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Charter School Financing

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MassDevelopment has raised a fund of over $15 million from its own resources, the U.S. …

MassDevelopment has raised a fund of over $15 million from its own resources, the U.S.
Department of Education and private sources to provide loan guarantees for charter
schools in Massachusetts.1 In partnership with the Massachusetts Department of Education
Charter School Office, the Massachusetts Charter School Association, Local Initiatives
Support Corporation, and The Boston Foundation, MassDevelopment has created a
program that guarantees loans for acquiring, constructing or renovating both owned and
leased charter school facilities.

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  • 1. Charter School Financing The Friends of the Pioneer Massachusetts Charter School Loan Guarantee Fund Valley Performing Arts High MassDevelopment has raised a fund of over $15 million from its own resources, the U.S. Department of Education and private sources to provide loan guarantees for charter School, Inc. (Friends) is using schools in Massachusetts.1 In partnership with the Massachusetts Department of Education a $3,800,000 tax-exempt Charter School Office, the Massachusetts Charter School Association, Local Initiatives bond issue to pay for an Support Corporation, and The Boston Foundation, MassDevelopment has created a program that guarantees loans for acquiring, constructing or renovating both owned and expansion of the Pioneer leased charter school facilities. Valley Performing Arts Charter Public School (PVPACPS) in Program Specifics Eligible Organizations Hadley. The financing package Massachusetts-based charter schools is supported by a $538,000 The program gives priority to applicants located in: MassDevelopment charter – Districts in which a public school has been identified for improvement, corrective action, or restructuring under Title I of the Elementary and Secondary school loan guarantee. Friends Education Act as amended by the No Child Left Behind Act will use the funds to purchase – Areas in which a large proportion of students perform poorly on state academic assessments a 48,000 square foot renovated – Communities with a large proportion of low-income students, as measured by building and lease it to the percentage of students receiving free lunch school. Founded in 1996, – An economically distressed area (an area determined by the Commonwealth to have a high unemployment rate, poverty rate and/or low household median PVPACPS offers a challenging income) and innovative curriculum focused on all aspects of the Projects Eligible for Financing Suitable projects include land or building acquisition, new construction, renovation, performing arts. The school and leasehold improvements. Refinancings of loans or bonds used for such projects currently educates 400 students are also eligible. in grades seven through Structure of Guarantee twelve. For facilities to be owned by the school: – The loan guarantee can cover a percentage of the first mortgage loan up to the lesser of 50% or $3 million – Loan-to-value ratio may be up to 100% – Lender must have a first mortgage on the real estate – Guarantee reduces dollar for dollar with principal payments Updated 4/08 160 Federal Street, Boston, MA 02110 800.445.8030 www.massdevelopment.com
  • 2. Structure (continued) For facilities to be leased by the school: – The loan guarantee can cover up to the lesser of $1,000,000 or 90% of the cost of the improvements – Borrower must make a minimum equity contribution of 10% – Guarantee reduces dollar for dollar with principal payments Fees There are no application or commitment fees Process A completed application with supporting documentation is submitted to MassDevelopment A MassDevelopment loan officer will then work with the school and financing source to structure the facility financing Once due diligence is completed, the loan officer will present the transaction for MassDevelopment Credit approval What’s More... MassDevelopment is committed to helping your educational institution grow by providing financing solutions that fit your needs. In addition to the Charter School Loan Guarantee Fund, we offer direct loans and other tax-exempt bond financing options. Please call us at 800.445.8030, or visit www.massdevelopment.com for more information on any of our programs. 1 The Massachusetts Charter School Loan Guarantee Fund program is funded in part (65%) by the U.S. Department of Education, which provided a $10.025 million grant awarded to MassDevelopment, through its Credit Enhancement for Charter School Facilities program. A total of $5.5 million (35%) is financed by non-federal sources, including $2.5 million from The Boston Foundation, $2 million from Local Initiatives Support Corporation, and $1 million from MassDevelopment. Updated 4/08 160 Federal Street, Boston, MA 02110 800.445.8030 www.massdevelopment.com

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