A Billion-Dollar Financier

John Finke, director at the National Development Council, has been a behind-the-scenes presence in many public development projects.

In terms of city skylines, ribbon cuttings and large public works in Washington, John Finke (rhymes with pinkie) may be the most influential man you’ve never heard of.

He and the National Development Council, the nonprofit he’s worked for since 1983, have been at the forefront of local community development for decades and wildly successful in structuring public-private partnerships to finance big-ticket public projects.

“Wildly” may not be the word to describe anything about the soft-spoken, wonkish eastern Washington native, but his steadfast approach to securing tax-exempt bonds is a local bright spot in an economy where traditional financing is costly and tough to get.

In 15 years, NDC and the creative skills of Finke’s team have financed and built more than 20 projects with more than $1.8 billion in direct development costs for their client governments, both inside and outside Washington state.

Greg Johnson, president of real estate development company Wright Runstad, has partnered with Finke many times. “Public-private partnerships help now even more than in robust economies by bringing private processes and private perspective to enhance public projects,” says Johnson.

Finke has made the IRS Rule 63-20 an instrument of choice for issuing tax-exempt bonds for nonprofits, though he’s also a virtuoso of conventional financial devices such as Section 108 and Community Development Float lending; SBA guarantees; New Markets and Historic Tax Credits; HOME funding and regular bank financing.

Created originally in 1963 for projects like public hospitals, 63-20 was the original process that enabled not-for-profits to gain access to tax-exempt bonds. But, Finke says, “One of the awkward elements of that ruling is that when debt was paid off, the ownership of the facility must revert unencumbered to a public agency.”

When alternative means (conduit financing) came along, most developers migrated away from 63-20s. But, Finke says, “About 15 years ago, we, and others, realized they’ve [63-20s] got great potential for building public buildings.”

The 63-20s are tax exempt and essentially have the same rate as bonds issued by governmental agencies. “It is lower-cost debt, yet that debt is running to a private not-for-profit,” says Finke, “and the building is owned for the private not-for-profit as long as the debt’s on it. And because it’s private debt and because it’s private ownership, it’s a private debt, it’s a private project.”

That’s good because, he says, the private and public sectors approach development very differently. Government development has no reward for efficiency, since there often is

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