financing

Real Estate Lending and Pathways

August 1, 2024 by PCSD

Who did you meet with today?

Today, my fellow interns and I got the opportunity to speak with Eric Sussman, a Pacific Charter School Development (PCSD) Board Member and UCLA Professor. Later that same day, we got the chance to speak to three employees of City National Bank (CNB), one of the many banks that lend money for PCSD.

Where do they work? What does the company do?

Both Eric and City National Bank (CNB) work with Pacific Charter School Development (PCSD), a non-profit focused on real estate. Eric Sussman is a board member of PCSD and is a professor at UCLA for Real Estate and Accounting along with being a business owner. City National Bank is one of the main lenders of money for commercial acquisition and construction projects. With the investment, PCSD is able to fund projects that otherwise wouldn’t be possible.

What did you learn today? What were some highlights?

Today, I learned about how real estate properties differ in price depending on their surroundings and conditions that make them less likely to have demand. From both of our conversations, the topic of Covid-19 was common, as both speakers expressed their challenges and changes caused by the pandemic. From office buildings becoming vacant to industrial properties becoming more expensive and in demand. Some highlights from today were hearing about Eric’s journey to becoming a professor, from finding out his boss was committing fraud to losing his job and using his connections and talent for teaching to work at UCLA. Another highlight from today was getting to decide on which properties we would invest in, as in the City National Bank presentation we were presented multiple properties with many different positives and negatives.

What insights did you gain into the field of real estate development?

One of the many insights I gained into the field of real estate development was how the price and evaluation of a property changes as a result of the land or the surroundings changing for the better or worse. As an area becomes less populated and business starts moving out the surrounding properties and business decreases and slows down. I also got some great advice about purchasing homes and the difference between single family, duplex, and fourplex. Like not buying a house near a big street with a street light because of the traffic to search for a place in a safe area with little or no crime.

Did you become more interested in the field after today?

After today, I have become more interested in real estate, specifically in the many different conditions that make the properties themselves increase or decrease in value and the things lenders look for in order to decide to lend to someone or not. I didn’t know about how important it is to know that nearby properties affect other properties and their value reflects on how popular an area is or is in demand. I feel like I have discovered an interest for finding out all the details about a property and its land as it is very cool how it changes and that it is visible if you look into it.

Eric Sussman showing his Venn diagram for careers

Simon from CNB talking about commercial lending

Exploring the World of Real Estate Development with PCSD

July 2, 2024 by PCSD

Who did you meet with today?

Today, I had the opportunity to meet with Joe Wilson, who is a Project Director, and Scott Thomas, who is the project finance coordinator here at PCSD.

Where do they work? What does the company do?

Pacific Charter School Development is a nonprofit real estate development organization, with a goal of assisting schools on their journey to being a charter school by helping them with anything related to real estate, like finding a permanent facility. PCSD fundamentally builds charter schools from scratch, which means that the organization has many different areas that build up the final product, for example, scouting, finance, or the legal aspects.

What did you learn today? What were some highlights?

During my time with PCSD I learned about the process of how a school called Equitas was built. As well as how a project finance coordinator manages and deals with different circumstances when it comes to money, which was particularly fascinating because I learned a rich history about a school PCSD worked on and new finance terms.

Some of the highlights of the day included viewing before pictures of Equitas and seeing the complete transformation in person, which provided me with a deeper understanding and appreciation of how much planning and effort went into the project.

What insights did you gain into the field of real estate development?

One of the key insights I gained was understanding what a budget contingency is. A budget contingency is additional money that is used in case of unexpected costs during development, or in other words, kind of like emergency money in case we go over our budget. This showed me the importance of finance and budgeting because it ensures that a project could continue smoothly, even if unexpected circumstances occur.

I realized that real estate development involves ensuring that a location is suitable for what it is planned for, which in this case would be a school. This requires communication skills and knowledge because someone has to look at the environmental factors of the property, the utilities, location, infrastructure, legal issues and more.

Did you become more interested in the field after today?

