HJ Sims Successfully Closes on $13.9 million Series 2023 Bonds for Start-up Public Charter High School in CA
“We worked with HJ Sims for over a year as we navigated through various approvals and permits to get us into a position where a tax-exempt bond was feasible. Through all of the ups and downs Rob Nickell and Kaiti Wang were an absolute pleasure to work with. Throughout the entire process, the HJ Sims team was communicative and worked collaboratively towards finding a viable funding source for our project. As a brand new single-site start up, having access to the capital to ensure we had a long-term home was a significant priority for our team. We recognized early on the impact having a state-of-the-art facility would have on our ability to carry out our mission. The acquisition of our facility and the upcoming conversion into a high school campus is not only transformational for our organization but also for the entire North Sacramento Community which has historically been one of the most underinvested parts of our entire city. On behalf of the entire Capital College & Career Academy team, thank you for your support.”
-Kevin Dobson, Founder & Executive Director of Capital College & Career Academy (CCCA)
Capital College & Career Academy (“CCCA”) is a start-up public charter high school opening in Sacramento, California in fall 2023. Authorized by the Sacramento County Board of Education, CCCA’s initial charter was approved for five years, through June 30, 2028, and allows it to serve up to 400 students in grades 9-12. In its first year CCCA expects to serve 80 students in its freshman class.
Offering college preparatory curriculum, CTE courses, internships with industry leaders in the construction trades, and dual enrollment through two local colleges, CCCA presents multiple pathways that lead to tangible certifications, real world job experience, and college units.
The Series 2023A tax-exempt and Series 2023B taxable revenue bonds enabled CCCA to refinance the purchase of its school site along with the existing building, and begin work in time to open in August 2023 and welcome its first class of students for the 2023-2024 school year.
Total bond proceeds of $13.9 million were used to refinance the acquisition of 1.27 acres of real property, begin site work, and make renovations to the existing building to create 16 classrooms and install four modular buildings for a total size of approximately 20,000 square feet.
The bonds were structured with a 40-year amortization allowing for the lowest annual debt service, capitalized interest, and a 7-year optional call at 103%.
The $13,905,000 bond issue was split into two series, one long-term tax-exempt series and one 10-year taxable series. The Series 2023 bonds have a 7-year optional call at 103%, decreasing 1% each year until they can be refunded at par in 2033. The relatively shorter call is a valuable feature that could allow CCCA to refinance its bonds at a lower rate after the risk associated with start-up schools has passed.
HJ Sims helped identify Local Initiatives Support Corporation as the lending partner on a one-year bridge loan at 5.5% used to purchase the property in June 2022.
HJ Sims sought out potential long-term investors to refinance the bridge loan and fund the entire cost of the project, and opted to pursue a deal with a single investor willing to purchase the entire amount of bonds needed for the project.
The tax-exempt bonds consist of a $1 million term bond maturing in 2037 with a coupon of 7.6% and a $12.235 million term bond maturing in 2062 with a coupon of 8.0%. The $670,000 taxable bonds consist of one term bond at a rate of 10.0% due in 2032. All bonds were priced at par.
On February 17, 2023, HJ Sims closed on the $13.9 million Series 2023 Bonds with the entire issuance purchased by a single institutional investor. With site work and renovations now underway, CCCA will open its doors and start school in its permanent facility by August 2023.
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