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Case Study: Pacific Collegiate School

Updated: Sep 22, 2023


Pacific Collegiate School ("Pacific Collegiate") is a distinguished college preparatory public charter school serving students in grades 7-12. Operating under a charter agreement with the Santa Cruz County Office of Education, Pacific Collegiate thrives through the support of the Pacific Collegiate Foundation ("PCF"), a 501(c)(3) non-profit corporation. PCF, through a long-term lease agreement, provides the campus to Pacific Collegiate.

Pacific Collegiate consistently ranks among California and the nation's top public schools.

US News & World Report ranked PCS #1 High School in Santa Cruz, #9 in California, #82 high school and #18 charter school in the U.S. in 2023

Financial Challenge

Facing the challenge of refinancing approximately $7 million in outstanding variable rate demand revenue bonds (the "Prior Bonds") issued for campus improvements, Pacific Collegiate sought to secure a more stable and cost-effective financing solution. The Prior Bonds were backed by a letter of credit (LOC), which was up for renewal. Unfortunately, during the "banking crisis" of 2023, LOC costs had substantially increased, making the annual debt service costs of the Prior Bonds burdensome.

The Refinancing Process

Pacific Collegiate engaged Weist Law and CalMuni Advisors to orchestrate the refinancing strategy. The task at hand involved extensive due diligence to enhance credit, identifying a trustee bank, partnering with a joint powers authority for issuing refunding bonds (the "Refunding Bonds"), negotiating favorable terms for the debt service coverage ratio, and optimizing financing and repayment structures. Weist Law and CalMuni Advisors performed the due diligence and analysis necessary to prepare the RFP, proforma schedules, revenue and coverage tables for various financing scenarios, ultimately determining the best repayment structure in line with PCF and Pacific Collegiate goals and objectives.

Success Achieved

After reviewing proposals from several banks across California and the United States, Santa Cruz County Bank ("SCCB") emerged as the ideal purchaser of the Refunding Bonds. Weist Law and SCCB successfully negotiated terms that included a fixed 4.47% interest rate, a debt service coverage ratio of 1.01, and an advantageous optional redemption feature starting immediately after the closing date.

Collaborative Partnerships

Weist Law also worked in concert with the California Municipal Public Financing Authority ("CalMuni PFA"), a statewide joint-powers authority, which acted as the issuer of the Refunding Bonds. CalMuni PFA, in its capacity as issuer, entered into agreements with SCCB for financing and with the PCF through a loan agreement.

Positive Outcomes

In conclusion, the refinancing initiative delivered several significant benefits to PCF and Pacific Collegiate, including:

Enhanced Budget Predictability: Securing a locked-in fixed interest rate, shielding against market fluctuations.

Reduced Annual Payments: Annual Debt Service Payment reduced from approximately $460k to $357k, providing welcomed budget relief.

Elimination of LOC Costs: Eliminating the LOC and associated annual fees, enhancing savings to Pacific Collegiate.

Reduced Reserve Fund Requirements: Substantially lowering reserve fund requirements, granting flexibility in allocating general fund resources.

Improved Debt Service Coverage Requirement: Lowering the debt service coverage ratio covenant from 1.25 to 1.01, creating budget efficiency and resiliency.

Prepayment Options: Offering flexibility for prepayment, potentially leading to substantial savings in the future.

Leadership and Commitment

Pacific Collegiate's strategic decisions, financial health, and credit position are a testament to the astute guidance provided by its dedicated board members and seasoned leadership team. The board and management consistently develop and execute both short- and long-range plans, demonstrating discipline in measuring performance and adapting to evolving objectives and competitive landscapes.

Weist Law's Commitment

Weist Law worked closely with Pacific Collegiate and PCF throughout the process, serving as an extension of their team and contributing to the long-term financial success of both the school and the foundation. The transaction was executed with diligence and pride, reflecting a commitment to support the local community and the future of education. As a California-based law firm, it was our privilege to collaborate with a local charter school and a community bank, aligning with our values of local partnership and educational advancement.


The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact a designated Weist Law representative. This material may be considered advertising under certain rules of professional conduct.

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