Client success: Buffalo Niagara Medical Campus saves nearly $1 million on parking garage
As a previous tax-exempt bond neared maturity on a parking garage at New York’s Buffalo Niagara Medical Campus (BNMC), leadership teams considered various refinancing options that would save money they hoped to use for additional improvements on the existing campus for their staff, patients, and visitors. With guidance from a Key Government Finance specialist, BNMC leaders learned they could save nearly $1 million in interest with a refinancing option. Would it be practical for BNMC to refinance a full year before the existing debt matured?
Challenge
BNMC is a nonprofit organization managing a 120-acre campus, focused on creating and contributing to a vibrant and healthy urban community. In 2012, BNMC utilized tax-exempt bond financing to construct the Michigan-Goodrich garage which provided much-needed parking spaces for the healthcare facility’s staff, patients, and visitors. The two-acre 675,000-square-foot garage includes 2,036 parking spots.
As the construction bonds neared maturity, BNMC’s CFO, Pat Kilcullen, invited financing providers to recommend refinancing options. Key Government Finance’s David Zapata and KeyBank Commercial’s David Reading proposed a conduit financing option through the Buffalo and Erie County Industrial Land Development Corporation that could save BNMC nearly $1M in bond interest. This option also offered the lowest cost and lowest interest rate for BNMC.
“Considering market interest rates, we saw no reason to wait, and the professionals from Key Government Finance worked diligently to make the process seamless for us.”
Pat Kilcullen, Chief Financial Officer, Buffalo Niagara Medical Campus
“We initially presented two options: the conduit solution, and a taxable financing solution through the KeyBank Real Estate Capital® group,” said David Zapata, vice president, East Region manager at Key Government Finance.
Reading, a KeyBank senior vice president based in Buffalo, provided additional guidance by presenting multiple options to BNMC to realize their refinancing goals.
“BNMC ultimately went with the Key Government Finance conduit solution because of interest expense savings and the ability to utilize the existing tax-exempt legal documentation,” said Zapata.
Solution
Zapata worked with the Buffalo and Erie County Industrial Land Development Corporation to refinance the Tax-Exempt Revenue Bond (Series 2010). In January 2021, Key Government Finance closed on a $20M tax-exempt bond and a $2.5M taxable loan.
The taxable loan paid off an existing loan and terminated a swap. The loan is being used for equipment upgrades and a pedestrian walkway construction project. Both the tax-exempt bond and taxable loan have a 10-year term and 20-year amortization and were the first secure overnight financing rate (SOFR) based transactions for Key Government Finance.
“David and his entire Key Government Finance team communicated closely with us throughout the process, keeping us updated and prepared to close as quickly as possible,” recalled Kilcullen. “Through circumstances outside of anyone’s control, we closed a month later than our original plan. However, thanks to the Key team’s preparations, we closed on the same day as our final loan approval.”
“We were able to reduce interest rates in an environment where we anticipated they’d be rising. Because of this cost savings, BNMC is able to keep our medical campus parking rates economical.”
Pat Kilcullen
Results
The new Michigan-Goodrich garage offers a secure, convenient, and affordable parking option for the growing medical campus community. Prior to its construction, the campus’s staff, patients, and visitors had to use surface lots or older facilities — often paying higher rates and walking further in inclement weather to reach their destination. Additionally, BNMC leveraged equity from the parking garage to develop a pedestrian walkway, allowing staff, patients, and visitors to conveniently and safely move from the parking garage to other buildings on campus.
Thanks to this favorable refinancing option, BNMC is able to maintain competitive parking rates and offer state-of-the-art technology for its staff, patients, and visitors.
“We were able to reduce interest rates in an environment where we anticipated they’d be rising,” said Kilcullen. “Because of this cost savings, BNMC is able to keep our medical campus parking rates economical. As an added benefit, we’re able to upgrade our 10-year-old parking access control system without tapping into our existing operations cash reserve.”
“Key Government Finance is happy to identify a solution that is saving the medical campus nearly $1 million,” said Zapata. “The 20-year financing option gives BNMC flexibility depending on economic circumstances, and also allows the organization to access existing equity in the facility. They’re already planning to utilize that equity for improvements.”
“It’s phenomenal to me that we’re saving nearly a million dollars, and I’m grateful to David and his Key Government Finance team members,” said Kilcullen. “This group was easily accessible, always professional, and very knowledgeable throughout the entire process.”
For more information:
Contact
- David Zapata • VP East Region Manager, Key Government Finance, at 315-470-5180 or david_zapata@keybank.com
- David Reading • SVP KeyBank Commercial, at 716-819-5827 or david_reading@keybank.com
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