A new fund started doling out money in Los Angeles last week to help charter schools there overcome their biggest barrier to growth: finding affordable facilities.
A coalition of nonprofit organizations and financial institutions announced that they had cobbled together a $36 million fund from a mix of public and private sources to pay for buildings to house five to seven charter schools in disadvantaged communities.
The Los Angeles Charter School New Markets Loan Fund was made possible by a federal tax-credit program aimed at spurring investment in low-income communities. Known as the New Markets Tax Credit Program, run by the U.S. Department of the Treasury, the program is being used around the country to shake loose money for charter schools.
Word of the fund comes two years after the federal government authorized Excellent Education Development, or ExED, to find investors to take advantage of the income-tax credits in the Los Angeles area.
鈥淚t takes a while to get all the investors in and make it happen,鈥� said Anita Landecker, the executive director of the Los Angeles-based nonprofit organization.
Officials announced the fund last week at the groundbreaking of a building near downtown Los Angeles that will become home to the first school to qualify. The Camino Nuevo High School has been housed in a former ice cream factory, the kind of facility that is not uncommon in a city where the demand for new charter schools is high but the real estate costs are often out of sight.
鈥淎ffordable facilities is the biggest obstacle to creating charter schools in Los Angeles,鈥� Ms. Landecker said.
Schools benefiting from the new fund will be able to borrow money at below-market rates, thanks in part to the tax credits lenders receive under the federal program.
鈥淚f a market-rate loan is at 8 percent, we can lend at 6 percent,鈥� Ms. Landecker said.
Schools taking part will also receive grants financed through a $2 million gift to ExED from the Los Angeles-based Broad Foundation. Those grants, aimed at helping the schools pay back the loans, are to average around $400,000 per school.