After today’s experience, I found myself more intrigued by the field of real estate development because learning about most of the steps that go into planning and building beforehand is interesting. Additionally, seeing the complete transformation of a school that used to be an armored car facility was awesome to see! The exposure has definitely increased my interest in pursuing a career in real estate development.

The team gathered by the playground at EQ 5/6

PCSD closes NMTC loan for Tejano Center

March 27, 2024 by PCSD

PCSD is thrilled to announce that we have closed New Markets Tax Credit (NMTC) financing for the Tejano Center for Community Concerns to purchase and renovate a site for the Raul Yzaguirre Schools for Success (RYSS) STEM Academy in Pasadena, Texas. RYSS already operates its early education program on a portion of the almost 12 acre site with full classes for pre-kindergarten through 2nd grades and 5th grades to be added for the Fall of 2024. Eventually, the campus will encompass PreK-8th grade with classrooms to accommodate approximately 760 students and other community services.

PCSD also provided some of its $20M credit enhancement award from the Department of Education toward the project. According to PCSD’s Vice President of Project Finance, Tina Lin, “this worthy project was the result of many valued partners like Raza Development Fund, Chase Community Equity, Sunflower Bank and Equitable Facilities Fund coming together to support Tejano Center’s long-serving and important community mission.”

PCSD Interns: Navigating Charter School Finance: Insights from a Day with Brian Holman at MusickPeeler

July 19, 2023 by PCSD

In today’s rapidly evolving world, the digital age and the pandemic have caused significant shifts in the work environment across industries. In the realm of charter schools, understanding their financing options is crucial to their growth and success. Recently, we had the opportunity to meet with Brian Holman, a partner at MusickPeeler LLP, specializing in charter school finance. Our day was packed with insightful experiences, from exploring the changing landscape of MusickPeeler’s offices to diving deep into a Charter School Finance 101 presentation. In this blog post, we will share our key takeaways and what we learned about putting together a successful charter school facility finance structure.

The Changing Work Environment

We kicked off our day with a tour of MusickPeeler LLP’s offices in downtown Los Angeles. Amidst the digital age and the pandemic, we observed the impact on their workspace. Numerous bookshelves stood nearly empty, a testament to how much information has migrated online. Nevertheless, the library still held a collection of valuable reference books, specifically focusing on various court cases.

Charter School Finance 101

Returning to PCSD’s offices, Brian Holman commenced his presentation on Charter School Finance 101. He began by discussing the different financing sources available to charter schools, ranging from donations to hard money loans. As nonprofits, charter schools have access to various types of donations, including contributions from individual donors and both private and public grants. We delved into an overview of financing sources like New Market Tax Credits, bond financings, bank and institutional loans, as well as federal and other government loans.

Building a Charter School Facility Finance Structure

One of the most valuable aspects of our day with Brian was gaining a clear understanding of the process of building a charter school facility finance structure. Through visual aids and insightful explanations, we were able to grasp the complexities involved. Brian concluded the presentation with some indispensable facility financing tips, emphasizing the importance of keeping one’s legal matters in order, involving legal counsel early in the process, thoroughly reading all agreements, and staying vigilant to avoid legal pitfalls.

Real-Life Example: A Charter School Facility Financing Deal

After lunch during which we learned more about Brian’s background and his journey into the legal field, we delved into an illustrative example of a charter school facility financing deal. We reviewed term sheets, loan agreements, and various loan documents, gaining valuable insights into how different parties collaborate throughout the process. It was fascinating to see how a charter school financing deal typically unfolds over 3-5 months, requiring careful attention to detail and collaboration among various stakeholders.

Understanding Corporate Organizations

To round out our enlightening day, we explored the different types of corporate organizations. Sole proprietorship, partnerships, corporations, limited liability companies (LLCs), and nonprofits all offer distinct advantages and disadvantages. Understanding these options can play a vital role in shaping a business’ structure.

Our day with Brian Holman at MusickPeeler LLP provided us with invaluable insights into charter school finance. Understanding the various financing sources available to charter schools and the process of building a successful charter school facility finance structure is essential for their growth and sustainability. We extend our sincere gratitude to Brian for sharing his expertise and making this day an enlightening and enriching experience.