3. John Hardy and Catherine Harmon
= 1,780 Excess
Enrollments
123% of Capacity
Sunset Ridge Middle school
11 portable classrooms, 120 % capacity
4. West Jordan City
• 16,437 population growth 2013-2020
• 4820 housing units
• 4,676 total new students
Copper Hills Area
• 3,295 K-9 students
• Projected excess enrollments for grades K-9:
5,016
• Student population will be 168% of current
school capacities
6. • Current Solutions:
Portable classrooms –
Over 260 in use District Wide
Year-round schedules –
Expanding for 2014-15 school year.
Boundary re-alignment/pocket bussing –
Starting 2014-15 school year.
Double sessions -
AM/PM Schools
John Hardy and Catherine Harmon
• District plans for student growth:
Proposed $495 million bond to fund more schools
rejected by voters.
7. John Hardy and Catherine Harmon
• Utah Charter Schools are
Public Schools
• Open Enrollment, Cannot
Discriminate
• Tuition Free
• Oversight provided by
Utah State Charter Board.
9. John Hardy and Catherine Harmon
• 1st year
Open enrollment or Lottery
• Subsequent Years
Kindergarten preference to siblings of current students.
Open enrollment or Lottery
10. John Hardy and Catherine Harmon
2014-2015 School Year
• Early Light Academy
• Kinder: 35
• 1-9: 11
• Waiting List: 1,500+
• Hawthorne Academy
• Kinder: 40
• 1-9: 15
• Waiting List: 1,000+
• Providence Hall
• Kinder: 45
• 1-5: 0
• 6-12: Expanded for next year.
• Waiting List: 4,059
11. John Hardy and Catherine Harmon
• Build-to-Suit Charter Schools
• Long-Term NNN Lease w/ Purchase Option
• Under-Served Market (Jordan School District)
• Building Size Based on Student/SF
• Low-Cost, Sustainable Facilities that Focus on
Providing Better Education
• School Curriculums Focus on Arts/Crafts or
Math/Science/Tech
• Leverage for Max Profit
12.
13.
14. John Hardy and Catherine Harmon
• 7460 South 5600 West,
West Jordan, UT
• Grade K-8 Charter School—
Build to Suit
• Land Size: 5 acres
• Two-story, 45,500 SF building
• Max Capacity: 700 student
15. Key Spaces
Administrative Wing:
Offices
Entrance Foyer
Kindergarten Classrooms
Kindergarten Yard
Classroom Wing:
28 Classrooms
6 Shared / Flex spaces
Festival Wing:
Festival Hall / Gym
Administrative Classroom
Festival
21. John Hardy and Catherine Harmon
• Lease: 20-year NNN w/ Purchase Option
• Lease Rate: % of Cost (Approx. $819,420 in year 1)
• 2% Annual Lease Escalation
• No Operating Expenses (NNN Lease)
• Total Project Cost: $7,804,000
• Debt: $5,853,000 (75% LTC)
• Equity Required: $1,951,000
• Annual Debt Service: $453,882
• Year 5 NOI: $886,967
• 5-year IRR: 37.25%
My Child’s Future Is Worthy Investing In. Isn’t Yours?
22. John Hardy and Catherine Harmon
• Lease: 20-year NNN w/ Purchase Option
• Lease Rate: % of Cost (Approx. $819,420 in year 1)
• 2% Annual Lease Escalation
• No Operating Expenses (NNN Lease)
• Total Project Cost: $7,804,000
• Debt: $5,853,000 (75% LTC)
• Equity Required: $1,951,000
• Annual Debt Service: $453,882
• Year 5 NOI: $886,967
• 5-year IRR: 37.25%
My Child’s Future Is Worthy Investing In. Isn’t Yours?
23. John Hardy and Catherine Harmon
Cash Flow Projections Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Gross Potential Income
Base Rental Income $0 $819,420 $835,808 $852,525 $869,575 $886,967 $904,706
Vacancy $0 $0 $0 $0 $0 $0 $0
Effective Gross Income $0 $819,420 $835,808 $852,525 $869,575 $886,967 $904,706
Less: Operating Expenses $0 $0 $0 $0 $0 $0 $0
NOI $0 $819,420 $835,808 $852,525 $869,575 $886,967 $904,706
Acquisition & Site Improv $871,200
Construction Costs $6,932,800
$7,804,000
Disposition Price $10,230,294
Selling Costs ($306,909)
Net Selling Price $9,923,385
Unlevered Cash Flow ($7,804,000) $819,420 $835,808 $10,775,910
Debt Service/Payoff ($453,882) ($453,882) ($6,307,548)
Levered Cash Flow ($1,951,000) $365,538 $381,927 $4,468,362
Disposition Price $10,643,598
Selling Costs ($319,308)
Net Selling Price $10,324,290
Unlevered Cash Flow ($7,804,000) $819,420 $835,808 $852,525 $869,575 $11,211,257
Debt Service/Payoff ($453,882) ($453,882) ($453,882) ($453,882) ($5,316,561)
Levered Cash Flow ($1,951,000) $365,538 $381,927 $398,643 $415,693 $5,894,696
Cash on Cash 18.74% 19.58% 20.43% 21.31%
Annual Debt Service at Market Rate $453,882 $453,882 $453,882 $453,882 $453,882
DSCR 1.81 1.84 1.88 1.92 1.95
Annual Debt Service at Phantom Rate $523,661 $523,661 $523,661 $523,661 $523,661
DS at Phantom Rate 1.56 1.60 1.63 1.66 1.69
PROFORMA
24. John Hardy and Catherine Harmon
• Public school revenue: $5,883/student (grade K-8)
• Monthly rent: $819,421
• Facility expense (rent or mortgage) > 25% of total revenue
• At full enrollment: 19.90% rent to income ratio
• At 80% enrollment: 24.87% rent to income ratio
Fully Enrolled 80% Enrolled
Total Students 700 560
Average funds per student $5,883 $5,883
Total Gross Revenues $4,118,100 $3,294,480
Rent/Income Ratio 19.90% 24.87%
Sources of Revenue
Grades K-8
25. John Hardy and Catherine Harmon
• Seeking 80% equity partner
• Waterfall distribution structure
• Preferred return: up to 12%
Partnership Type Party Name
%
Ownership
Preferred
Return
Distribution
$220,000 Deferred Dev. Fee
$170,200 Cash
$1,951,000 100%Total Equity
CAPITAL STRUCTURE
80% After
Preferred Paid
Limited Partners
Outside Cash
Investors
$1,560,800 Cash 80% 12.00%
Innovative
Development, LLC
Initial Equity Contribution
20% None
20% After
Preferred Paid
General Partners
