Ask the Experts: Facilities Financing Straight Talk 1
Introductions Spencer Styles President & CEO John Kim Managing Director David Hyun Principal Valerie Braimah Executive Director CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 2
Agenda I. The Basics of Facility Acquisition Know Thyself Borrow / Lease / Buy II. The 5 Pillars Building the Team Finding the Site Financing Entitlements Design & Construction III. Breakout Discussions CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 3
THE BASICS OF FACILITIES ACQUISITION CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 4
Know Thyself What kind of campus do I want? How big do I want to get? What kind of program(s) do I want to run? What does the future look like? Knowing where you want to go is the first step in knowing how to get there. CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 5
Borrow / Lease / Buy Borrow (Prop 39) Benefits: Low Cost Ease of Entry Challenges: Short Term Dependent on District Lease Benefits: Minimal Underwriting Easier to Execute Potential Purchase Option Challenges: Improvement Costs Financing w/o Collateral Escalating Rent Zoning Buy Benefits: Permanent Home Fixed Cost Challenges: Thorough Underwriting Cost Surprises Zoning Timing CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 6
THE 5 PILLARS CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 7
The 5 Pillars of Site Acquisition Building Your Team Design & Construction Finding the Site Entitlements Financing This is not a linear process. Each search will provide challenges and constraints in difference pillars. CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 8
Building the Team School Board School Leader Real Estate Broker Developer Land-use Attorney Traffic engineer Environmental, etc. Architect Business Manager Bond Underwriter Community / Communications Expert CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 9
Finding the Site Knowing your search boundaries (the importance of geo-mapping) Using your team to search (on-and off-market) Site specs: Lot size Building size Zoning / use Parking Transportation / access profile Escrow timeframe / contingencies / deposits CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 10
Financing What can my school afford? Cost per student / % or revenue SB740 eligibility and impact Understanding internal program flexibility Escalating costs and how to address them What options do I have (Borrow/Lease/Buy) Which options am I eligible for? What are the timing implications of each option? What future financing options do I have? CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 11
Entitlements What is zoning about, and why does it matter? Your BEST friend: zoning maps Los Angeles http://zimas.lacity.org/ SF http://propertymap.sfplanning.org/ San Diego http://www.sandiego.gov/developmentservices/zoning/zoninggridmap.shtml Conditional Use Permitting Technical process Political process Costs CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 12
Design & Construction Long term planning - what is my ideal and realistic long-term enrollment? What do I really need in my building? Wish list vs. must have s? How will pick-up and drop-off work? Will my entitlement process impact my design? Do I have any structural retrofitting? Historical overlays? Does my construction timeline fit in my academic school year? CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 13
BREAKOUT DISCUSSIONS CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 14
Get Your Questions Answered Valerie Braimah School Strategy Management Building the team Long-term strategic planning Facility needs assessment (needs vs. wants) David Hyun Facility Acquisition and Development Overall facility development process Site search Zoning and CUP issues Spencer Styles School Financials and Budgeting Case studies/examples of varying affordability How to get your financial house in order John Kim Facility Financing What options exist for acquiring a permanent home? How to set and maintain appropriate reserves? What does it mean to be financeable? CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 15
Questions? CHARTER IMPACT CITY CHARTER SCHOOLS RED HOOK CAPITAL PARTNERS STIFEL 3/28/2018 16