonable financial assistance to those students in need by outlining the following: (1) total number of students receiving financial assistance; (2) total amount of financial assistance provided to individual students or entire student population; (3) other financial assistance offered to students.
The requirements as listed above will apply to the financing or refinancing of facilities that will be used for educating children in the elementary, middle and/or upper grade levels (pre-school to the twelfth grade). The Authority will consider each request for approval of projects not adhering to the Authority’s requirements as described above on a case-by-case basis.
The Authority may review the requirements as listed above from time to time and at such time will make any modifications to such requirements as the Authority deems appropriate.
Effective Date: April 20, 2011
Healthcare Facilities Policy
In 1991, CSCDA adopted economic development benefit guidelines based upon the finding that the nonprofit facility promotes economic development within the jurisdiction of a CSCDA Program Participant. Effective March 1, 2006, the CSCDA Commission adopted health care benefit guidelines to be considered in conjunction with the CSCDA economic development guidelines with respect to proposed bond issues for 501(c)(3) nonprofit healthcare facilities.
Economic Development Benefit*
A significant and growing opportunity for the creation and retention of employment to the California economy and the enhancement of the quality of life of local Program Participant residents;
The facility being a significant factor in the economic development of an area, promoting residential, commercial and industrial development and increasing the tax base; or
The facility providing the educational background and vocational training which is a necessary element to the development and retention of a capable work force.
Health Care Benefit*
Health care resource consideration given to quality of life for Program Participant and other area residents for access to quality medical care in general;
Emergency care consideration given to quality of life for Program Participant and other area residents; whether the health care facility provides 24-hour emergency care to all individuals, regardless of ability to pay;
Facility upgrades and increased patient capacity – consideration given to quality of life for Program Participant patients, health facility employees, physicians and staff for new, improved or expanded medical facilities;
SB1953 compliance – consideration given to quality of life for Program Participant patients, health facility employees, physicians and staff for medical facilities being rehabilitated or constructed in compliance with SB1953 and that provide a safer acute health care environment;
Public health facility assistance – consideration given to quality of life for Program Participant owned or operated public health facilities for healthcare applicants that identify programs, contracts or practices where facilities link with or otherwise assist or ease the burden on area public health facilities;
Community outreach consideration given to quality of life for Program Participant residents from efforts of health facility physicians and staff (such as free health screenings, immunizations for the elderly and disadvantaged, toy drives, holiday events, etc.);
Research consideration given to medical advancements by way of research that benefit Program Participant residents and others;
Medi-Cal and Medicare acceptance – consideration given to quality of life for Program Participant residents for health care providers that serve Medi-Cal and / or Medicare patients; special consideration should be given to disproportionate share hospitals (a government measure for how much care hospitals provide to designated low-income patients);
Non-reimbursed community benefit costs for the poor and the broader community – consideration given to quality of life for Program Participant and other area residents that include:
a. Charity care and uncompensated care
b. Unpaid cost of Medi-Cal services
c. Unpaid cost of Medicare services
d. Education
e. Research
f. Low or negative margin services
g. Nonbilled services
h. Cash and in-kind donations
i. Other benefits to the poor or broader community, as defined by the applicant
* Although any one of these listed benefits may demonstrate a clear public benefit, the absence of other benefits does not mean that there is a lack of public benefit associated with a project. There may be other benefits not listed which can also be considered to demonstrate public benefit.
Effective Date: March 1, 2006
Higher Education Policy
It is the policy of the California Statewide Communities Development Authority (the “Authority”) to consider favorably the issuance of bonds, notes or other evidences of indebtedness (the “Bonds”) for the financing or refinancing of higher educational facilities to be utilized by a non-profit organization (the “Applicant”) provided that the Applicant does not discriminate on the basis of a student or teacher’s national or ethnic origin, disability, race, creed, color, sexual preference or religion in the administration of its admission or hiring policies. Additionally, per the CSCDA General Guidelines the Applicant must demonstrate that the community will receive a public benefit as a result of the financing or refinancing of the Applicant’s facilities.
