Certificates of Participation (COPs) are tax-exempt securities evidencing a pro rata share in a specific pledged revenue stream, usually lease payments by the issuer. The certificates entitle the holders to receive a share, or participation, in the lease payments from a particular project. The lease payments are passed through the COPs trustee who then distributes the lease payments to the certificate holders.
This form of financing is typically utilized by large non-profit organizations, such as universities and hospitals, as well as municipalities as a way of issuing debt without the need to obtain the approvals required for General Obligation Debt.
The key characteristic of a COPs issue that distinguishes it from traditional bond indebtedness is a non-appropriations clause. The non-appropriations clause means that payments of the lease are dependent upon an annual appropriation by the governing body
- Municipal buildings such as office buildings, public administration buildings and courthouses
- College and university buildings and equipment, including housing facilities, libraries and instructional facilities
- Health care facilities
- Prison, jail and other correctional facilities
- Parking Structures
Advoca Capital works closely with the borrower in COPs financings. Advoca structures and places the COPs and the proceeds from the sale of the COPs sold in the municipal securities market are used to finance the project.
The Advoca Capital program utilizes a straightforward application and closing procedure and is funded by the issuance of the COPs.
- Engage Advoca Capital as Advisor
- Advoca Capital undertakes an initial evaluation to determine if the project qualifies for the program
- Upon qualification, Advoca Capital coordinates the working group members
- Advoca creates the financing package to be forwarded to the rating agencies for review
- Advoca coordinates the financing schedule and conference calls throughout the financing process
- Bond documents are generated and distributed to the financing team
- Borrowers generally can be funded within 45 to 60 days following execution of the COPs Term Sheet
