THE FUTURE OF      CHARTER        SCHOOL     FACILITIES       FUNDING2012 FL CHARTER SCHOOL           CONFERENCE          ...
WHO WE AREDedicated to charter schools  •  Specialty finance company serving only charter schools  •  Began funding charte...
WHAT WE DOProvide charter schools access to funding  •  Working and growth capital     o  Accelerate attendance-based fund...
WHAT CLIENTS SAY A partner to charter schools   •    Deep operational experience   •    Commitment to the charter school m...
WHAT CLIENTS SAY     “Charter School Capital is a trustworthy   and reliable financing resource. They are a   true friend ...
AGENDAWhat We Will Cover Today  •    Balancing facilities dreams and budget realities  •    Funding options  •    Project ...
PERCEPTION VS REALITY What to Consider   •    Ownership is an investment   •    Control is critical to maintain stability ...
BUDGET VS NEED What can we afford?            What is required?   •  Existing                       •  Academic      reser...
PASSING THE TEST Securing a Funding Structure   •  Supporting Economics   •  Clear need       o  Waiting list       o  Mar...
FUNDING COMPARISON                        TRADITIONAL                     LT LEASE/  CRITERIA       CASH      BANK       B...
FUNDING COMPARISON                                                                    TRADITIONAL                         ...
FUNDING COMPARISON                                                                    TRADITIONAL                         ...
FUNDING COMPARISON                                                           TRADITIONAL                                  ...
AS UNIQUE AS YOUR SCHOOL                                                              TRADITIONAL                         ...
PROJECT FLOW      Plan          Fund         Acquire         Design                Constructþ  Space      þ  Cash     þ...
PROJECT EXECUTION (BUILD) Convert Facility Dreams to Reality   ü  Funding strategy / Structure   ü  Good solid budget   ...
PROJECT EXECUTION (BUILD) Success requires unique expertise   •    Design needs   •    Space needs/programing   •    Value...
PROJECT EXECUTION (BUILD)  Building is the easy part, getting ready is hard                                              C...
EXECUTION / DELIVERY STRATEGIES  1) Design/Build           2) Design/Bid/Build      •  One contract           •  Several C...
EXECUTION / DELIVERY STRATEGIES                                                                             School Opens  ...
OPTIONS Additional Considerations   •  Access to working capital   •  Selecting a full service partner       o  Commercial...
QUESTIONS?Charter School CapitalStuart Ellis: sellis@charterschoolcapital.orgJon Dahlberg: jdahlberg@charterschoolcapital....
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The Future of Charter School Facilities Funding

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The Future of Charter School Facilities Funding

