02-25-2004 Council Agenda - Laserfiche WebLink

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The bonds are also secured by a mortgage on the property. The default risk in borne by the purchasers (investors) of the bonds. Therefore, the structuring of this deal and the financial strength of Family Academy are critical in determining the marketability of these bonds. ➢ To date, no bond financed charter schools have defaulted in their debt obligations. ➢ The first charter school bonds were issued in 1998. ➢ Bonds are issued for a 30 -year term. ➢ Family Academy is only now just starting the preliminary steps in this process and is at least 90 to 120 days away from being able to issue debt. ➢ Family Academy was hoping to have a new 35,000 square foot school facility ready for the fall of 2004. Given the steps they need to complete involving the acquisition of property, the design of the facility, and issuance of debt, I believe it is virtually impossible for them to attain September 2004 occupancy. ➢ The donor that has been mentioned in our earlier discussion has expressed support for a new building, but no specifics are known at this time relative to the amount or timing of a donation. ➢ Family Academy could jump start this process by having a third party front the cash to assist in securing the property (Mr. Frattalone has confirmed that he would need a sizeable, non - refundable deposit to hold the property if a sale was less than guaranteed.) I do not know how feasible this possibility is for them. ➢ Family Academy currently has about 250 students in grades K -9, plus another 36 in day care. Their goat is to achieve enrollment of 400 in grades K -12, plus maintain a day care operation. They have about 100 students on their waiting list at the present time. ➢ There is some question as to whether or not Family Academy (or their 501c3 corporation) could give the City the shop area. (I feel fee ownership versus a long -term lease is crucial to ensure our rights to use this property are protected.) More research will be necessary to determine what is allowable in this regard. ➢ Family Academy would plan to lease the existing office area in the Frattalone Building to ISD 916 versus their use of that space. ➢ The subdividable portion of the Frattalone Property (about 2.2 acres) is of questionable size to accommodate a 35,000 square foot school with associated parking, green space, and play areas. Expansion of this facility appears out of the question. (See report from City Planner attached.) Recommendation: I can not recommend the City's acquisition of the Frattalone property based on its speculative nature and the lack of appropriate economic incentive to undertake the risk. I also cannot recommend the Family Academy option at this time. Presently, it does not appear to be viable given the multitude of issues that need to be resolved. These include the size of the site being of marginal size to accommodate their use, the potential of a substantial, non- refundable deposit needed to hold the site until feasibility can be determined, questions regarding the appropriateness of the land use, hurdles Family Academy has to clear to be able to pursue acquisition and construction, uncertainty regarding Family Academy's ability to "give" the shop and associated land to the City, issues regarding re -use of the facility if Family Academy were to default on their debt obligations, and the loss of tax revenue that would be generated by a sale to a tax - paying user associated with the increase in EMV. 3