“The cost for the private placement is much cheaper” than a public bond sale, said Queener. But the speed of execution was even more important to him than the savings.

Bond transactions are usually unaffordable for small properties, so private placement may be the only way some small tax-exempt bond deals are feasible unless the bonds are pooled into one large bond transaction with other small developments. (Pooling of properties into one bond deal allows the various projects to share the fixed costs of the transaction.)

In a public sale of a bond, a financial services firm enhances the bond so it can get a much better credit rating than the developer would be able to get on its own. The bond is then ready for sale to third parties. For example, Citibank Community Development (CCD) typically provides enhancement for 17 years – the two-year construction period plus the 15-year low-income housing tax credit compliance period – noted Steve Hall, CCD’s marketplace director.

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