$111,035,000 — Negotiated Sale
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$111,035,000 — Negotiated Sale
A $120 million deal from a start up, Equitable Facilities Fund, whose mission is “to make it easier, faster and less expensive for charter schools to put down roots in sustainable facilities,” will price Thursday amid a busy new-issue week.
Non-profit is floating first bond for revolving loan fund. The loans would cut reliance on high-yield muni-bond market.
The A-Rated, Nonprofit Lending Fund Provides Long-Term, Low-Cost Facilities Financing to High-Quality Public Charter Schools. The Issuance Will Allow More Resources to Directly Reach 30,000 Students.
Equitable Facilities Fund (EFF) will issue $100 million in A-rated tax-exempt bonds to further its mission of supporting an equitable, high-quality public education for all students by providing financing to excellent public charter schools to build, grow and renovate facilities.
Through EFF’s Preliminary Official Statement, the nonprofit lender has laid out plans that will support 30,000 public charter school students by providing affordable funds for their schools’ buildings, equipment and other capital projects, thus directing more resources into the classroom and helping students realize academic success and a lifetime of opportunity.
EFF is supported by the Walton Family Foundation’s Building Equity Initiative(BEI), an unprecedented effort to make it easier and more affordable for public charter schools to access equitable, affordable facilities funding.
“This next step for the Building Equity Initiative will help public charter schools more easily and affordably access facilities and free up resources to go where they belong, with teachers and students,” said Walton Family Foundation board member Alice Walton.
Since launching in 2018, EFF has committed more than $158 million in low-interest loans supporting 11 public charter facilities projects across seven states. To date, these loans have saved public charter schools and networks over $15 million and allowed them to better serve more than 30,000 total students.
EFF pools public charter school loans in an innovative manner to provide long-term, fixed-rate loans with terms that public charter schools could not otherwise secure. Adapting a revolving loan fund model that has successfully supported more than $100 billion in clean water projects for three decades, EFF is the first pooled fund of its kind for public charter schools. The fund’s team of finance and public charter school experts have formulated a best-in-class loan underwriting and monitoring system and plan to raise additional capital for a target near-term fund size of $600 million to benefit high-quality public education.
"Every high-quality public school deserves equitable, permanent financing,” said EFF Founder and CEO Anand Kesavan. “This is what we're striving to provide at EFF—with a proven approach that has the potential to positively impact thousands of students. That's the beauty of it. We're combining traditional investment structures and cutting-edge philanthropy and putting it all to work against educational inequity."
Unlike district schools, which typically operate out of buildings acquired and financed from credit founded on a tax base, public charter schools must fund facilities costs from their operating budgets. This can lead to uneven distribution of resources for public school students attending public charter schools, where valuable resources are directed away from classroom instruction in order to pay for the school facility. EFF, by providing credit enhancement and low-cost permanent capital, aims to ensure public charter schools can direct more resources to helping students realize meaningful academic and life outcomes.
“Equitable Facilities Fund has been an incredible partner for us,” said Jeremy Chiappetta, CEO of Blackstone Valley Prep Mayoral Academy (BVP), which received a $16 million loan from the EFF to finance the acquisition of a previously leased high school facility for its 1,959 K-12 students in northeast Rhode Island. The loan will save BVP, one of the highest-performing school networks in Rhode Island, over $60,000 annually throughout its 30-year term.
“As a relatively young and growing organization, our ability to access facilities funding was limited. The EFF team, however, not only provided us with very favorable financing terms, but also provided sage strategic advice and counsel. As a result of this project, we are able to reallocate hundreds of thousands of dollars into classrooms.”
Two non-profit lending funds launched by the Building Equity Initiative have made more than $40 million in new loans for public charter school facilities. The low-cost loans, distributed through the Charter Fund and Facilities Investment Fund, have to date allowed four schools across the country to find, secure and renovate permanent facilities. As a result of these loans, these four schools will save hundreds of thousands of dollars over the next 30 years and serve more than 3,500 students collectively.
“More schools now have access to permanent, quality facilities and resources once spent on facilities can now go back to classrooms, to teachers and back where our resources should be – with students,” said Alice Walton.
