The Future of Charter School Facilities Funding

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Charter School Capital discusses the steps your charter school can take to turn your school's facility dreams into reality at the California Charter Schools Conference. The presentation will help school administrators and board members gain valuable insights into the future of charter school funding and facilities. We discuss how available funding sources are being utilized to build and operate charter schools, as well as approaches to funding the operational costs, new construction, and modernization of charter school facilities.

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The Future of Charter School Facilities Funding

  1. 1. The Future of Charter School Facilities FundingWednesday, March 13 2013 California Charter Schools Conference San Diego, CA Copyright © 2013 Charter School Capital, Inc.
  2. 2. Welcome. Copyright © 2013 Charter School Capital, Inc.
  3. 3. WELCOMEPanelistsCharter School Capital•  Stuart Ellis – Founder and CEO•  Jon Dahlberg – VP of Business Development and Facilities3Copyright © 2013 Charter School Capital, Inc.
  4. 4. FACILITES PROJECTWhat We Will Cover Today•  Understanding and choosing a funding structure•  Balancing facilities dreams and budget realities•  Funding Approval - keys areas of focus•  Project execution and timing•  Other considerations4Copyright © 2013 Charter School Capital, Inc.
  5. 5. Focused on Charter Schools. Copyright © 2013 Charter School Capital, Inc.
  6. 6. WHAT WE DOProvide charter schools access to funding•  Working and growth capital – Accelerate attendance-based funding o Receivables Purchase Model o Secured Loan o Secured LOC•  Facilities financing – Expansion and new development – Relocation and refinancing•  Resource development – Matching clients with grant, entitlement and philanthropic funds6Copyright © 2013 Charter School Capital, Inc.
  7. 7. WHO WE ARE100% Dedicated to charter schools•  Specialty finance company serving only charter schools•  Headquartered in Portland, OR•  Began funding charter schools in California in 2007•  Over $500M of funding provided to date•  Team of 30 professionals dedicated to delivering timely and flexible solutions•  Relationships with over 300 charter schools serving 250,000 students•  Stellar track record with schools and investors7Copyright © 2013 Charter School Capital, Inc.
  8. 8. WHERE WE ARE CSC ? 1,000 ? 11StudentsSchools 40,000 31,000 147 72 23,000 64,000 5,000 41,000 116` 184 16 19,000 235 122,000 6,000 43 328 259 17 103,000 26,000 4 300 126,000 164 80 6 10,000 17,000 49,000 360 33 48 26,000 22 45,000 63 360 18,000 82,000 81 4,000 21,000 4 50 32,000 179 412,000 18 41 45,000 53 983 10,000 109 7,000 40 19,000 135,000 11,000 17,000 20 47 524 31 84 56,000 6,000 104 27 188,000 43,000 280 9,000 99 179,000 31 520 8 Copyright © 2013 Charter School Capital, Inc.
  9. 9. 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 Foundation9Copyright © 2013 Charter School Capital, Inc.
  10. 10. Facilities Funding Structures. Copyright © 2013 Charter School Capital, Inc.
  11. 11. PERCEPTION vs. REALITYWhat to Consider in a Financing Structure•  Ownership is an investment•  Control is critical to maintain stability or growth•  Evaluate dollars spent not percentage rates•  Cost is not just money, but time and opportunity11Copyright © 2013 Charter School Capital, Inc.
  12. 12. WANT vs. NEED vs. BUDGETWhat can we afford? What is required? •  Existing •  Academic reserves mission •  Ongoing % of •  Growth plan revenue Your for attendance •  Fundraising – Project •  Specialty public / private requirements •  Funding •  Local alternatives considerations12Copyright © 2013 Charter School Capital, Inc.
  13. 13. FUNDING COMPARISON Traditional BANK LT Lease /Criteria Cash Bond Bank OptionCash neededAnnual costUnderwritingSecurityGrowth Options 13 Copyright © 2013 Charter School Capital, Inc.
