• Who is eligible for financing through the Authority?
    Generally, any organization "located" in New  Jersey which is authorized or permitted by law, whether  directly or indirectly through a holding corporation, partnership or other entity, to provide health care-related services. Assisted living, in addition to many other services, is considered a health care-related service.
  • Is tax-exempt financing available?
    Tax-exempt financing is available if specifically permitted by the Internal Revenue Code. Generally, the Code limits the use of tax-exempt financing to those for-profit, Authority-eligible projects which can meet the requirements of "qualified residential rental projects" identified in Section 142(d) of the Code. Sufficient private activity bond cap allocation must also be granted in order to qualify for tax-exempt financing (See below).
  • What are the major requirements of Section 142(d)?
    There are two major requirements. First,  the services provided by the facility must qualify as residential, as more clearly defined by the Code. And second, a certain percentage of the units in the project must be occupied by individuals or families who meet the Code definition of low and moderate-income tenants.
  • I've heard about a volume cap allocation being needed to be able to get tax-exempt financing. What is a volume cap and how does my organization get it?
    In order to issue tax-exempt debt for a for-profit organization, the issuer, in this case the Authority, must receive an allocation of the Unified Volume Cap ("UVC"). The UVC was established as a result of the 1986 amendment to the Code in order to limit the amount of tax-exempt debt issued on behalf of certain types of facilities.

    Annually, the Authority will request a UVC allocation from the Office of the State Treasurer. The Authority will distribute the allocation in conformity with its internal procedure, which generally provides allocation on a first-come, first-served basis as long as the borrower continues on a timely path toward a financing. The Authority's procedures for the allocation of "volume cap" are available upon request.

  • Will the Authority issue bonds on a non-recourse basis?
    The Authority will consider the issuance of bonds on a non-recourse basis. Ultimately, it will be the market which determines whether non-recourse bonds are sellable.
  • Does the Authority require a minimum loan to value ratio?
    No, this is another case where the market will determine what loan to value ratios are acceptable.
  • Is a credit rating required?
    Most, but not all, bond issuances will carry a credit rating from one or more independent rating agencies. The credit rating is intended to measure the probability of timely repayment of principal and interest on the bonds being issued by the borrowing institution. The rating agency continues to monitor the institution's financial position over time and provides updates to investors when required. However, there is also an option to purchase credit enhancement, such as bond insurance or a letter-of-credit from a commercial bank, to enable the issuance to be sold based on the credit rating of the enhancement provider and not the borrowing institution. Often, both options are explored and evaluated taking into consideration the financial strength of the borrower.
  • Under what circumstances will a feasibility study be required?
    Following a policy change made in June 2007, the Authority no longer requires a feasibility study, with the understanding that, should a borrower need a feasibility study to sell bonds, the underwriter will ask the borrower to obtain one.
  • Assuming that my project fits the requirements, how much of my project costs can be financed on a tax-exempt basis?
    There are two factors that are important; first, those costs which are allowable under the Tax Code, and second, those costs which investors are willing to finance.

    Generally, the Tax Code will permit project costs except: (i) working capital, (ii) any capitalized interest beyond the construction period, and (iii) any costs of issuance in excess of two percent of the bond size. The marketplace, however, may place greater limits on the costs covered by the financing. A borrower should discuss this issue at greater length with its financial advisor or investment banker.

  • Does the Authority lend its own money?
    As a conduit issuer, the Authority issues bonds on behalf of a borrower and then lends those proceeds to that borrower. The borrower provides security to the bondholder, not the Authority. Therefore, the interest rate on the bonds is based on the market's assessment of the likelihood that the borrower, and not the Authority, will make timely payments on the bonds. Under its Capital Asset Program, the Authority loans proceeds from a bond issue completed in 1986 to qualified borrowers for certain types of projects. The Authority does, however, have one financing program that involves lending money from its own funds; that is the Authority's Federally Qualified Healthcare Centers Loan Program.
  • What if my project doesn't qualify for tax-exempt financing?
    There may be other financing methods available for your project, including the issuance of federally taxable bonds through the Authority. All interest on bonds issued by the Authority is exempt from State of New Jersey taxation.
  • How much does the Authority charge to complete a financing?
    The Authority's fee schedule is posted here.
  • I have a lot more questions. How can I get them answered?
    Members of the Authority's staff are available to meet with potential borrowers or spend time on the phone going over the particular circumstances of a financing. Visit the Authority's web site at where you will find additional financing information, as well as phone numbers and e-mail addresses of Authority staff. The Authority's central phone number is 609-292-8585.