There's an intriguing item that just appeared on the Dallas City Council's consent addendum for next week's meeting, posted here. According to the doc, the city wants to create a nonprofit called the City of Dallas Education Finance Corporation "for the purpose of financing or refinancing of educational facilities and/or housing facilities incidental to education facilities."
But not just any ol' educational facilities. This is being done at the request of Uplift Education, which, according to those familiar with the proposal, wants the city's help issuing bonds to help with expanding not just in Dallas, but also in Fort Worth, where Uplift expects to open two new campuses in the coming school year. The Educational Finance Corporation, which would have its own board approved by City Manager Mary Suhm and city council, would issue the bonds on Uplift's behalf. Sources say the board's already in place.
Update at 6 p.m.: A lengthy explanation from Uplift CEO Bill Mays follows, in addition to your regularly scheduled jump. Here too is the council briefing for Monday that explains what the city's attempting to do and why.
This is significant for many reasons, chief among them: The state doesn't issue facilities funding to charter schools, but Chapter 53.351 of the Texas Education Code does allow for open-enrollment charter schools to "issue revenue bonds on behalf of authorized open-enrollment charter schools for the acquisition, construction, repair, or renovation of educational facilities of those schools." This is how Harmony funded its recent expansion.
According to Uplift board members with whom I've spoken, all of whom defer to the unavailable-for-now CFO Bill Mays, Uplift is hoping to issue around $85 million in bonds. And they say the reason Uplift wants the city's help is because bonds issued by the Education Finance Corporation would be exempt from federal taxes. Sources say the city would not be on the hook for the bonds that are issued. Calls have been left for other Uplift officials as well.
Of course, we'll know more about this come evening, when the city posts the full addendum and a briefing on the subject that Karl Zavitkovsky, head of the Office of Economic Development, will give to the council's Economic Development Committee Monday. I've left messages for Zavitkovsky as well. Now, then: How did this get on the consent agenda?
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This is how it reads, in full:
Authorize (1) establishment of a non-profit corporation, the City of Dallas Education Finance Corporation for the purpose of financing or refinancing of educational facilities and/or housing facilities incidental to education facilities; (2) approval of the Corporation's certificate of formation and bylaws; (3) appointment of the Corporation's initial Board of Directors; (4) the Mayor to execute and deliver a certificate approving the bonds to be issued for the benefit of Uplift Education, a Texas non-profit corporation, and the facilities to be financed with the proceeds of the bonds for the purpose of satisfying the requirements of Section 147(f) of the Internal Revenue Code of 1986, as amended; and (5) the City Manager to file the Corporation's certificate of formation with the Secretary of State - Financing: No cost consideration to the City
Update: Deborah Bigham, Uplift's Chief Development Officer, dispatches this explanation from its chief financial officer, Bill Mays:
Uplift Education has requested that the City of Dallas set up an Education Finance Corporation so that Uplift, as well as other public school operators, can issue certain bonds reflecting a more favorable cost of financing through the EFC. It's important to note that the city does not incur a cost to facilitate the issuance of these bonds, nor does it incur any liability, direct or indirect, for the repayment of these bonds. Full recourse on these revenue bonds remains with the issuer (in this case Uplift Education). Board members of the Education Finance Corporation do not receive a salary and are citizens who are agreeing to serve so that public schools in the community can access Qualified School Construction Bonds (QSCB's) made possible through the federal government. Attached is a link describing this program.
To date neither Uplift nor any other local public school has attempted to access this particular type of financing, hence the need now to ask the City of Dallas to form this EFC. By accessing this lower rate financing, Uplift and other public school issuers who choose to access QSCB's are able to direct less taxpayer dollars toward interest costs and more dollars toward teaching resources and the classroom. This is an important source of favorable financing for all public school districts, whether traditional or charter, and it is especially important to charter school operators since they do not have access to facilities financing from the state and thus must operate on fewer dollars per student.
Uplift Education is a high-performing, college preparatory, open enrollment, public charter school network with 100% of its graduates accepted to college to date (with over 90%+ accepted to four year colleges). Uplift currently operates 20 public charter schools in Dallas, Arlington and Irving serving nearly 6,000 students and with nearly that many students on their wait list. By 2015, Uplift plans to double the number of students it serves, with its contemplated 2012 bond financing facilitating a portion of this growth.