Variable Rate Program
The Variable Rate Program (VRP) was created in 1985 through the sale of $67 million Variable Rate Demand Revenue Bonds. The bonds are secured by a rated bond insurer. Generally, investment grade facilities may borrow funds without additional security and non-investment grade facilities must obtain a letter-of-credit to provide security for their loans.
Structured as a revolving pool of funds, the VRP has been and continues to be utilized by borrowers for the financing and refinancing of construction and renovation projects, as well as equipment acquisitions. The revolving pool concept provides several distinct advantages to borrowers and enables the Authority to continue to make loans until the year 2020. The VRP offers a cost-effective, efficient, and flexible vehicle for financing your capital needs.
Cost-Effective
- Low Interest Rate
- No prepayment penalties
- Construction escrow accounts
- Minimal financing costs
- No reserve fund requirement
- No need for capitalized interest funding
Flexibility
- Terms reflect the historical and anticipated financial and operating performance of the borrower
- Terms related to the bonds are standard and terms related to the security are negotiated between the borrower and their letter-of-credit provider
- Loans are tailored to meet the borrower's current and future capital financing needs
Advantages over Bonds
- Minimal time involvement
- Processing time is approximately seven to ten weeks
- Standardized documents
- Money is available for private uses; e.g., medical office buildings
- No annual secondary market disclosure informatin requirement
- Refinancing of these loans will not count against the limited number of advanced refundings.
Average Interest Rate Performance
- 10-year average 3.90%
- 5-year average 3.41%
Simplified Loan Process
The loan process has been simplified in an effort to expedite a loan request. Simply call the Authority and request an application. The completed application will be reviewed, a credit analysis prepared, and presented to the Authority for approval. The letter-of-credit provider will negotiate the security package directly with you. The Authority's staff will draft the standard documents. A closing will be held through the mail.
