Tax-exempt bonds are usually considered the lowest cost option for a borrower — a local government, charter board or non-profit — looking to build a school. But charter schools have some key differences.
According to Kevin Hall, senior vice president for business development for Charter Beacon Academies, “generally, a school district is able to borrow at a lower rate than a charter school; it can pledge its tax proceeds against the bonds.
“In the case of our schools, you pay more on your borrowing but you are getting your building sooner, and we have been able to deliver a building less expensively and capacity comes on faster, so it relieves overcrowding.”
Local governments and developers face challenges in establishing a charter school. Chief among these are credit issues involved in the school’s financing. Also, charter schools are often new entities where the revenue stream to pay for operating and facility expenses comes entirely from enrollments.
Local governments and developers attempting to build a new charter school from scratch, Hall advises, should be flexible, listen to the desires of the community and be ready to provide a first-class education.
“Our approach has been a partnership,” Hall says. “You need cooperation from lots of different parties to make this work, and you need a school product that is going to be attractive — something high-quality to attract parents.”
“From the developer’s perspective, there is clearly a value to having a school ready to go,” he said, and knowing that the area’s educational needs will be met supports housing prices in the community, a good thing for home builders and buyers alike.
“Oakland’s elected leaders, home builders and education authorities have looked at their local area and said education is the most important thing in our community, so it is important to do this.”
For more information about charter schools and Chancellor Beacon Academies, click here.
Oakland’s success in building a charter school is one of the case studies described in NAHB’s new publication — “Building for Tomorrow: Innovative Infrastructure Solutions” — that identifies many of the most promising alternatives for meeting infrastructure needs.
To read the publication, which is available to NAHB members only, click here.
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