Noble Network of Charter Schools
Over the last several years, the Noble Network of Charter Schools has relied on IFF (formerly known as the Illinois Facilities Fund) as a strategic financial and facilities partner to achieve its ambitious expansion plans. Noble is comprised of seven nonselective college preparatory charter schools serving a mostly low-income population of students in Chicago. Consistently ranked among the top 15 Chicago public high schools (including magnet, selective and nonselective schools), Noble schools provide a rigorous, college preparatory curriculum emphasizing educational excellence, civic responsibility and tolerance, sending more than three quarters of its students onto post-secondary education.
Since 2005, Noble has launched two schools a year, each modeled on the highly successful Noble Street Charter High School, which opened its doors in 1999. To accomplish this goal, Noble turned over the management of its facility projects to IFF.
As the largest Midwest Community Development Financial Institution to serve charter schools, IFF helped Noble obtain the financing necessary to achieve its expansion plans through the Charter Schools Capital Program (CSCP). IFF designed CSCP to finance larger amounts of capital through tax-exempt bonds, using two federal grants from the U.S. Department of Education's Credit Enhancement for Charter School Facilities Grants Program totaling $18 million. The credit enhancement structure allows charter schools, like the Noble Network, to access capital at terms similar to those traditional public school districts enjoy.
Noble participated in the inaugural credit-enhanced, tax-exempt bond issue under CSCP, ultimately raising more than $25 million from the public bond markets. In addition, IFF also closed a total of $8.38 million in direct loans to Noble, primarily for predevelopment work associated with new campuses.
Noble also benefited from consulting provided by IFF that did not involve the use of its grant funds. Consultants led the facilities work for each expansion schools, including the site search, feasibility analysis and project management of architectural, zoning, environmental, bidding and construction issues. Since 2005, IFF has managed the development of 10 campuses (three of which are scheduled to open in 2009).
With IFF's support, and through the assistance of the Department of Education's Credit Enhancement program, Noble has expanded to serve more than 2,200 students and has garnered an excellent reputation with major funders of education reform.
KIPP LA Prep
The KIPP Foundation provided an annual lease guarantee of $228,000 for five years, for the purpose of securing a 25-year lease for KIPP LA Prep supported by grant funds under the Department of Education's Credit Enhancement for Charter School Facilities Program.
KIPP LA Prep opened in 2003, and was ranked the ninth best middle school in LA Unified School District, as measured by the 2007 California Academic Performance Index. LA Prep's lease expired at the end of June 2008, which provided an opportunity to find a long-term home in an adjacent neighborhood in a city that is notorious for overcrowded schools and lack of educational space. The property consists of 22,000 square feet plus outdoor space, including green space, and the location provides an opportunity to partner with the neighboring YMCA for gym space and involvement in other programs.
The landlord wanted a school on his property, but he was not familiar with schools and was concerned about the funding of education in California, which created the need for a lease guarantee. LA Prep first sought a letter of credit from First Republic Bank, but it would require the school to encumber $228,000 for five years, which would have been unwise when LA Prep would be experiencing a cash crunch due to $400,000 it needed for tenant improvements. The guarantee allows a high-performing school to secure a long-term lease without tying up precious cash as collateral. The guarantee is backed by the reputation and financial history of KIPP Foundation, but financial risk for the Foundation is mitigated by the Department of Education grant funds.
Chandler Park Academy
The Michigan Public Educational Facilities Authority (MPEFA) issued $8,465,000 in limited obligation revenue bonds, Series 2008 to fund a loan to Chandler Park Academy (the"Academy"). The 2008 bonds were issued as fixed-rate term bonds with a final maturity of November 1, 2038 and a rating from Standard & Poor's of 'BBB'. The net interest cost was 6.48%. The Academy used the proceeds of the bonds to acquire a 10-acre site with athletic fields and a 123,000 square-foot facility with 43 classrooms, special education classrooms, a library, kitchen/cafeteria, gymnasium, auditorium, administrative offices, and a storage building.
Chandler Park Academy is a public school academy operating as a Michigan non-profit corporation and a governmental agency of the State of Michigan incorporated on May 30, 1997. The Academy currently provides public education for grades K-10 and is authorized to provide public education for grades K-12. The Academy plans on expanding the school to its full K-12 compliment by the 2009-10 school year. The Academy primarily teaches students residing in the City of Detroit, who are mostly minorities. The Academy's mission is to deliver academic excellence, character development and leadership for the urban child, to benefit from a culturally and academically enriched K-12 college preparatory education. There were 1,634 students enrolled at the Academy for the 2007-08 school year.
Both Chandler Park Academy Elementary School and Chandler Park Academy Middle School made Adequate Yearly Progress (AYP) for the 2007-2008 academic year. The Michigan Department of Education issues "School Report Cards" to Michigan schools. The composite letter grade (the overall grade is arrived at by combining student achievement, indicators of school performance, and AYP status) given for 2007-2008 academic year was a B for Grades 3 - 8.
In the 2006, the Michigan Department of Education awarded the Chandler Park Academy a two-year federal Charter School Dissemination Grant to disseminate information and implementation of its successful Technical Academic Support Consultants (TASC) Program to assist other public schools. Because of this grant, Chandler Park Academy was able to share its academic success in serving students in an urban setting with other schools in the Detroit metropolitan community.
Grant funds received by MPEFA from the U.S. Department of Education's Credit Enhancement of Charter School Facilities Program were used to fund $500,000 of the debt service reserve for the bonds. The benefit of the Grant Funds resulted in the issuance of fewer bonds, saving the school the cost to borrow these funds over the term of the bonds. By effectively creating a zero percent loan for 27 years Chandler Park will save approximately $600,000.