Finding and financing charter school facilities is a challenge. The 2000 National Study of Charter Schools indicates that inadequate facilities, along with insufficient start-up and operating funds, are two most frequently cited obstacles charter school developers and operators face. Though charter schools are public and they receive state and federal funds that are comparable to those of traditional public schools, they do not receive facilities funding. Unlike traditional public schools, charter schools do not have the ability to raise funds through taxes. Thus charter schools must finance their facilities out of operating revenues or fundraise to cover facilities costs. However, raising these funds is difficult, because charter schools appear risky ventures to conventional lenders. The schools' limited assets, contracts, and operating histories make banks hesitant to provide charter schools with long-term mortgages or lease financing. The facilities challenge is particularly daunting for start-up charter schools as compared to existing schools that convert to charter status.
This piece offers an outline of steps to follow to secure school facilities. Four basic steps in the process are (1) developing a facilities plan, (2) assessing building/site needs, (3) selecting and evaluating a site, and (4) financing the site. This page also provides a list of Site Options with examples that illustrate how several schools creatively found and financed their facility, and links to a list of Resources on facilities.
II. Developing a Facilities Plan
The first step toward securing facilities is developing a facilities plan. The school's facilities plan is integral to its overall business plan, which communicates the school's objectives to its board, staff, funders, and others. Planning for school facilities involves taking stock of expected enrollment, staff size, revenues, and growth. A few tips include the following:
Start the planning process early and be flexible in the first few years of operation
Allow 1-2 years to begin, negotiate, finance, and complete a charter school facility project
Draw on professional assistance from real estate agents, nonprofit developers, architects, building inspectors, general contractors, real estate financiers, lawyers
If possible, hire an experienced project manager to assist with assessing needs and selecting a site
Start with sufficient enrollment to cover rent or debt service
Reserve enough physical space for several years' growth
Keep occupancy costs within 25 percent of operating revenues
Keep the school's revenue-generating space (classrooms) at or above 45 percent of the school's total facility space
Partner with community agencies for facilities like libraries, recreation areas, etc.
Involve parents, students, staff, and the broader community to ensure that the school is well-received in its location
III. Assessing Building Needs
The next step in finding a suitable facility is to take stock of what is needed. Ideally, the school facility reflects and supports the school's vision and enrollment. Thus founders may want to take into account the following:
School vision and how the facility reflects that vision
Expected enrollment and expected growth
Classroom space necessary to meet educational goals, e.g. science labs
Amount of space needed to maintain the desired student: teacher ratio
Desired non academic spaces, e.g. dance studio, auditorium, playground
Technology needs, e.g. wiring for computers and internet access
Geographic location in relation to the students who will be attending
Transportation options for reaching the site
School's legal status, i.e., Can it own property?
It is important for developers of new charter schools to be flexible, knowing that the school's needs for space may change over time, and that all facility needs don't have to be met by the first day of school. Creative founders consider a wide range of alternative sites and keep many options open. For instance, perhaps the needs of the school can be reconsidered in the short term to make a facility work as a starting point for the first year(s).
IV. Selecting and Evaluating a Site
With a clear idea of what is needed, the next step is to assemble a team to identify and evaluate potential sites, allowing for time to get informed about the market, leasing, and buying, and to consider various options. It is important to seek possible sites through every avenue: trustees, founders, media coverage of local school or business closings, and scanning the desired geographic area. Additionally, it is crucial to become well versed in all applicable safety issues, building codes, and zoning rules. These may include regulations such as square foot requirements for each type of classroom; permissible construction materials; specifications for walkways, doors, windows, and ceiling heights; requisite work permits; and adequate access for people with disabilities. See our State and School Information area for details in your state.
Once potential sites are identified, evaluate what it will take to make them suitable for your school. Pay particular attention to building codes, hazardous materials, liability costs for insurance and repairs, and plumbing and wiring. Be aware that there may be alternative approaches to meeting regulations, through waivers, phase-in periods, or grand-fathering. Continue to rely on professional legal, architectural, and construction expertise where appropriate. Then carefully consider the costs: new construction is estimated to cost roughly $100 per square foot, while renovation is sometimes cheaper ($30 per square foot). Either way, costs will increase if you are on a short timeline or if the project takes longer than expected. Modular, or portable classroom units may provide short term solutions and may run $0.70-0.75 per square foot per month for 24-month lease; or $65 per square foot for purchase.
Creative Site Options
As with curriculum, governance, and management, many charter school developers have been innovative in securing facilities, especially on limited budgets. Consider some of the following site options utilized by existing charter schools:
Unused or underused educational space, such as that in existing public schools (Bowling Green, Sonoma), private and parochial schools (Neighborhood House), or local colleges/universities (Leadership High, Westwind Academy). A great benefit of this option is that the facility has already been made suitable for learning.
Community facilities that can be shared on days they are not in use, e.g. churches, community centers (City on a Hill), city parks, and recreation areas (Casa Blanca, Ketchikan).
Public facilities such as state or locally owned vacant buildings (Hilltown). Your state or municipality may have a department that identifies available property, such as the Massachusetts Division of Capital Asset Management or Boston's Department of Public Facilities. Vacant buildings, however, often require a lot of renovation.
Corporate partnerships. Some businesses have shown interest in hosting schools that are convenient for their employees, while others may have a philanthropic interest (Accelerated) or be interested in forming a reciprocal relationship (Flagstaff).
Once a suitable site is selected and negotiations are made to obtain it, financing it is the last hurdle. Charter school developers need to be as flexible and creative in finding the money as they are in finding the facility. Following is a list of possible sources of facilities funding.
Large regional and national commercial banks (might not be eager to lend to start-ups), small local banks, finance companies, or the actual seller. (Charter School Facilities offers details on types of loans and how to work with a lender).
University partners, management companies, government programs, or community development corporations that act as loan guarantor
Community development financial institutions (CDFI's), which specialize in providing access to loans for nonprofits
Local agencies designed to support charter schools, such as MassDevelopment, Illinois Facilities Fund, or Chicago's $2 million loan pool.
State per pupil operating funds
Fundraising through a capital campaign tapping many different sources of grant funding, from federal, state, and local government grants, to corporate and foundation grants, donations from individuals, or monies from private investors.
Tax-exempt bonds. Colorado has pioneered this option for charter schools with its Educational and Cultural Facilities Authority.
Modular building companies, which may offer construction management and financing to nonprofit organizations that buy their modular facilities.
VI. Resources
The following links contain lists of useful on-line resources.
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