The Charter Fund (CIF) is a national non-profit social impact fund created to help high-performing charter schools across the country maximize resources for students. The CIF provides long-term, fixed-rate loans—similar to a home mortgage—for up to 100 percent loan-to-value financing, with no reserve fund requirements and millions of dollars saved over the life of a loan. The CIF is the first pooled fund of its kind for public charter schools, utilizing philanthropy and excellent credit standards to develop a product with immense value for schools and fund investors alike.
Recent projects include:
"CIF's successful launch affirmed our founding hypothesis: schools are eager to spend less on facilities and more on children,” said CIF Founder and CEO Anand Kesavan. “Our first two loans to Soulsville and Village Tech saved the schools over $5 million—dollars right back into high-performing classrooms. Long-term, low-cost, high impact. That’s our mission. We look forward to helping dozens more schools save in the coming years. It's been rewarding and humbling to work alongside the Walton Family Foundation, high-performing school leaders and their school communities as we grow scalable, efficient capital markets to work toward educational equity."
Created in collaboration with Bank of America Merrill Lynch and managed by Civic Builders, the Facilities Investment Fund (FIF) is a groundbreaking $100 million loan fund that is committed to improving facilities financing for high-performing charter schools and networks across the country. The program provides financing for new school construction or renovations to existing buildings with loans up to $20 million for up to 90 percent loan-to-value financing. The interest rate is fixed for the duration of the five-year loan period, and the loans feature 25-year amortization, no prepayment penalty, and up to 24 months of interest-only during construction.
Recent projects include:
"For 17 years, Civic Builders has been committed to our mission of ensuring that real estate will never be a barrier to an excellent education,” said Civic Builders CEO David Umansky. “The Facilities Investment Fund represents a critical step toward improving access to affordable facilities financing for high-performing charter schools nationwide. We are proud to partner with the Walton Family Foundation and Bank of America Merrill Lynch to bring this innovative product to the facilities lending landscape."
Accessing facilities that adequately serve the needs of their public school students and educators remains a significant barrier for public charter schools across the country. The CIF and FIF aim to incentivize new and additional capital to charter school facility projects at cost-effective interest rates. The Building Equity Initiative marks the first time philanthropists have tried to catalyze system-wide improvements in how high-performing public charter schools access facilities financing. Through the Building Equity Initiative, there is now a large network of real estate experts, lenders, financiers, technical assistance providers and additional resources available to help public charter schools finance and secure facilities.
About the Walton Family Foundation
The Walton Family Foundation is, at its core, a family-led foundation. The children and grandchildren of our founders, Sam and Helen Walton, lead the foundation and create access to opportunity for people and communities. We work in three areas: improving K-12 education, protecting rivers and oceans and the communities they support, and investing in our home region of Northwest Arkansas and the Arkansas-Mississippi Delta. In 2017, the foundation awarded more than $535 million in grants in support of these initiatives. To learn more, visit waltonfamilyfoundation.org and follow us on Facebook and Twitter.
A foundation with a philanthropic vision is combining forces with impact investors to provide charter schools with alternative low-cost financing options for building and renovating schools.
The Walton Family Foundation, based in Bentonville, Ark., provided seed funding to create two “innovative” educational facility financing vehicles that it said would provide charter schools with new longand short-term financing choices, in part because some schools don’t have access to public financing.
With $200 million from the foundation to start up, the Charter Impact Fund will be a revolving-loan-type fund offering long-term, fixed-rate loans to high-performing charter schools for up to 100% of project costs.
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The Walton Family Foundation today announced the creation of the Charter Impact Fund and Facilities Investment Fund. The two distinct non-profit funds are supported through the foundation’s Building Equity Initiative, an unprecedented effort to make it easier and more affordable for public charter schools to find, secure and renovate facilities. The Charter Impact Fund and Facilities Investment Fund will provide quicker access to long- and short-term financing, respectively.
“Big challenges require bold solutions,” said Alice Walton, Walton Family Foundation Board Member. “This effort will allow resources that were spent on facilities to be directed back into the classrooms, back to the teachers and back to where it should be—with the students.”
