Historically, one of the biggest obstacles to charter school
formation has been the challenge of financing and securing affordable
facilities. With a growing charter school movement in Nevada and the need
for a solution, the Nevada Legislature enacted the Charter School Financing Law
during the 2013 session.
NRS 386.612-649 authorizes The Department of Business and
Industry, Director’s Office (Department) to be a conduit issuer of tax-exempt
bonds for Charter Schools in the State of Nevada. The statute authorizes the
issuance of tax-exempt bonds and other obligations to finance the acquisition,
construction, improvement, maintenance or furnishing of land, buildings and
facilities for charter schools. The Department works with bond council
and charter schools to facilitate the acquisition of bond proceeds from the
Benefits of Tax -Exempt Bond Financing
Better Rates: Tax-exempt rates are lower than taxable
rates or traditional bank financing.
Better Terms: No up-front cash or equity is required,
allowing schools to borrow up to 100% of the cost of the project.
Longer Time: Tax-exempt debt may be issued at a
long-term fixed interest, allowing for predictable cost of capital beneficial
to the budgeting process.
Criteria to Apply
To obtain bond financing from the capital markets for a
project, a Charter School must provide financial and operational history
sufficient to meet the market requirements.
The applicant Charter School must have received within the
preceding 3 consecutive school years one of the two highest ratings of
performance pursuant to the statewide system of accountability for public
schools or received equivalent ratings in another state as determined by the
Department of Education (NRS 386.632).
The applicant Charter School is required to provide a 5-year
operating history unless the bonds are to be only sold to a qualified
institutional buyer or the applicant has received a rating within one of the
top four rate categories of Moody’s Investors Services, Inc.; Standard and Poor’s
Rating Services, or Fitch IBCA, Inc.
If an operating history is not available and the applicant
does not meet the above requirement, the applicant will need to provide an
obligor[i] that will guarantee the payment of the
principle, premiums, if any, and interest on any bond issued.
is limited in amount and purpose to the payments of the costs associated with
the cost of the project.
applicant will be responsible for the application fees and bond council fees
needed to obtain bond financing. A $50,000 deposit is due upon receipt of
the certification of inducement by the Department. The Department will
refund the remaining portion of this deposit after deducting actual costs.
applicant will also agree to pay the Department a $5,000 annual fee to cover
the annual administrative costs of the bond issue.
bonds issued by the Department pursuant to this statute, inclusive, are
special, limited obligations of the State.
State Board of Finance must approve of the financial package before the bonds
can be sold to the capital markets.
Department and State Board of Finance must ensure there are sufficient
safeguards in place so that all money provided by the bond financing will be
expended solely for the purposes of the project.
in NRS 386.621