Can Our School Afford a Permanent Facility? Louise Manuel, ExED Greg Brendel, Bouma Jennifer Afdahl Rice, NCB Capital Impact
Agenda Introductions Budgeting Developing Financing Case studies Q & A
NCB Capital Impact: Charter School Expertise & Social Impact NCB Capital Impact has been financing charter schools for 17 years. To date, our financing has totaled over $500 million and provided nearly 200,000 charter school seats across the country. NCB Capital Impact is the largest, Community Development Financial Institution (CDFI) charter school lender.
The Five C’s of Lending Character Competition Credit Cash Flow Collateral
“CHARACTER” Trust and Experience School Management and Operation: -Board -Executive Director -Principal -Finance Manager -Teacher retention Project Management: -General Contractor (GC) -Architect -Project Manager Student Population and Education Model: -%FRL, ESL, minority -Curriculum -# teachers per students -Parents participation
“COMPETITION” Charter and Academic Performance Enrollment: Political support: -Authorizer -Local/state Students Achievement: -API -AYP -Graduation Rates Enrollment: -Growth trends -Waiting List -Retention Rates -Attendance -Other options in the neighborhood
“CREDIT” Financial Condition and Performance Balance Sheet: cash & debt Income Statement: operating margin and bottom line Credit History Track record with creditors
“CASH FLOW” School’s capacity to repay its debt Debt Service Coverage Ratio -On historical performance -On cash flow projections DSCR = EBIDA / Debt Service = (Net Income + Interest + Depreciation + Amortization) / (CPLTD pp + Interest)
-Debt Service Reserve Account “COLLATERAL” Recourse in case the school cash flow is not sufficient to cover the debt payments Reserve Accounts: -Debt Service Reserve Account -Maintenance Reserve Credit Enhancement: -CCBF Program -Letter of Credit -Guarantees Real estate: -Down Payment -Appraisal -Loan-To-Value (LTV) -Leasehold
What do lenders evaluate? School Project Financial condition and performance Management and Governance Planning and Reporting School performance Scope of project, plan & budget Project team Timeline Operational plan (post completion) Repayment plan
Beginning the Conversation: What Will the Lender Request? Organizational Financial Facility Strategy and business plan Annual report and brochure List and bios of board of directors, key staff List of major funders School performance Audited financial statements Current year budget Year-to-date financials Existing debt and borrowing history Multi year operating projections Fundraising plan & commitments Project description, scope of work Project team bios Project budget Project timeline Copies of leases, contract of sale, construction and architect’s agreements Appraisal
KIPP Raices
The Sustainable Answer Key Resources The Answer Key The Sustainable Answer Key www.ncbcapitalimpact.org
Contact Information: Greg Brendel Louise Manuel National Development Executive Facilities Development Director Bouma Excellent Education Development (ExED) 300 N. Lake Ave., Suite 320 11858 LaGrange Avenue, 2nd Floor Pasadena, CA. 91101 Los Angeles, CA 90025 616-450-6785 (310) 394-1152 X245 gbrendel@boumaconstruction.com lmanuel@exed.net Jennifer Afdahl Rice Senior Loan Officer NCB Capital Impact 1333 Broadway, Suite 602 Oakland, CA 94612 Tel 510.496.2221 Fax 510.496.0404 jrice@ncbcapitalimpact.org Contact Information 15