HJ Sims Successfully Closes on $13.5m Series 2022 Bonds for a Start-up Classical Idaho Public Charter School
“Kootenai Classical Academy will be the first Classical K-12 Charter School in North Idaho, starting with grades K-8 and adding a grade each year to reach a targeted enrollment of 702 students. With more than 1,500 interested students on the waiting list for the initial 428 seats available for 2023-2024, it was crucial that we complete our bond financing and break ground in time to complete our first phase of school facilities construction prior to the school opening in August 2023.
HJ Sims remained our partner through all of the challenges and unforeseen delays that, at times, made it seem that our dream might not become a reality, working together with our financial advisor to find a private capital investor who supported our mission and vision for the students of North Idaho. Kaiti and Rob met each new challenge with calmness and grace, never wavering in their support of the board and the entire finance team. We are so grateful for their knowledge and expertise.
Partnering with HJ Sims was a great choice for Kootenai Classical Academy. We appreciate their integrity and encouragement, and look forward to the possibility of working with them again when we are ready to expand into our next phase of school construction!”
— Renee Burgess, Board Treasurer, Kootenai Classical Academy
Partnered Right®
Kootenai Classical Academy (“KCA”) is a start-up public charter school approved to serve up to 702 students in grades K-12 in Post Falls, Idaho beginning the 2023-2024 school year. In its first year KCA will have capacity to serve 428 students in grades K-8, and as of fall 2022 over 1,500 students have expressed interest in attending what will be the first K-12 classical school in the region. KCA is a member of the Barney Charter School Initiative (“BCSI”) of Hillsdale College, one of the most well-known classical school models in the country. Authorized by the Idaho Public Charter School Commission, KCA’s initial charter was approved for five years, through June 30, 2028.
Structured Right®
The Series 2022A tax-exempt and Series 2022B taxable Nonprofit Facility Revenue Bonds enabled KCA to acquire land and begin construction on its permanent facility in time to open in August 2023 and welcome its first class of students for the 2023-2024 school year.
Total bond proceeds of $13.5 million were used to acquire 11 acres of real property and begin construction on 31,000 square feet of new school facilities. The project will create 18 classrooms and enough space to serve the initial 428 students in grades K-8. A future expansion will be needed to accommodate the addition of grades 9-12 and growth to a full K-12 school. The bonds were structured with a 40-year amortization (allowing for the lowest annual debt service), capitalized interest, and a 3-year call option at 103%, an important feature that will allow KCA to refund the outstanding bonds at a lower rate once it has an established operating history and no longer carries start-up risk. A special optional redemption feature allows for the school to redeem up to $3 million of bonds at par based on fundraising efforts in the first two years.
Executed Right®
The $13,485,000 bond issue was split into two series, one long-term tax-exempt series and one 10-year taxable series. The $12,705,000 tax-exempt Series 2022A ($12,705,000) has a final maturity of 2062, while the $780,000 of taxable Series 2022B has a final maturity of 2032. The Series 2022 bonds have a three-year optional call at 103%, reducing 1% each year until they can be redeemed at par in 2028. HJ Sims solicited term sheets from multiple investors and was able to secure a 7.25% coupon at par for both the Series A and B bonds, lower than comparable start-up financings in the market at the time of pricing and closing.
Financed Right®
On November 29, 2022, HJ Sims closed on the $13.5 million Series 2022 Bonds with the entire issuance purchased by a single institutional investor. KCA will now start construction and open the school with its permanent facility once completed in August 2023.
For more information, please contact:
Robert Nickell
214.681.0952