Facilities Financing - NEW Bond Option

Copyright © 2018 Charter School Capital, Inc. All Rights Reserved.
Financing your
school building
just got very
interesting

2
AGENDA
§ WHO WE ARE
§ EXPERIENCED CHARTER FACILITIES
EXPERTISE – A NATIONAL REAL ESTATE
PLATFORM
§ STRUCTURES AND APPROACH
§ A NEW, NO-COST BOND OPTION
• Q&A

3
§ 22 years of charter school and real estate
experience
§ Herndon HS Hall of Famer
§ Committed to improving education for ALL
students and their families, loved ones
MIKE ROBINSON
Client Services Representative
TOMMY ALBERINI
Facilities Acquisition and Underwriting Manager
§ LA native, Boston University graduate
§ Deep experience in real estate development
and financing
§ Passionate about working with charter school
leaders to make their visions a reality
ABOUT US

CSC’s Real Estate Platform

5
CHARTER SCHOOL CAPITAL’S FACILITIES SUPPORT
• Helped purchase, manage more
than 40 school facilities in past 10
years
• Developed flexible facilities
platform and ecosystem of world-
class partners
• Created a tax-exempt, no-cost
bond option for charter school
leaders

6
CHARTER SCHOOL CAPITAL’S FACILITIES SUPPORT
• Helped purchase, manage more than 40 school facilities in past 10 years
• Developed flexible facilities platform and ecosystem of world-class partners
• Created a tax-exempt, no-cost bond option for charter school buildings
The California Infrastructure and Economic Development Bank has
agreed to serve as conduit issuer for $100 million of revenue bonds
to support an Oregon nonprofit’s purchase of several charter school
buildings in California.
The IBank board approved on Oct. 28 the request from Wonderful
Foundations.
The unrated tax-exempt and taxable deal will be the foundation's
second bond sale through the IBank. IBank was also the conduit
issuer on $185 million in revenue bonds sold July 30.
Citi is lead manager. The bonds will be sold as a limited offering to
qualified institutional buyers in minimum denominations of
$100,000. The bonds, which are expected to close on Dec. 22,
would have maturities up to Dec. 1, 2061.

Structures and Approach

8
FACTORS THAT ARE IMPORTANT TO CONSIDER WHEN
THINKING ABOUT FACILITIES FINANCING
• Eventual ownership
• Term length
• Lease renewals
• Buyout options / refinancing
options
• Control over building
improvements / expansions
• Payment structure
• Payment amount
• Expenses
• Covenants
How should school leaders
think about these factors?

9
OUR FRAMEWORK FOR EVALUATING FACILITIES
FINANCING
• The ability to adapt
and change
• Offers different
options
• Predictable
• Constant
• Permanent
• Price paid to
acquire or maintain
• What you give up
(opportunity cost)
Flexibility
1
Stabilityvs.
2
= Cost
3

10
HOW WE THINK ABOUT FACILITIES FINANCING
STRUCTURING: FLEXIBILITY VS. STABILITY
What increases flexibility:
• Shorter terms
• Buyout options
• Lease renewals
• Lack of covenants
• Ability to expand / upgrade /
relocate
What increases stability:
• Ownership
• Longer terms
• Fixed / predictable payments
Flexibility
Stability
Flexibility1 Stability2vs.

11
LT Lease w/ buyout options
in pooled bond structure
LT Lease w/
buyout options
DIFFERENT STRUCTURES: FLEXIBILITY VS. STABILITY
Self-Issued Bond
Long-Term
Lease
Short-
Term
Lease
Flexibility
Stability
Flexibility1 Stability2vs.

12
HOW DO WE THINK ABOUT COSTS?
Facilities Financing Case Study:
• $5mm Building Value (Purchase Price)
Traditional Bond Option:
• Bond @ 6% interest rate
• 15% cost of issuance (capitalized)
• 10-year lockout period
CSC Lease Option:
• Lease @ 7% rental rate (of purchase
price)
• 2% annual escalators
• Buyout in year 3 & year 10
Which is more costly?
Cost3

13
HOW DO WE THINK ABOUT COSTS?: TOTAL PAYMENTS
Total Annual Payment
$418k $418k $418k
$350k
$418k
$490k
Year 1 Year 10 Year 18
Bond Lease
Total Cumulative Payment
$1,253k
$4,177k
$7,519k
$1,071k
$3,832k
$7,494k
Year 3 Year 10 Year 18
Bond Lease
Cost3

14
HOW DO WE THINK ABOUT COSTS?: OTHER
CONSIDERATIONS
• $s today are worth more than $s tomorrow
• Does the structure allow for the flexibility to borrow additional funds to fuel
growth
• As you give up options, you pay an opportunity cost, should market rates
improve
Cost3

No-Cost Bond Structure

16
OUR FACILITIES FINANCING ECOSYSTEM

17
vs. =
A NO-COST POOLED BOND OPTION + WONDERFUL
FOUNDATIONS
Flexibility Stabilityvs.
+ >
≠ Cost
• Get into a bond without incurring the
transaction fees
• Modest facility expense relief is possible
– putting more money to work for kids
• Access to annual giving funds – annual
gifts for your school to put to work
• Access to a capital expenditure fund –
helps fund your school
building improvements or repairs
• CSC manages bond issuance
process
• No covenants (no restrictions on
working capital borrowing or debt
service reserve account, etc.)
• Path to ownership – schools in good
standing will be gifted their building at
the end of the lease
• Enjoy the security of a non-profit
landlord whose mission is completely
aligned with the charter school – to
serve more students with
better educations
1 2 3

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QUESTIONS?

19
NEXT STEPS:
• Speak with your board, share this
information with them
• Talk with your landlord – or introduce
them to us!
• Connect with us to find out whether:
–Your school might qualify for a path to
ownership through a no-cost bond option
–Your school might save every month
through our lease-back solution

20
THANK YOU
FOR ATTENDING!
EMAIL: talberini@charterschoolcapital.org
TOMMY ALBERINI
Facilities Acquisition and Underwriting Manager
MIKE ROBINSON
Client Services Representative
EMAIL: mrobinson@charterschoolcapital.org

Facilities Financing - NEW Bond Option

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