  1. 1. THE FUTURE OF CHARTER SCHOOL FACILITIES FUNDING2012 FL CHARTER SCHOOL CONFERENCE NOVEMBER 13 ORLANDO, FL Copyright © 2012 Charter School Capital
  2. 2. WHO WE AREDedicated to charter schools •  Specialty finance company serving only charter schools •  Began funding charter schools in California in 2007 •  Over $400M of funding provided to date •  Relationships with over 300 charter schools serving 250,000 students •  Expanding nationally Copyright © 2012 Charter School Capital 2
  3. 3. WHAT WE DOProvide charter schools access to funding •  Working and growth capital o  Accelerate attendance-based funding •  Facilities financing o  Expansion and new development •  Resource development o  Matching clients with grant, entitlement and philanthropic funds Copyright © 2012 Charter School Capital 3
  4. 4. WHAT CLIENTS SAY A partner to charter schools •  Deep operational experience •  Commitment to the charter school movement •  Reliable, flexible and cost-effective funding solutions •  Significant industry and investor relationships •  Stellar track record with schools and investors Copyright © 2012 Charter School Capital 4
  5. 5. WHAT CLIENTS SAY “Charter School Capital is a trustworthy and reliable financing resource. They are a true friend and ally to charter schools, our movement and the children we serve.” - Caprice Young VP for Education, The Arnold Foundation (Founding CEO, California Charter School Association) Copyright © 2012 Charter School Capital 5
  6. 6. AGENDAWhat We Will Cover Today •  Balancing facilities dreams and budget realities •  Funding options •  Project execution •  Other considerations Copyright © 2012 Charter School Capital 6
  7. 7. PERCEPTION VS REALITY What to Consider •  Ownership is an investment •  Control is critical to maintain stability •  Evaluate dollars spent not percentage rates •  Cost is not just money, but time and opportunity Copyright © 2012 Charter School Capital 7
  8. 8. BUDGET VS NEED What can we afford? What is required? •  Existing •  Academic reserves mission •  Ongoing % of •  Growth plan revenue Your •  Specialty •  Fundraising – public or Project requirements private •  Local considerations •  Funding alternatives Copyright © 2012 Charter School Capital 8
  9. 9. PASSING THE TEST Securing a Funding Structure •  Supporting Economics •  Clear need o  Waiting list o  Market statistics •  Compelling story o  Academic Success o  History / mission Copyright © 2012 Charter School Capital 9
  10. 10. FUNDING COMPARISON TRADITIONAL LT LEASE/ CRITERIA CASH BANK BOND OPTION Cash needed Annual cost Underwriting SecurityGrowth Options Copyright © 2012 Charter School Capital 10
  11. 11. FUNDING COMPARISON TRADITIONAL BANK LT LEASE/ CRITERIA CASH BANK BOND OPTIONCash needed to close (e.g. $10M $3-4M ~$200 – 500K $0 –100K $10M Project) Annual Cost (e.g. $10M $0 $500K – 900K $900K – 1.2M $900K – 1M project) 6-9% 6% – 8% on 9-10% the debt 120% of Other Reserves? project $ No 10 – 20yr amortization amortization Rating?Scenarios are for illustrative purposes only. Actual pricing and terms will vary based Copyright © 2012 Charter School Capitalon unique credit worthiness of each school, dynamic market conditions and whereapplicable state law. 11
  12. 12. FUNDING COMPARISON TRADITIONAL BANK LT LEASE/ CRITERIA CASH BANK BOND OPTION Min 5 yrs No minimum Min 3 yrs Underwriting / Surplus Academic Credit None Surplus success Worthiness Assets + Rating? Revenue Flexible Security Real estate Real estate None None Interest + all assets + all assetsSchool Growth Refinance Refinance Scalable / cash = build Options (rate risk?) (rate risk?) expandableScenarios are for illustrative purposes only. Actual pricing and terms will vary based Copyright © 2012 Charter School Capitalon unique credit worthiness of each school, dynamic market conditions and whereapplicable state law. 12
  13. 13. FUNDING COMPARISON TRADITIONAL BANK LT LEASE/ CRITERIA CASH BANK BOND OPTION Cash needed Annual cost Underwriting SecurityGrowth OptionsComparison for illustrative purposes only. Rankings are based on how hypothetical Copyright © 2012 Charter School Capital“School A” might view its options based on unique attributes and objectives. 13
  14. 14. AS UNIQUE AS YOUR SCHOOL TRADITIONAL BANK LT LEASE/ CRITERIA CASH BANK BOND OPTION Cash needed Annual cost Underwriting SecurityGrowth OptionsEach school likely has a different view of how options rank; color maps will likelyvary by school. Copyright © 2012 Charter School Capital 14
  15. 15. PROJECT FLOW Plan Fund Acquire Design Constructþ  Space þ  Cash þ  Locate Site þ  Select firm(s) þ  Move dirtþ  Features þ  Bank þ  Acquisition þ  Design/build þ  Raise theþ  Budget þ  Bond þ  Permitting options roofþ  Timeline þ  Long Term þ  Land prep þ  GC input þ  Control: Lease þ  Timing; big Projectþ  Charter bang or manager or issues phased owners rep Copyright © 2012 Charter School Capital 15
  16. 16. PROJECT EXECUTION (BUILD) Convert Facility Dreams to Reality ü  Funding strategy / Structure ü  Good solid budget •  Time •  Time •  and more Time Is commercial real estate part of your mission? Copyright © 2012 Charter School Capital 16
  17. 17. PROJECT EXECUTION (BUILD) Success requires unique expertise •  Design needs •  Space needs/programing •  Value engineering •  Schedule/timeline management •  Project manager focused on cost containment Do you have the human capital and risk tolerance to go this process alone? Copyright © 2012 Charter School Capital 17
  18. 18. PROJECT EXECUTION (BUILD) Building is the easy part, getting ready is hard Construction   Begins   Copyright © 2012 Charter School Capital 18
  19. 19. EXECUTION / DELIVERY STRATEGIES 1) Design/Build 2) Design/Bid/Build •  One contract •  Several Contracts •  Fast delivery •  Slow delivery •  Early Guaranteed •  Costs can be reduced but not Maximum Price capped (GMP) Hybrids and other options 3) Construction Manager (CM) at Risk •  Two contracts •  Medium speed delivery •  Late determination of (GMP) Copyright © 2012 Charter School Capital 19
  20. 20. EXECUTION / DELIVERY STRATEGIES School Opens Final GMP (9-12 mo.) ContractDesign / Build Design and Trade bid > Construction overlaps School OpensDesign / Bid / (15-18 mo.) Contract Build Design > Bid > Construction sequential – longest method Non build options Relocate / (3-5 mo.) (4-6 mo.) Renovate Contract Relocate Improvements Copyright © 2012 Charter School Capital 20
  21. 21. OPTIONS Additional Considerations •  Access to working capital •  Selecting a full service partner o  Commercial developer o  Architect o  GC o  Design/build •  Total cost of ownership Copyright © 2012 Charter School Capital 21
  22. 22. QUESTIONS?Charter School CapitalStuart Ellis: sellis@charterschoolcapital.orgJon Dahlberg: jdahlberg@charterschoolcapital.org877.272.1001 charterschoolcapital.orgAll information in this presentation is provided for educational and/or informational purposes. It is not intended toprovide legal, accounting, or tax advice and should not be relied on for any such purpose. Please consult anattorney, accountant, or financial advisor to answer any financial or legal questions. Copyright © 2012 Charter School Capital

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