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Benefits of Facility Ownership

By necessity, many charter school managers find their schools stuck in facility leases with annual payment escalators that increase facility costs by 3% or even more per year. At every lease renewal, they also face the risk that the building owner may be unwilling to renew the lease or may hold them hostage for significant payment increases. Additionally, because School management or the building owner may not consider the arrangement permanent, the facility often does not receive the improvements it needs to make it an optimal school environment.

Owning a facility usually provides many benefits to a charter school, including the following:
  • Buying provides long-term stability - If a school is forced to move to a new location too far away, it could lose significant enrollment.

  • Buying is usually less expensive over the long-run - Purchasing a facility using fixed-rate debt "locks-in" a school's future facility payments. This creates a favorable financial situation as per-pupil revenue increases in the future. The percentage of a school's facility payments in relation to its revenue will therefore decrease over time.

  • Buying builds equity - Owning a facility provides the opportunity for a school to eventually be free of facility payments when the debt is paid off.

  • If you lease, you're usually paying taxes you don't need to (even if you don't realize it) - A for-profit entity that owns a building and leases it to a school is required to pay property tax in most states. This can be tens of thousands of dollars per year. They must pass this cost along to the school, whether or not it is explicitly stated in the lease. When a non-profit organization owns a facility, it is not required to pay property tax.

  • Owning a facility can attract students and teachers - Ownership usually makes it economical to design a school facility exactly as a school would like; leasing a facility presents obvious limitations. For example, compare a school that is designed and built as a school to a leased facility in a strip mall. First-rate facilities provide an additional sense of pride for the students and teachers who use the facilities on a daily basis. This helps in attracting enrollment and retaining students and teachers.

  • If you want to build a new facility but don't have the in-house time or resources to do so, we can introduce you to a builder/developer who will make the process as smooth and efficient as possible

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