Taxable Obligations
A viable and expeditious financing alternative. Taxable obligations offer an alternative for projects which either cannot qualify for tax exempt financing or for which the obligor of the financing chooses not to pursue the tax-exempt debt route due to the rules and requirements associated with the issuance of tax-exempt debt. Unlike a tax-exempt financing, taxable obligations may be issued either by a political subdivision for the benefit of the entity which will utilize the proceeds of the financing (the "Obligor") or directly by the Obligor and do not require the various elements necessary to qualify for tax-exemption. Since the complex private activity issues of tax-exempt financings are avoided, taxable financings are "quick to market," usually within 30-40 days.
Consideration of various approaches. We are able to advise Obligors on the advantages and disadvantages of various approaches to the issuance of debt so that the Obligor is able to maximize the return. For example, in certain situations, it may be beneficial for the Obligor to ask its local subdivision to issue the taxable debt.
Flexibility. The use of the proceeds of taxable obligations is not restricted by federal or state law (except in cases in which a political subdivision is the issuer) and funds may be used for project finance (land, building, new or used equipment), refinancing any type of debt, restructuring debt or for working capital. The financing needs of the Obligor can be the primary focus, not tax law issues, allowing creativity in financing structure and duration.
Full range of document services. We prepare trust indentures, remarketing agreements, note purchase agreements, offering documents, trustee documents and various other certificates for taxable financings and if a decision is made to seek a rating for a taxable obligation, the rating agencies are familiar with our documents.
(For a discussion of our experience with taxable housing financings, please
see HOUSING – Multifamily Housing.)