  14. 14. FUNDING COMPARISON Traditional BANK LT Lease /Criteria Cash Bond Bank OptionCash needed toclose (e.g. $7M $7M $2.1-2.8M ~$200 – 500K $0 –100KProject)Annual Cost (e.g. $0 $350K – 700K $600K – 800K $630K – 700K$7M project) 6-9% 6% – 8% on 9-10% the debt 120% ofOther Reserves? project $ No 10 – 20yr amortization amortization Rating? Scenarios are for illustrative purposes only. Actual pricing and terms will vary based 14 Copyright © 2013 Charter School Capital, Inc. on unique credit worthiness of each school, dynamic market conditions and where applicable state law.
  15. 15. FUNDING COMPARISON Traditional LT Lease /Criteria Cash Bond Bank Option Min 5 yrs No minimum Min 3 yrsUnderwriting / Surplus Academic None SurplusCredit Worthiness success Assets + Rating? Revenue Flexible Real estate Real estateSecurity Interest None None + all assets + all assets RefinanceSchool Growth Refinance Scalable / cash = build (rate risk?)Options (rate risk?) expandable Covenants? Scenarios are for illustrative purposes only. Actual pricing and terms will vary based 15 Copyright © 2013 Charter School Capital, Inc. on unique credit worthiness of each school, dynamic market conditions and where applicable state law.
  16. 16. FUNDING COMPARISON Traditional LT Lease /Criteria Cash Bond Bank OptionCash neededAnnual costUnderwritingSecurityGrowth Options Comparison for illustrative purposes only. Rankings are based on how 16 hypothetical “School A” might view its options based on unique attributes and Copyright © 2013 Charter School Capital, Inc. objectives.
  17. 17. ASSIGNMENT: YOUR COLORS Traditional LT Lease /Criteria Cash Bond Bank OptionCash neededAnnual costUnderwritingSecurityGrowth Options Color map for your school will be unique! 17 Copyright © 2013 Charter School Capital, Inc.
  18. 18. Funding Approval and Execution. Copyright © 2013 Charter School Capital, Inc.
  19. 19. PASSING THE TESTFunding Structure RequirementsAttendance•  Stable or increasing enrollment•  Strong demand – waiting list, expanding grades, market growthSchool / Leadership History•  Experienced leadership team with successfully history•  Market leading academic performance(local peers, district, state)Numbers have to “pencil”•  Sound financial performance and pro forma•  Debt service / lease payment target <20% of total revenue•  Valuation of target property(land)Intangibles•  Compelling or differentiated story19Copyright © 2013 Charter School Capital, Inc.
  20. 20. DREAMS INTO REALITYSuccess requires unique expertise•  Design needs•  Space needs/programing•  Value engineering•  Schedule/timeline management•  Project management focused on cost containment20Copyright © 2013 Charter School Capital, Inc.
  21. 21. PROJECT EXECTION - BUILD Execution requires significant time Plan Fund Acquire Design Construct  Space   Cash   Locate Site   Select firm(s)   Move dirt  Features   Bank   Acquisition   Design/build   Raise the  Budget   Bond   Permitting options roof  Timeline   LT Lease /   Land prep   GC input   Control: Option   Timing; big Project  Charter bang or manager or issues phased owners rep 21 Copyright © 2013 Charter School Capital, Inc.
  22. 22. PROJECT EXECTION - BUILDBuilding is almost the easy part22Copyright © 2013 Charter School Capital, Inc.
  23. 23. EXECUTION / DELIVERY School Opens Final Guaranteed Maximum Price (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 23 Copyright © 2013 Charter School Capital, Inc. 23
  24. 24. OTHER CONSIDERATIONSChoose a strong Partner•  Full-Service resource – Selecting the right funding partner / structure o  Bond o  Loan o  Lease – Commercial developer – Architect – General Contractor – Design/build•  Flexible / Adaptive to your unique project•  Guarantor / Sponsor / Investor•  Provide access to working / growth capital•  Calculate total cost of ownership (now and later)24Copyright © 2013 Charter School Capital, Inc.
  25. 25. Questions25Copyright © 2013 Charter School Capital, Inc.
  26. 26. Stuart Ellis: sellis@charterschoolcapital.org Jon Dahlberg: jdahlberg@charterschoolcapital.org 877.272.1001 charterschoolcapital.org26Copyright © 2013 Charter School Capital, Inc.
  27. 27. Thank You Presentation available at: SlideShare.net/CharterSchoolCapital27Copyright © 2013 Charter School Capital, Inc.

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