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California Educational Facilities Authority

Introduction

The California Educational Facilities Authority (CEFA) was established in 1973. CEFA operates pursuant to the California Education Facilities Authority Act, as set forth in the California Education Code, Section 94100-94216.11 and the California Code of Regulations (Title 4, Division 12, Chapters 1-3).

CEFA was created for the purpose of issuing revenue bonds to assist private non-profit institutions of higher learning, in the expansion and construction of educational facilities. Because it is authorized to issue tax-exempt bonds, the Authority may provide more favorable financing to such private institutions than might otherwise be obtainable.

The law specifically provides that bonds issued under this Act shall not be a debt, liability, or claim on the faith and credit or the taxing power of the State of California, or any of its political subdivisions. The full faith and credit of the participating institution is normally pledged to the payment of the bonds.

Eligibility

In order to meet the requirements for CEFA financing, an institution must:

  • Be accredited by the Western Association of Schools and Colleges. Colleges or universities offering legal education must be accredited by the Committee of Bar Examiners of the State Bar, or the American Bar Association.
  • Be non-sectarian, or if any college or university requires its students to take courses in religion or theology, the application must be accompanied by a factual showing that such required courses (a) are taught according to the academic requirements of the subject matter, (b) cover a range of human religious experiences, (c) are not limited to courses about a particular faith, and (d) are not taught in a manner or for the purpose of indoctrinating or proselytizing students.
  • Have been functional for a minimum of three years prior to submitting an application for financing and provide three years of audited financial statements.
  • Have revenue or collateral sufficient to cover debt service on the proposed financing.

Should you have questions on eligibility, contact Ronald Washington, Deputy Executive Director at (916) 653-2872.

In addition to initial eligibility, the Authority requires borrowers to comply with its Bond Issuance Guidelines per bond rating category and provide loan security provisions and bond covenants that correspond with its rating.

Use of Funds

Proceeds from CEFA financings may be used for the following project related costs:

  • Construction
  • Remodeling and renovation
  • Land acquisition (as part of the proposed project)
  • Purchase of or lease of equipment
  • Refinancing or refunding of prior debt
  • Costs of bond issuance and reimbursement of prior expenses.

Application and Approval Process

Submitted applications are thoroughly reviewed by the Authority. The borrower may select the following personnel, subject to approval by the STO:

  • A qualified financial advisor, or investment banker, with experience in preparing municipal bond offerings.
  • Bond Counsel
  • Trustee to act as a depository and record keeper for the required bond reserve, redemption, and other funds.

A complete list of these approved companies can be found at http://www.treasurer.ca.gov/bonds/.

The Authority utilizes the services of two financial advisors:

  • Macias Gini & O'Connell LLP assists with the application review and financial analysis.
  • Public Financial Management (PFM) assists with the bond sale process.

Upon a finding by the Authority that the application is in good order and the institution is in a position to meet the financial obligations of a bond issue, a CEFA meeting is scheduled for approval of the financing. The bond issue is then scheduled for either public or private sale. Within thirty days of the bond sale, a closing takes place at which time the transaction is completed.