An unusual public-private partnership in Indianapolis is helping charter schools get access to money for buildings at favorable rates.
Launched in 2005, the has made up to $20 million in loans available to charter schools sponsored by the mayor’s office.
Eligible charters can borrow tax-exempt money for acquiring, constructing, or renovating facilities. The schools pay lower rates on those loans because of the backing of the city and other partners in the initiative, including the Annie E. Casey Foundation, a Baltimore-based philanthropy.
“We wanted to do everything we could to reduce barriers to enter into the [charter] sector,” said David Harris, the former charter schools director for Indianapolis Mayor Bart Peterson, a leading proponent of charter schools who left office in January after being defeated for re-election.
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“It’s hard for charter schools to borrow money oftentimes on their own, period, and when they do, they have to pay pretty high interest rates,” said Mr. Harris, who is now the chief executive officer of The Mind Trust, an Indianapolis nonprofit group that supports entrepreneurial ventures in education, including charter schools. “This gives them an access point, but also to do so at a very favorable interest rate.”
The Casey Foundation and the Educational Facilities Financing Center of Local Initiatives Support Corp., a New York City nonprofit, each put up $1 million in loan guarantees to help leverage funding for charters in Indianapolis.
A $2 million grant from the U.S. Department of Education is further underwriting the effort. The city of Indianapolis has put its “moral obligation” behind the loans as a guarantee, pledging to seek appropriations if the program’s debt-service reserve fund becomes depleted.
The partnership also involves JPMorgan Chase Bank. The loan program is administered by the Indianapolis Local Public Improvement Bond Bank.
