In July 2020, High Tech High completed a $71.225 million refunding via a tax-exempt bond issue which was directly purchased by City National Bank of California (an RBC Company). The issue was completed through the California School Finance Authority under the guidance of Treasurer Fiona Ma and Executive Director Katrina Johantgen.
Over the years, HTH had issued a series of financings, beginning in 2010 with a Qualified School Construction Bond issue. HTH followed up that issue with a 2013 QSCB, and then issued a series of issues from 2014-2018. All of their outstanding issues with the exception of their Series 2017 bond issue were refinanced with the proceeds of this non-rated issue, which was structured as a Master Trust Indenture financing. Additionally, a minor new money component of $1 million was included for the construction of a kitchen at HTH’s Mesa campus. This financing has a 20-year maturity and uses a 30-year amortization schedule. Its all-in interest rate is 2.57% as the result of a floating-to-fixed rate swap with CNB.
HTH currently operates sixteen schools across the San Diego metropolitan region. Their 2020 enrollment was approximately 5,800 students, and enrollment is expected to grow to over 6,500 students by fiscal 2023. Fourteen of the sixteen HTH schools make up the obligated group of this financing (through their landlord LLCs). The actual borrower was HTH Learning, a companion corporation set up to own facilities and lease them to HTH, and the transaction will qualify HTH for the California SB 740 lease reimbursement program.
Begun by a coalition of educators and civic leaders in and around San Diego in 2000, HTH is guided by four connected design principals which set aspirational goals and set a foundation for understanding their educational approach. These are: equity, personalization, authentic work, and collaborative design. Equity to address inequalities and help students reach their full potential. Personalization to practice a learner-centered approach that supports and challenges each student. Authentic work means to integrate hands and minds and incorporate inquiry across multiple disciplines which helps students engage in work that matters to them. Collaborative design where teachers work together to design curriculum and projects, among other goals.
In addition to the $71 million facility financing, a $15 million working capital line-of-credit was also arranged through City National Bank. This will be critical to allow HTH to navigate the upcoming fiscal environment for charter schools in California as a result of the economic upheaval stemming from the Covid-19 lockdowns. Between the savings from the refunding and this line-of-credit, HTH has bolstered its ability to weather the fiscal storm expected over the next several years.
Buck Financial Advisors LLC served as Municipal Advisor to HTH, and Procopio, Cory, Hargreaves and Savitch, LLP served as borrower’s counsel. Orrick, Herrington & Sutcliffe LLP served as bond counsel, and Kutak Rock served as bank counsel. Wilmington Trust served as Master Trustee. As noted, City National Bank directly purchased the bonds.
Congratulations to the students, families and staff of HTH on this milestone, and keep up the good work!