Old Redford Academy received its charter from Central Michigan University and began operations as a public school academy in 1999, enrolling 270 students. The Academy has grown substantially, offering grades Pre-K-12 to 1,977 student from three leased locations in Detroit, MI. The proceeds from the Series 2010 Bonds were used to finance (1) the costs of the renovation, furnishing and equipping of the Middle School Facility; and (2) the refinancing of: (a) a Land Contract, to aquire the Middle School Facility (b) a Variable Rate – Installment Note to aquire the High School Facility; and (c) Other Installment Notes used to construct an addition to the High School Facility and HVAC upgrades. This is a uniquely structured deal, The Foundation, a 501(c) (3) nonprofit entity, owns the school buildings and leases them to the Academy. The Academy agreed to pays lease ayments that are sufficient to cover the installment payments for the Bonds. This is the second financing complete by the Academy through this structure. The first one was in 2005 for $11,110,000. It was the first fixed-rate, long-term bond issue completed through the Michigan Public Education Facilitates Authority on behalf of a charter school.
The Academy was able to use $500,000 of appropriated and grant funds from the States of Michigan to fund their debt service reserve fund. Funding the reserve with grant and appropriated dollars decreased the amount the Academy had to borrow effectively reducing the interest expense.
In the weeks prior to pricing, the Underwriter’s Institutional Sales team undertook a strong sales effort to draw as much interest as possible from potential investors. The Series 2010A, 30 year, fixed-rate, Tax-Exempt Bonds priced with an average coupon of 6.31%. The Series 2010B Taxable Bonds (used to pay for cost of issuance exceeding 2% of Bond proceeds) priced at 8% maturing 2013.