Herron High School Closes on Qualified School Construction Bond Financing

Anderson Partners LLC recently closed on financing for Herron High School utilizing Qualified School Construction Bonds.  Herron is a charter school located in and chartered by the City of Indianapolis which was recently named the 26th best high school in the nation by US News and World Report.

The Herron project consists of the renovation of two historic structures on the former Herron Art Museum Campus at 16th and Pennsylvania Streets.  Working closely with the Board of Directors and school officials, Anderson Partners LLC structured a financing package utilizing $4,284,000 in Qualified School Construction Bonds (“QSCB”) issued by the Indiana Finance Authority. QSCBs were authorized by the American Recovery and Reinvestment Act of 2009 and provide a direct payment subsidy from the US Treasury for nearly 100% of the interest cost of the QSCB.

Indiana Bank and Trust Company acquired an A Bond of $4,000,000.  With a floor interest rate of 6.75% and a US Treasury reimbursement/direct pay rate of 5.27% at closing, Herron’s all in rate on the QSCB financing is 1.48%.

Local Initiatives Support Corporation (LISC) acquired a $284,000 B Bond with a rate of 7% and a reimbursement rate at closing of 5.17%, for a mezzanine rate of 1.83%.

The financing structure will generate more than $2,000,000 in interest savings to the school.

Herron High School was the first direct pay QSCB transaction closed in the State of Indiana on behalf of a charter school.  Construction began last week, and the renovated buildings will be open for students in August 2011.

Congratulations to Herron High School on its growth, awards, and strategic planning.

About Anderson Partners:  Anderson Partners is a law firm in Indianapolis, Indiana specializing in creative financing.  Our clients include charter schools, developers, nonprofits, cities and towns and others seeking to finance transactions utilizing tax credits, bonds and other creative financing tools.  You can contact us at janderson@jralelal.com or on the web at www.andersonpartnersllc.com.

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