Charter Facilities and Financing Justin Matthews, Executive Director Mountain Island Charter School Jennifer Lucas, Managing Director Voyager Academy

Facilities as a Component of Budget 15% 10% 20+%

How Much Facility? On average, plan for 50-75 sqft per student Generally, the larger the school, the lower the per square foot ratio Highly dependent on scope of program, design of building 400 Membership School=around 30k sq ft 800 Membership School=around 50k sq ft

Policy ID Number: TCS-U-015 Virtual Facility Policy ID Number:  TCS-U-015 The virtual charter school shall have an actual, physical location within the geographic boundaries of the state of North Carolina  The virtual charter school’s student-to-teacher ratio cannot exceed 50 to 1 per class.  the virtual charter school shall receive the same rate as a full-year course in the NC Virtual Public School for eight courses per student This calculation excludes academic coaches, learning partners, parents, or other non-teachers of record The school will receive an equal rate of state funds per pupil. The school will nOT receive local funds. The school may receive federal funding available per federal law, if the school completes the required federal documentation.

Facility Archetype #1 New Construction $100+ per sqft ($8+ average per sqft, per year) Most difficult to finance without 3+ Years of Operation Longest lead time from Planning to Completion Lowest long term cost Highest probability of building meeting program needs

Build to Suit

Facility Archetype #2 Pre-Existing Construction/Renovation $100+ per sqft cost (existing structure plus cost of renovation/retrofit) May be less expensive as many initial costs are known Medium lead time from planning to completion Inherent value in existing building increases opportunity for financing May require creativity/compromise on program

Renovation of Office Space Prior Dr. offices, campus built in pods

Facility Archetype #3 Modular Buildings $6-8 on average per sq ft Generally, easiest option to finance Lowest on average ongoing (usage) cost Shortest lead time from Planning to Completion Requires site development approval and work, infrastructure (power, water, etc.) Additional costs to commission and decommission Most schools transition out over time, impacting short term vs. long term program needs

Modulars Rent or Rent to Own Can add on during growth phase

Facility Archetype #4 Temporary/Shared Site Cost varies and is unique to situation Generally, no financing is required unless renovations/restoration to site is needed Site dynamic has large impact on program

Shared Space School inside a preexisting structure Share common area Share lab Share conference rooms Flex space office buildings $5-$15 per sqft. Some include shared receptionist, virtual office admins, rental fee of conference rooms at $200-$250 per usage

Facility Related Considerations Impacting Budget and Program Zoning Traffic Ingress/Egress Safety Parking Expansion Impact of Location and Type of Facility

Virtual Considerations virtual charter school must offer “regular educational opportunities” to its students through meetings with teachers, educational field trips, virtual field trips attended synchronously, virtual conferencing sessions, or asynchronous offline work assigned by the teacher of record Onsite commons area with conference rooms or shared space Offsite gathering areas?

Financing Options Conventional Loan 80-90 % Loan to Value (LTV) Usually requires strong financials with 3+ years of operation, cash for 10%-20% down payment, and possibly a Guarantor May require additional organization(INC) as current law does not support charter school acquisition of capital assets that may increase in value Current rates 2.5%-3.5% variable, 3.5-5% fixed

Financing Options Developer Financing Financing may be tied to specific site/project Most often project translates into long term lease Common Area Maintenance(CAM) and lease escalator (sometimes tied to GDP) will increase cost 9-10% CAP (Capitalization) rate is market standard May require Guarantor

Financing Options Public Bond Offering Can borrow 100%+ of project Interest rates/terms based on “rating” (S&P) Requires intensive review of school and project Public approval (city or county) Large upfront cost which may be partially added to Bond Long term amortization 5-30 years Bond becomes first in line for revenues

Financing Options Private and Public Charter School Capital Firms Knowledgeable about Charter Schools 95% of all charter schools qualify for some type of financing Service includes program fee as well as “discount” on accounts receivable (school revenue), generally equates to current cost of capital (10%) Short term interest only payments with a 5 year balloon and refinancing option

Thank You and Good Luck! Justin Matthews, Executive Director jmatthews@micharter.org (954) 815 9568 Jennifer Lucas, Managing Director jlucas@voyageracademy.net (954) 732 3122