April 26, 2017
The Community Development Trust ("CDT"), Raza Development Fund ("RDF") and Bank of America Merrill Lynch ("BofAML") are collaborating to invest $14 million toward the construction of a new $16.5 million school in partnership with the Classical Charter Schools ("CCS") network that serves students in the South Bronx, New York.
"We're incredibly excited about this project because we believe that it is a moral imperative to offer our curriculum to as many deserving but underserved children as possible," said Lester Long, Executive Director of Classical Charter Schools, recognized nationally for educational excellence.
"On behalf of our scholars and their families, we applaud CDT, RDF and BofAML for their strong leadership and commitment to providing opportunities for young people to learn in a positive, nurturing environment," Long said.
The six-story, 53,463-square-foot building, which is scheduled to open during the 2017-18 academic year, will feature 23 classrooms, a full-size gymnasium, a cafeteria with a separate warming kitchen, staff offices and several conference and meeting rooms, as well as a music room and outdoor space.
At full enrollment, the new Classical Charter School will serve 580 Kindergarten through eighth-grade students in the South Bronx neighborhood of Morrisania. The structure represents the first newly constructed facility in CCS's portfolio, Long said.
Bank of America Merrill Lynch has been financing charter school facilities through its Community Development Banking group since 2000 and continues to look for new and innovative solutions to fulfill its goal of increasing educational access in low- to moderate-income communities. BofAML approached CDT in 2016 about providing permanent financing for the proposed Classical Charter School building through a 24-month forward commitment that would refinance the BofAML construction loan.
"We have enjoyed a long and productive relationship with CDT," said BofAML Senior Vice President Stephanie Oliveras. "As community development lenders, we share the recognition that access to quality education is as important to building successful communities as access to quality affordable housing."
CDT, a national investor in affordable housing, expanded its mission 14 months ago by creating the CDT Charter School Lending Program. The program provides long-term, competitively priced fixed-rate financing for academically high-performing charter schools. As with all CDT initiatives, the charter-lending program has a national platform.
"Initially, the CCS proposal did not align with all of CDT's Charter School Lending Program guidelines," said Shelly Cleary, CDT's Senior Vice President, Charter Schools. But after meeting with BofAML and school administrators and learning more about Classical Charter's impressive track record of student accomplishment, CDT approved the proposal in order to support "an institution that is clearly among the city's premier charter school operators," she said.
"Our aim is to address the problems that charter schools have historically faced in obtaining suitable financing," Cleary said. "We believe that, in addition to affordable housing, providing access to quality schools helps parents and families to ensure their children will thrive."
Once CDT became comfortable with the proposal, Cleary said, CDT approached the RDF Education Finance team about serving as the transaction's co-lender. RDF, a longstanding educational facility lender with a significant presence in New York City, was familiar with the Classical Charter network and agreed to provide 50 percent of the first mortgage.
The $14 million BofAML construction loan to develop the CCS facility will be refinanced with two co-first mortgage loans of $7 million from CDT and RDF. CDT's commitment represents the first project financed through its Charter School Lending Program.
"RDF is dedicated to collaborating with quality organizations such as CDT and BofAML," said RDF President and CEO Tommy Espinoza. "We look forward to continuing to grow the number of high-quality charter schools available to all families, especially those in communities where students do not have access to a high-quality education."
The Classical Charter flagship school, located in the Hunts Point neighborhood of the South Bronx, opened in 2006. In 2014, CCS received the prestigious National Blue Ribbon School award in recognition of its exemplary performance. Since opening its first school, Classical Charter has been awarded three additional charters and currently serves nearly 1,000 students. Classical Charter employs a lottery system for admissions, and for the 2017-18 academic year school officials have received nearly 6,500 applications for 300 available slots, Long said.
The Community Development Trust (CDT) is a real estate investment trust that provides capital for the preservation and creation of affordable housing and charter school facilities. Working with local, regional and national partners, CDT makes long-term equity investments and originates and acquires long-term mortgages. In its 18 years, CDT has invested over $1.25 billion in debt and equity capital to properties in 44 states and regions - helping to preserve and create over 40,000 units of affordable housing. CDT is a private real estate investment trust (REIT), a certified Community Development Financial Institution (CDFI), an approved Fannie Mae affordable housing lender and a member of the Federal Home Loan Bank of New York (FHLBNY). As a CDFI and private REIT with a social impact mission, CDT operates as a double-bottom-line organization by utilizing creative financial solutions to provide debt and equity capital to underserved real estate markets, all while seeking attractive returns for shareholders.
About Raza Development Fund
The Raza Development Fund is the largest Latino-serving Community Development Financial Institution ("CDFI") in the United States. The company provides specialty-financing solutions to nonprofit organizations and select for-profit companies that support low-income, Latino families and children in the areas of education, affordable housing and health care.
About Bank of America Merrill Lynch
Bank of America Merrill Lynch (BofAML) Community Development Corp. provides debt and equity financing for properties in low- and moderate-income communities throughout the country. BofAML is also the nation's largest investor in community development financial institutions (CDFIs), with more than 240 CDFI partners in all 50 states, the District of Columbia and Puerto Rico.