August 26, 2020

Investors Increase Credit Inquiries
A $145 million bond financing from Equitable Facilities Financing’s (EFF)“Equitable School Revolving Fund” went to market on August 12th.  The bonds have been given a “social” designation from Kestrel Verifiers. Social bonds are a burgeoning area in the municipal market, as issuers and investors alike become more aware of the interest from a growing investor class that wants a signifier of how municipal bond proceeds are being spent.
“This deal is part of our plan to provide equitable financing for all high-quality public charters — and we're doing it with an 'A' rated, credit-enhanced, long-term, scalable investment product," said CEO and founder of the EFF, Anand Kesavan. EFF is backed by the Walton family.

The EFF deal is being run by RBC Capital Markets. RBC managing director, Tim Williams, said the charter school sector continues to perform and the "social" aspect of the deal makes it more compelling to investors. “With so much money and so many investors out there chasing assets, this deal is one that has a solid footing and is backed by philanthropic funding, so it makes sense for investors to come into it," he said.

EFF is providing money to roughly 27 schools across the country and has “dozens more in the hopper,” according to Kesavan. Still, anxiety around the pandemic isn’t being ignored. Kesavan noted, “We’re getting much more investor inquiry on credit in general and we think investors are asking the right questions now in this environment.”

Kesavan recently recorded a podcast with the Bond Buyer about the deal and EFF’s plans. Click here to listen: Charter Schools Funding Exists and Matters During Coronavirus  Lynne Funk, Charter School Deal to Come to Market Amid Coronavirus Threats to Education, The Bond Buyer, August 11, 2020
Borrower and Schools Strike a Deal to Satisfy Bonds
When two high performing New York City charter schools financed their new campuses through bonds in 2018, the future looked bright for both institutions. Things started to unravel for American Dream Charter School in Brooklyn and Hebrew Language Academy Charter School 2 in the Bronx in October 2019 when their general contractor Hollister Construction Services filed for bankruptcy.  Things went from bad to worse when the surety under the payment and performance bond failed to step in to finish construction of the projects.  And the COVID pandemic certainly didn't help.  
Due to the delay in the construction of the school facilities, they were not completed on time for the schools to move in as planned for the 2020-21 academic year.  As a result, the borrower and the school for each school bond financing conveyed their right, title and interest in and to the property and related collateral in full satisfaction of the outstanding balance and all other amounts payable under the Financing Documents, and the American Dream bonds and the HLA bonds were redeemed and canceled as of August 21, 2020.  
Both schools continue to operate in their existing facilities.


Construction Plans Includes Skyway Access to Sports Dome
The city of St. Paul will decide this week whether it will issue $43 million in tax-exempt bonds to help Hmong Prep Academy expand its campus - including adding a skyway. Of the $43 million in borrowing, $17 million would be used to pay down the debt from a previous expansion that included building a sports dome. Plans call for a new middle school, a large play area, more lunchroom space and a skyway to connect the existing school to the sports dome and new middle school. Currently, staff must stop traffic to allow students to cross the street to reach the sports dome. Hmong College Prep will enroll 2,400 students this year. It isn’t seeking to significantly increase enrollment. It just needs more space. A local community council unanimously supports the expansion project, urging city council to issue the bonds because the school has “revitalized a corner of our neighborhood and is an ongoing asset to our community at large.” Josh Verges, Access to St. Paul Charter School’s Sports Dome at Issue in Financing Request to City Council, Twin Cities Pioneer-Press, August 18, 2020


Big Facilities Project to Add 600 Students in Newark
Newark Charter School (NCS) has embarked on a $20 million expansion project that will add a fourth building to its campus and allow the school to serve an additional 600 students. Two years ago, the school purchased a seven-acre property - formerly a warehouse for freezers - that backs up to NCS’s campus. It will replace it with a three-story, 90,000-square-foot junior high school, slated to open in fall 2022. With the additional space, each grade will expand by 50 students, bringing the total enrollment to 3,155. The school plans to hire 25 additional teachers. Dan Newcott, who will serve as principal of the new building, said the entire community is excited about the expansion. “It’s like reliving the glory days of the beginning of Newark Charter School all over again.” Josh Shannon, Newark Charter Launches $20 Million Expansion Project, Will Add Fourth Building and 600 More Students, Newark Post, August 21, 2020

Charters Boldly Go Where No Union Dares to Go
Many charter schools are reopening faster than regular public schools, and parents are rushing to enroll their children in any available seat. “I’ve never seen this type of interest in the 10 years that I’ve been involved with charter schools,” says California charter school director Kathy Grbac. Governor Newsome has modified his order that the state’s schools begin the school year from a distance by granting waivers to elementary schools that want in-person learning. More than 80 charters and private schools in Orange County alone have started the waiver process, while the all of state’s largest school districts will remain shuttered.

Interest and enrollment in charters and private schools from New York to Minnesota and other states is also increasing. Adam Baber, a principal in New York, says that admission inquiries have increased “partly due to our intention to reopen our campus safely and fully with regular in-person attendance.” Lance Izumi, Opinion: With Teacher Unions Blocking Reopening, Parents Seek Alternative Schools, The Times of san Diego, August 13, 2020; Spencer Custodio, Scores of Orange County Elementary Schools Move to Reopen Classrooms, The Voice of OC, August 6, 2020

Recognizing that schools in “hotspots” will remain remote at least part time, the New York Charter Schools Association (NYCSA) is providing extraordinary support for its members. School Improvement Partnership’s Tressa Pankovits is participating in a webinar with the NYSCA on Thursday, August 27 at 4:00 p.m. EDT. The topic is ensuring that charter schools that cannot open full-time in-person provide quality online instruction. NYCSA welcomes out-of-state participants! Join using this link or on the NYCSA website

Unique New Charter School Sets Sites on Lancaster City 
Professional soccer player Brian Ombiji led the Harrisburg City Islanders to championship titles in 2007, 2010 and 2011. Now, he wants to lead a "sports-infused" charter school. The Kenyan immigrant founded the AFC Lancaster Lions, a soccer club that teaches students life lessons through sports. He and his co-founders will apply the same principles to the planned "AFCLL Academy Charter School." It would serve about 100 students, with the hopes of reaching 200 in five years, in grades five through eight, with a curriculum focused on college and career readiness. In addition to the typical core subjects, the school would offer courses related to journalism, fitness and nutrition, scouting, analytics and other sports-centered topics - and of course - soccer for P.E. Alex Geli, Pro Soccer Club Founder Proposes Sports-Infused Charter School in Lancaster City, Lancaster Online, August 21, 2020
School Improvement Partnership improves transparency and accountability in the charter school bond market. As continuing disclosure agent for more than 40 schools in six states, we enhance the form and content of secondary market information for charter school bond investors. On behalf of such investors, School Improvement Partnership performs comprehensive evaluations of charter school borrowers in transition - both pre-investment and post-investment. Please view our website or call us at 215.854.6322.
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