Flexible Financing Widens Access to Education in Tennessee
Church Site Transformed into Growing High School Serving Students in Low-Income Communities
MEMPHIS, April 10, 2018 – Hundreds more children from low-income Memphis families will soon find a gateway to college on the grounds of an old church, thanks to a loan announced today.
The $3-million loan from Nonprofit Finance Fund (NFF) and Boston Community Capital (BCC) will help Bluff City High School advance toward its goal of enrolling 640 students in Grades 9-12 by 2021. The school, part of the Green Dot Public Schools national network, opened last fall with 154 ninth-graders and plans to add a grade each year. Renovations to the site, former home of the Solid Rock Christian Church, and the addition of modular buildings are creating classrooms and staff offices, providing an infrastructure in which Green Dot Public Schools Tennessee can help close academic achievement gaps especially for students of color, from low-income communities, and with special needs.
Public charter schools in Tennessee face a number of financing challenges. For example, local bank mortgages rarely exceed 80 percent of a property’s value, while charter schools often need financing at 100 percent or more to cover development costs, and they tend to be in neighborhoods with low property values. In Memphis, charter schools are multiplying and growing, but many are still start-ups with limited assets. They are public schools but don’t get public funding for facilities or access to free facilities as others do, so many have to compete in the private real-estate market.
Enter Community Development Financial Institutions (CDFIs) such as NFF and BCC, which can make loans that fit a school’s needs with, for example, high loan-to-value ratios, and interest-only periods that defer principal payments and allow time for the school to grow and generate more revenue. These loans can also utilize US Department of Education-awarded credit enhancement grants, which guarantee a portion of the loan, allowing financing with less risk.
The deal announced today marks the sixth NFF-BCC loan to charter schools in Tennessee, collectively helping more than 5,400 students get a high-quality education and providing more than 200 new school jobs.
“CDFIs can be great financing partners for charter schools, community health centers, and other nonprofits when traditional lending isn’t the right fit for their facilities projects,” said Norah McVeigh, Managing Director, Financing, at NFF, which has supported more than 70 charter schools across the US with $135M in financing to date, including loans to Green Dot in California. “We are proud to partner with BCC and with Green Dot, and to provide the flexible capital that nonprofits need to do their important work in underserved communities.”
“BCC continues to expand its efforts to bring educational excellence to underserved communities across the nation by collaborating with public, private, and nonprofit organizations such as NFF and Green Dot,” said Elyse Cherry, CEO of Boston Community Capital. “Such partnerships increase access to high-quality education, create jobs, and contribute to the long-term economic viability of the community.”
“We are grateful for the partnership with NFF and BCC,” said Megan Quaile, Executive Director of Green Dot Public Schools TN. “The continued growth of Bluff City High School allows us to offer quality academic options to the students of the Hickory Hill community. Bluff City High School will serve as the proof point that all students can learn at high levels when provided the opportunity.”