Capital Lease Financing for Public Schools

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Capital Lease Financing for Public Schools
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Leasing Public School Facilities

• August 2006, S.B. 2009 Ratified
• An Act to Allow Capital Lease Financing for
  Public Schools
• Lease - 40 years max. (with board of education)
• Continuous contract capital outlay
• Approved by county commissioners LGC
• Must be in the best interest of the school system
• The developer must be qualified to develop
  educational projects
• Developer must seek minority participation

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Leasing Public School Facilities

• August 2006, S.B. 2009 Ratified
• An Act to Allow Capital Lease Financing for
  Public Schools
• Construction must be bid to GCs or to Subs
• Pre-development agreement process includes Site
  selection, Design, Surveying, etc.
• Real estate transfer authorized
• Not subject to G.S. 115C - 518
• Approved by county commissioners
• Sunset July 1, 2011

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Leasing Public School Facilities
August 2006, S.B. 2009 Ratified

• August 2006, S.B. 2009 Ratified
• Additional Lease Terms (Abbreviated)
• Site Selection, Survey Testing, Etc.
• Programming, Planning, Etc.
• Qualification of Contractors
• Construction
• Financing
• Facility Maintenance Repairs
• Energy Usage Guarantees
• Transfer at end of lease
• Other

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Leasing Public School Facilities
Why enter into a Capital Lease?

• Flexible Financing
• Developer funds soft costs such as land
  acquisition, design, surveying and testing
• Lease payments begin at occupancy by the
  school system
• Owner is not stuck with an outdated budget
  set far in advance of starting construction
• Projects can be developed in less time
• Reduces the impact of inflation on the project
• Student needs can be met more quickly
• Cost Savings
• To provide high performance schools in the
  following manner
• Building construction
• Operations
• Education
• Maintenance
• Maintenance is funded and performed to the
  levels assumed in the life cycle cost analysis
• Eliminates deferred maintenance

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Leasing Public School Facilities
Why enter into a Capital Lease?
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Leasing Public School Facilities
Why enter into a Capital Lease?
Reduce Cost Reduce Risk Increase Quality
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So if you want efficiency and effectiveness you
have to do it through the means of private
property. Milton Friedman