Freedom Preparatory Academy Charter Schools—whose entire inaugural graduating class of 2017 was accepted to four-year colleges and universities, in a neighborhood where only 10 percent of residents earn college degrees—are growing to meet the need for quality education options for children in their Memphis, Tennessee community. When Freedom Prep was ready to open its second elementary school, the only option was to start in a temporary facility, even though it meant moving a year later. “Charter schools deserve equal and more seamless access to facilities resources so that we can meet the need in our neighborhoods,” says Charlise Clark Gwin, Chief Financial and Operations Officer, Freedom Prep.
Currently, public charter schools spend, on average, 15 percent of all funding on facility or facility-related costs, a figure that does not include untold staffing hours and resources spent addressing these issues. Public financing is extremely limited: Less than half of all states that allow charter schools provide them with any per-pupil facilities allowance, and opportunities to share space with district schools are rare. According to research from the Charter School Facilities Initiative, nearly one in five public charter schools have delayed opening by a year or more due to issues finding and securing facilities. Nationwide, more than $3.6 billion is spent annually on public charter school facilities—resources that could be directed to support teaching and learning.
The Charter Impact Fund, a new, non-profit organization, will launch with $200 million in seed funding and provide long-term, fixed-rate loans—similar to a home mortgage—to high-performing charter schools anywhere in the country for up to 100 percent of project costs. The CIF provides charter schools with access to lower transaction costs and quicker loan execution —allowing each school to save several million dollars over the loan term. Adapting a revolving-loan fund model that has successfully supported clean water projects and affordable housing, the CIF is the first pooled fund of its kind for public charter schools, providing permanent, credit-enhanced loans at low cost.
“At Charter Impact Fund, we believe that the schools making the biggest impact for students should be empowered to grow. Borrowing through CIF realizes permanent savings for charter schools that they can put back into the classroom and serve even more families in their community,” said Anand Kesavan, CEO of the Charter Impact Fund. “We know the need because we’ve led and worked with charter schools, and we understand how to be a long-term partner for the school's success.”
Created in collaboration with Bank of America Merrill Lynch and managed by Civic Builders, the $100 million Facilities Investment Fund will offer public charter schools five-year fixed-rate loans for up to 90 percent of project costs for new construction or facility renovation. FIF loans are the only short-term loans available to public charter schools that meet three significant criteria: up to $20 million, low-fixed interest rates and high-percentage of project costs. The FIF is an innovative private-philanthropic partnership, combining commercial and foundation capital to drive down costs associated with finding and securing facilities.
“Making a significant impact in communities is an important consideration for projects we finance,” said Maria Barry, Community Development Banking national executive at Bank of America Merrill Lynch. “The Facilities Investment Fund will build on Bank of America Merrill Lynch’s work to provide more children access to high-quality public charter schools. Since 2000, BoAML charter school financing has exceeded $1 billion and created educational opportunities for more than 25,000 students at over 80 schools.”
“The charter school movement’s urgent challenge with facilities finance requires these kinds of innovative initiatives and public-private partnerships,” said Nina Rees, President and CEO of the National Alliance for Public Charter Schools. “Lack of access to facilities finance is among the biggest barriers to opening or expanding more high-quality charter schools in most communities across the country.”
The Building Equity Initiative marks the first time philanthropists have tried to catalyze system-wide improvements in how high-performing public charter schools access facilities financing.
In developing the CIF and FIF, the goal is to incentivize new and additional capital to public charter school facility projects at cost-effective interest rates. Through the Building Equity Initiative, there is now a large network of real estate experts, lenders, financiers, technical assistance providers and more resources available to help public charter schools when financing and securing facilities.
About the Walton Family Foundation
The Walton Family Foundation is, at its core, a family-led foundation. The children and grandchildren of our founders, Sam and Helen Walton, lead the foundation and create access to opportunity for people and communities. We work in three areas: improving K-12 education, protecting rivers and oceans and the communities they support, and investing in our home region of Northwest Arkansas and the Arkansas-Mississippi Delta. In 2016, the foundation awarded more than $454 million in grants in support of these initiatives. To learn more, visit waltonfamilyfoundation.org and follow us on Facebook and Twitter.