Congratulations to CSP Grantees!

Congratulations to Indiana for receiving $20M from the State Facility Incentive Grant to expand its per-pupil funding formula.

Congratulations to California and Massachusetts for receiving federal credit enhancement grants, along with Hope Enterprise, Civic Builders, and Charter Schools Development Corporation.

Texas Permanent School Fund

In 2014, the Texas legislature gave charter schools that met strict eligibility criteria the ability to issue and refinance bonds through the Texas Permanent School Fund (PSF) Bond Guarantee Program. With more than $44 billion in assets and triple-A ratings, the 165-year-old state agency’s PSF guarantees school bond issuances, so schools pay significantly lower interest rates on their borrowing.

In August 2019, total charter school capacity was at $6.5 billion. PSF has guaranteed $1.3 billion charter school non-refunding bonds and another $554 million in charter school refunding bonds—using less than a third of total capacity. As of late 2017, charter schools had realized about $10.5 million in savings for the next 25 years—about $275 million in total savings. The Texas Charter Schools Association anticipates those savings will quadruple over the next five years to more than $1 billion.

Unused, Unneeded, Unwanted—Why Unavailable?

Washington, D.C. Mayor Muriel Bowser recently announced the district would “reactivate” a district school closed since 2013, paving the way for a charter organization to potentially lease it. Ferebee Hope School is the first building released by Mayor Bowser during her six-years in office. The release happened the same week that the D.C. Association of Public Charter Schools launched a public campaign pressuring city leadership to stop “hoarding” shuttered school facilities, or selling them to be developed as luxury condominiums. The city is reportedly requiring any future tenant to renovate a recreation center connected to the school, which would be a prohibitive cost for most charter schools. If the city doesn’t reach a deal with a charter school in six months, it can accept applications from other organizations that want to use Ferebee Hope.

D.C. charter schools currently have 12,000 students on wait lists. The “End the List” campaign demands that D.C. officials honor a 2004 law requiring them to give charter schools a “right of first offer” to purchase or lease vacant school buildings at a 25 percent discount. D.C. has approved five new charter school applications for 2020, so the demand for seats is only growing.

The Ferebee Hope struggle is just one example of urban districts trying to prevent alternative schools from expanding, in spite of “first right of refusal” statutes.

• The Wall Street Journal found that the Milwaukee Public Schools (MPS) regularly “flouts” Wisconsin’s 2015 Surplus Property Law, which was supposed to force the sale of vacant MPS buildings to charter and private schools. As of late 2018, 13 nontraditional schools have tried to purchase vacant public schools, but none succeeded because of protests by the Milwaukee Teachers’ Education Association. Keeping just four abandoned MPS buildings maintained has cost taxpayers $2.7 million since 2015.
• In 2018 the Detroit Public Schools had at least 22 vacant buildings, but the education establishment has gone as far as to manipulate deed restrictions to avoid selling to charter schools.
• Students at Indianapolis’ Purdue Polytechnic High School (PPHS) started the 2019 school year in a converted office building on the same block as the former Broad Ripple High School. When Indianapolis Public Schools (IPS) announced in 2017 it would close Broad Ripple, PPHS immediately tried to buy the building. After initial consideration, IPS refused to sell to the charter high school.
• But, there may be progress in Memphis. In September, a Shelby County School Board (SCSB) committee agreed to advance the sale of closed Carnes Elementary School to a full board vote, and sale is expected to be approved. The buyer is Believe Memphis Academy Charter School. It’s worth noting, if SCSB would’ve disposed of the building at the time the school closed, renovations would have cost about $3 million. Because the school sat vacant as a target for vandals for three years, it will now cost the Believe Memphis Academy Charter School an estimated $10 million to make Carnes habitable for students.

Impact Investors Meet Charter Schools

Financial Advisor Magazine calls on impact investors to consider charter schools, pointing out that high net worth investors can earn a favorable risk-adjusted rate of return by investing in charter schools either through intermediaries or directly. Read more here: Charter Schools Need Your Investment Help.

The Largest Charter School Social Impact Fund Receives an S&P "A" Rating and Goes to Market with $110 Million Bond

The nonprofit startup Equitable Facilities Fund (EFF), backed by a $200 million grant from the Walton Family Foundation, has launched a new program that aims to cut the cost of financing charter schools. In early August, EFF went to market with the first bonds ever used to finance a loan pool for charter school facilities. EFF was inspired by state revolving-loan funds for water projects, which received initial capital from federal grants in the 1980s. EFF issued $110 of million bonds through the Arizona Industrial Development Authority and the California Infrastructure and Economic Development Bank. Proceeds of the sale, managed by RBC, will help EFF expand on its first $158.5 million of loans to 11 charter school operators in seven states.

Training and Resources

The Charter School Facility Center is not a think tank; we are a “do tank!” We provide free training to charter school leaders and aspiring leaders on best practices in developing their real estate financing and growth strategies. So far, we’ve conducted trainings for over 100 hundred attendees in Georgia, North Carolina, Texas, and Tennessee—including a training at the National Alliance for Public Charter Schools’ annual conference in Las Vegas.

The Facility Center has partnered with LISC’s SchoolBuild to provide facility training materials and programming for schools. Check out their site for lots of resources, including the Spark Opportunity Grant Program webinar that shows how to apply for LISC’s predevelopment capital grants to support the development of facility feasibility plans.

We’ve also released the third edition of Orrick’s Public Charter Schools: Borrowing With Tax-Exempt Bonds which provides charter schools and their stakeholders with relevant information about the benefits of tax-exempt financing.

Have ideas about something else we should research? Looking for more support? Contact Mark Medema at mark@publiccharters.org.