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Slide 1: Charter School Financing The Friends of the Pioneer Valley Performing Arts High School, Inc. (Friends) is using a $3,800,000 tax-exempt bond issue to pay for an expansion of the Pioneer Valley Performing Arts Charter Public School (PVPACPS) in Hadley. The financing package is supported by a $538,000 MassDevelopment charter school loan guarantee. Friends will use the funds to purchase a 48,000 square foot renovated building and lease it to the school. Founded in 1996, PVPACPS offers a challenging and innovative curriculum focused on all aspects of the performing arts. The school currently educates 400 students in grades seven through twelve. Projects Eligible for Financing Suitable projects include land or building acquisition, new construction, renovation, and leasehold improvements. Refinancings of loans or bonds used for such projects are also eligible. Massachusetts Charter School Loan Guarantee Fund MassDevelopment has raised a fund of over $15 million from its own resources, the U.S. Department of Education and private sources to provide loan guarantees for charter schools in Massachusetts.1 In partnership with the Massachusetts Department of Education Charter School Office, the Massachusetts Charter School Association, Local Initiatives Support Corporation, and The Boston Foundation, MassDevelopment has created a program that guarantees loans for acquiring, constructing or renovating both owned and leased charter school facilities. Program Specifics Eligible Organizations Massachusetts-based charter schools The program gives priority to applicants located in: – Districts in which a public school has been identified for improvement, corrective action, or restructuring under Title I of the Elementary and Secondary Education Act as amended by the No Child Left Behind Act – Areas in which a large proportion of students perform poorly on state academic assessments – Communities with a large proportion of low-income students, as measured by percentage of students receiving free lunch – An economically distressed area (an area determined by the Commonwealth to have a high unemployment rate, poverty rate and/or low household median income) Structure of Guarantee For facilities to be owned by the school: – The loan guarantee can cover a percentage of the first mortgage loan up to the lesser of 50% or $3 million – Loan-to-value ratio may be up to 100% – Lender must have a first mortgage on the real estate – Guarantee reduces dollar for dollar with principal payments Updated 4/08 160 Federal Street, Boston, MA 02110 800.445.8030 www.massdevelopment.com
Slide 2: Structure (continued) For facilities to be leased by the school: – The loan guarantee can cover up to the lesser of $1,000,000 or 90% of the cost of the improvements – Borrower must make a minimum equity contribution of 10% – Guarantee reduces dollar for dollar with principal payments Fees There are no application or commitment fees Process A completed application with supporting documentation is submitted to MassDevelopment A MassDevelopment loan officer will then work with the school and financing source to structure the facility financing Once due diligence is completed, the loan officer will present the transaction for MassDevelopment Credit approval What’s More... MassDevelopment is committed to helping your educational institution grow by providing financing solutions that fit your needs. In addition to the Charter School Loan Guarantee Fund, we offer direct loans and other tax-exempt bond financing options. Please call us at 800.445.8030, or visit www.massdevelopment.com for more information on any of our programs. The Massachusetts Charter School Loan Guarantee Fund program is funded in part (65%) by the U.S. Department of Education, which provided a $10.025 million grant awarded to MassDevelopment, through its Credit Enhancement for Charter School Facilities program. A total of $5.5 million (35%) is financed by non-federal sources, including $2.5 million from The Boston Foundation, $2 million from Local Initiatives Support Corporation, and $1 million from MassDevelopment. 1 Updated 4/08 160 Federal Street, Boston, MA 02110 800.445.8030 www.massdevelopment.com