FACILITES FOR OUR FUTURE
Facilities for our Future, Bluum’s Predevelopment Loan Guarantee Program, is made possible by a $3.5 million Charter School Program Credit Enhancement (CE) grant award from the US Department of Education (USDOE). Bluum is using this USDOE support to help outstanding school leaders design, build, expand and/or remodel charter school facilities across Idaho.
PURPOSE
Charter schools fund facilities differently.
Charter schools are an innovative part of Idaho’s public education system, not only from an educational perspective, but also with respect to how they finance their facilities. When a traditional school district needs to construct a new facility, the district asks local voters to approve a facility plant levy to construct the new school using local property tax revenues. In contrast, charter schools cannot seek local tax support for facilities projects. Like other start-up businesses, charter schools must fund facilities out of their operating revenues by securing facility financing out in the marketplace – this can represent a real challenge.
Typically, the initial financing a charter school needs for a planned facility project is a predevelopment loan. During predevelopment, the school team works with architects, contractors, consultants, attorneys, and financial advisors to design the school, find a parcel of land, conduct due diligence, and to secure a facility construction loan (usually in the $12 to $16 million range) to build the school. This predevelopment phase often takes one to two years and can cost $200,000 to $700,000 depending on the scope of the project.
It can be very difficult for charter schools to secure a loan to complete this important predevelopment work because the charter school is often newly formed, does not yet have a building or students, has little if any collateral, and does not yet have a proven track record of academic, fiscal, or operational performance. Banks see the schools, and therefore these loans, as high risk. With its new Facilities for Our Future loan guarantee program, Bluum will alter this landscape.
HOW IT WORKS
Through this program, Bluum will provide predevelopment loan guarantees up to $700,000 for qualifying charter facility projects. This will enable participating schools to quickly secure low-cost predevelopment financing. At the $700,000 level, Bluum’s Facilites for Our Future program has capacity to guarantee five (5) loans at any given time. At the end of the predevelopment phase, typically 1.5 years, the school will secure construction financing as it prepares to break ground on its project. The school’s construction financing budget will include funds to pay off the predevelopment loan at closing, thereby releasing Bluum’s guarantee, and enabling Bluum to provide additional guarantees to qualifying schools.
Click the Begin Application button below to request an application to participate in Bluum’s Predevelopment Loan Guarantee Program. Our team will respond with an email detailing the application process and providing additional Program information.
If you have any questions prior to requesting an application, we welcome you to email our team at grantsCE@bluum.org.