Buck Financial Blog

I get to do this another year!

Every year, I make an assessment about how things are going and whether or not this little endeavor that began 17 years ago can continue.  In 2017, Buck Financial closed more charter school financings (20) totaling more in funding ($689 million) than ever before.  We have now closed over 140 charter school transactions totaling over $3.2 billion.

There are a number of factors that contribute to something like this.  First and foremost, I am lucky and blessed to work with so many fantastic charter schools.  It is very humbling to work with you because of the efforts you make to change the life trajectory of so many students (and their families) who otherwise might not have a chance at a good education.  Many of you have been willing to tell your charter colleagues about us.  We have also built some fantastic partnerships with attorneys, back office financial firms, and others, who continue to recommend us to their clients.  A mild panic attack from a proposed change in tax law during the fourth quarter added to 2017’s record, by moving forward to 2017 some issues planned for 2018.  I am reasonably sure Buck Financial has served as advisor or consultant on more charter school financings than any other firm, and there are many folks to thank for that.

So, after a little R&R at the beginning of January, we will be back at it as hard as ever in 2018.  If there is something we can do for you, please do not hesitate to reach out.  In the meantime, best wishes for 2018.

As The Rolling Stones sang, “You can’t always get what you want, but … you get what you need.”  The long-awaited final version of the tax bill was anounced on Friday, December 15, 2017.  For charter schools, the outcome was mostly what we needed.

Private Activity Bonds (PABs), which include 501 c 3 bonds that are the basis of the vast majority of charter school tax-exempt bond issues, were NOT eliminated as originally proposed by the House.  Neither were New Markets Tax Credits (NMTCs), so two very important sources of facility funding for charter schools will remain.  Advanced refundings (AR), which refinance outstanding tax-exempt bonds more than 90 days prior to the call date on the outstanding bonds, were eliminated beyond December 31, 2017.  This will have a minor impact for charter schools, for example in states where some sort of enhancement is available (as schools which didn’t originally qualify for state enhancement later become qualified).  However, given that the interest rate environment has been low for a while, I don’t expect a huge impact here.  Finally, we can analyze the benefit of shortening the optional call date on new issues going forward to help offset the loss of AR.  Also eliminated were bonds whose name began with “Qualified”, such as Qualified Zone Academy Bonds (QZABs) and Qualified School Construction Bonds (QSCBs), whether on a tax-credit or direct pay basis. In the case of QSCBs, most of that allocation had been used anyway, but the loss of QZABs will have a minor impact for charter school facility finance.  Other items eliminated were energy-related tax credit bonds called Qualified Energy Conservation Bonds (QECBs) and Clean Renewable Energy Bonds (CREBs).   The final bill is expected to pass both houses when they vote the week of December 18.  After much drama and many twists and turns, charter school facility finance will largely be Business As Usual (BAU).

Congratulations to El Paso’s students and families on IDEA’s expansion there. The former school district board president’s comments are typical of the traditional public school mindset in too many instances: no mention of the educational outcomes for the students, just about the money to which the school district feels entitled. Even more telling is the comment by the local teacher union rep, about “cherry-picking” those low-income students to get Federal revenues. Yes, that’s it! EVERYONE wants to teach those low-income “easy to teach” kids. No wonder the local businesses asked IDEA to come.

http://www.elpasotimes.com/story/news/education/2017/12/12/idea-charter-school-chain-buys-former-jewish-community-center-preschool-west-el-paso/921634001/

Buck Financial served as financial advisor to Nevada Charter Academies, d/b/a American Preparatory Academy – Las Vegas (APA-LV) for its $29,965,000 bond financing to acquire its existing facility.  The facility is owned by Charter Facility Support Foundation and is leased to APA-LV under a long-term lease.  APA-LV is managed by American Preparatory Schools (APS), which also manages several schools in Utah.  Though APA-LV is only in its fourth year of operation, it received a BB rating from Standard & Poor’s and the issue was well received by the market.  APS founder Carolyn Sharette has worked on a number of turn-around situations for other schools with outstanding bond issues that are owned by some of the investors who bought APA-LV’s bonds, and they were eager to be able to invest directly in a school manged by APS.  Buck Financial is proud of our association with APS and to have closed our first transaction in the State of Nevada.  We have now closed over 140 charter school facility transactions totaling over $3 billion in 16 states.