What is Public/Municipal financing?

Public/Municipal financing generally refers to the use of governmental agencies and their borrowing/lending powers to issue their bonds for the purpose of raising funds for certain projects. The funds are raised immediately, and the bonds, which are generally sold to investors or the public, are paid off over a specified period of time at a certain rate.

Some bonds are issued by governments for their own use or the use of their citizens, such as to raise operating funds, build a recreation facility, or construct a municipal water system. Typically, these are called "governmental bonds".

Most of the transactions handled at Sell & Melton, though, are not specifically for the use of the governmental entity, but are in fact intended to raise funds for use by another entity through the governmental borrowing power of issuing bonds. These type of flow-through financings are referred to in the industry as "conduit financings".

These bonds are typically referred to as "revenue bonds," because the Borrower's revenues derived from the project are the only payment stream which is to be used to pay the bonds, and the bonds are not obligations of the issuing governmental entity and the government is not required to pay the principal and interest on the bonds if the project's revenues are insufficient to pay the debt service on the bonds.

The revenue bonds issued by governmental entities are generally of two types:
"tax-exempt" and "taxable".

Of course, because the federal government and IRS do not desire to allow states and their subdivisions plenary power to issue bonds the interest upon which people do not pay taxes, Congress and the IRS have placed significant restrictions on the type of projects and uses that governmental entities can issue bonds that qualified as "tax-exempt."

Who can use this type of financing?

• Manufacturing companies, industrial companies, food processors and similar businesses;
• Churches, schools, colleges, and other educational institutions or non-profit groups;
• Hospitals, nursing homes, assisted living facilities;
• Providers of low-moderate income housing and elderly housing;
• Local and State Governments.

What roles does Sell & Melton play in Public/Municipal Financings?

Sell & Melton, LLP has practiced in the area of Public/Municipal Finance since the firm's inception in 1980. Since that time, the Public/Municipal Section at Sell & Melton has participated in various roles as Issuer's counsel, Bond Counsel, and/or Borrower's counsel in over $1 billion in bond transactions. Sell & Melton continues to be a major player in Public/Municipal Finance in Middle and South Georgia. In addition, Sell & Melton has acted as Bond Counsel in Tennessee, Florida, Indiana, Texas, Missouri, Mississippi, New York, Ohio, Illinois, California, South Carolina and North Carolina.

Buck Melton and R. Chix Miller are two of the only three attorneys in Middle Georgia listed in The Bond Buyer's Municipal Marketplace Directory, known as the "Red Book." The Red Book identifies those attorneys and firms who specialize in public/municipal finance.

Members of the Public/Municipal Finance Section: click for more.

See R. Chix Miller for Bonds.