The requirements as listed above will apply to the financing or refinancing of facilities that will be used for higher educational facilities. The Authority will consider each request for approval of projects not adhering to the Authority’s requirements as described above on a case-by-case basis.
The Authority may review the requirements as listed above from time to time and at such time will make any modifications to such requirements as the Authority deems appropriate.
Effective Date: June 7, 2012
Public Access to Records Policy
It is the intention of the California Statewide Communities Development Authority (“CSCDA”) to make records accessible to the public in an expedient and reasonable manner under the terms of the California Public Records Act (California Government Code Section 6250 and following). Accordingly, the following policy has been adopted by the Commission of the CSCDA.
Requests
CSCDA prefers that all records requests be submitted in writing. However, should a request be made orally, the request will be recorded as accurately as possible and CSCDA will address the request in accordance with the manner in which it was recorded.
Requests for the right to inspect and / or for copies of CSCDA records that are disclosable under the Act may be made in writing to:
| Document Request: | |
VIA REGULAR MAIL: California Statewide Communities Development Authority VIA FAX: (916) 441-5507 VIA EMAIL: | |
Provided that if a member of the public appears in person during normal office hours at any facility where CSCDA public records are maintained requesting the right to inspect disclosable documents located at such facility, such person shall be presented with such documents for inspection as soon as practicable after making such a request following determination by the Authority officers or staff as to any applicable exemptions. Hard copies of records and documents requested will be provided to the member of the public making the written or oral request for such documents upon payment of the costs described below.
Records will be made available in an electronic format if requested in such a format and if they are currently maintained in such a format. If a particular kind of format such as CD or DVD is requested, records requested in that format will be made available in that format if CSCDA has used that format to create copies for its own use or for provision to other agencies. CSCDA will not release a record in an electronic format if to do so would jeopardize or compromise the security or integrity of the original record or of any proprietary software in which it is maintained. CSCDA is not obligated to reconstruct a record in an electronic format if the record is no longer available in that form.
Timing of the Response
Each request for CSCDA records shall be reviewed as soon as possible by Authority officers or staff to determine (i) whether the documents are exempt under the Act, (ii) where the documents are located and (iii) if to be copied by the CSCDA, an estimation of the time required for duplicating and shipping the requested documents and the cost of duplication and shipping (as required below). This determination will be provided to the person requesting documents not more than 10 days after the CSCDA has received such request unless “unusual circumstances” exist, in which case, the person requesting documents shall be provided in writing, the date that the determination will be made available (which date shall be not be extended more than 14 days thereafter) and the unusual circumstance causing the delay.
Upon receipt of payment of costs, CSCDA shall promptly make the requested copies of documents available to the person requesting such documents.
Costs
Person requesting copies of CSCDA records shall, prior to the duplications of such records, pay the costs of duplication and shipping as follows:
| Duplicating/production costs: | |||
| $.25 per page | 8.5×11 or 8.5×14 page | ||
| $.25 per page | Computer printouts | ||
| $5.00 each | Photograph reproduction | ||
| Actual cost plus $5.00 | Copies that require special equipment or special technique | ||
| No charges | Person requesting documents makes own arrangements for documents to be copied on site | ||
| Shipping costs: | |||
| Actual postage | First class mail | ||
| Actual cost plus $5.00 | Overnight delivery or messenger service | ||
| No charges | Documents picked up by person requesting them | ||
Costs shall be paid by check or money order made payable to CSCDA and delivered to the Secretary at the same address as written requests for documents noted above.
Distribution of Policy
CSCDA shall post this policy at www.cscda.org and shall make a copy of this policy, at no cost, to any person requesting the policy.
Conflict of Interest Code
CLICK HERE to download a copy of CSCDA’s Conflict of Interest Code
