Mary Wright Center Office Project:

Project:  Mary Wright Center, Spartanburg, SC

Description of Scope:  Financial advisory services to structure, solicit and implement new markets tax credit and historic tax credit financing for an office facility conversion of an historic elementary school building to be the headquarter offices of the Spartanburg Housing Authority and its related affiliates, offices for certain departments of the City of Spartanburg, and offices for a variety of other non-profit users.

Client:  The Housing Authority of the City of Spartanburg, SC (SHA) acting through its subsidiary the Spartanburg Housing Property Company (SHAP); SHA owns and operates over 1,300 public housing units, oversees more than 1,800 housing choice vouchers, is general partners and manager of four low-income housing tax credit projects totaling more than 300 rental units, and has developed and sold more than 300 homes in six affordable home ownership developments. The agency employs approximately 100 persons and has an annual budget of more than $20 million.

Project Size:  The Mary Wright School was an elementary school constructed in 1950 made up of 20-classrooms in an L-shape configuration with a kitchen and multi-purpose room. Later additions added more classrooms, a gymnasium and music room. The building is being renovated into a modernized 45,000 square foot office facility with adjoining warehouse for the tenants described above. Total redevelopment costs are in excess of $7.5 million.

Services Performed:  S.B. Clark Companies was retained to develop and implement a viable financing plan that provided the office uses competitive rents. The firm evaluated the proposed redevelopment budget, the status of the application to the state historic preservation office and National Park Service for historic designation, and then prepared a detailed proforma model. This proforma combined four qualified low-income community investment segments (QLICIs) to fund the project costs. The QLICIs were made up of: i) a senior real estate loan; ii) an associated supplemental loan, equal to 25% of the senior loan to be effectively forgiven after the 7-year new markets tax credit compliance period concludes; iii) a historic tax credit (HTC) and other equity secured loan; and iv) an associated supplemental loan equal to 25% of the HTC other equity loan. The financial proforma also detailed the construction period draws and the seven years of operation during the NMTC period, as well as demonstrating the permanent loan taking out the non-forgiven QLICIs.

The firm prepared a detailed solicitation for the selection of a community development entity (CDE) and an investor for the historic tax credits, ending up with Wachovia and Square D Company, a division of Schneider Electric (SA), respectively filling such roles. Upon receipt of commitments from the financial investors and approval by SHA’s Board of Commissioners, S.B. Clark Companies oversaw the working group of attorneys used to document and close the transaction, insuring that the business terms negotiated from the competitive process were preserved and/or enhanced for the benefit of SHA to the greatest extent possible.

Multi-Modal Bonds.  S.B. Clark Companies has extensive experience assisting bond issuers with floating rate debt both in the variable rate demand bond format with letters of credit and in the new auction rate securities format. One bond issue was a multi-modal bond initially issued in a 35-day auction rate format. This was the first variable rate issue by the client and S.B. Clark Companies assisted in preparing explanation memoranda and presentations during their deliberation.

Interest Rate Swaps.  S.B. Clark Companies acted as financial advisor to a client in their offering of $98 million auction rate securities, half of which was swapped in a LIBOR fixed payor swap to 3.76% for 29 years. Separately, S.B. Clark Companies acted as pricing verification agent on several large swap transactions whereby the swap provider’s proposed rate in a negotiated transaction was independently priced, with appropriate “day-count” adjustments so that the net fee earned by the swap provider did not exceed the level previously agreed upon. S.B. Clark Companies spent significant time in board and staff education sessions describing and detailing the elements and processes of interest rate swaps. Recently the firm presented a comprehensive overview of these structures and the risks associated therewith to a regional meeting of the Healthcare Financial Management Association.