1. Charter School Facility Financing Considerations September 9, 2015

2. Lenders to Charter Schools Tax-Exempt Bond Investors Commercial Banks – Conventional or Taxable Bank Debt Community Development Financial Institutions – Lenders Include: Nonprofit Finance Fund and The Reinvestment Fund New Market Tax-credit Investors – Representative Investor: Wells Fargo Bank 2

3. Key Business Considerations of Facility Finance Maturity of Financing Loan-to-Value Requirement –Percent of the Value of Assets Financed Ability to Pre-pay Eligibility Requirements –Location of Facility or Population Served Cost of Capital –Proposed Debt Service as a % of Operating Budget Covenants Execution Timing 3

4. Challenges to Facility Financing: Perceived Risks by Some Lenders Potential for Charter Revocation Charter School Authorizer is the School District of Philadelphia – Perceived as Potential Competitor for Students Funding for Facilities is not Provided to Charter Schools in PA Primary Revenues Dependent on Enrollment – Versus Local School Districts with Taxing Authority Limited Institutional Equity for Real Estate Projects 4

5. Credit Considerations Market Position – Student Demand Stable or Increasing Student Enrollment Student Retention Documented Waiting List – Academic Program Trend of Student Test Scores – Demographics of Enrollment Area Population Growth Competition From Local Public Schools, Other Charter Schools and Private Schools Charter – Term – Renewal History Management and Administration – Depth of Expertise 5

6. Credit Considerations Debt Management – Debt Service Less Than 20% of Operating Expenses – Other Planned Capital Expenditures Financial Management – Operating History Stable Per-Pupil Funding Demonstration of Positive Operations Over a Three Year Period – Stable or Increasing Fund Balance Minimum Balance of 5% of Operating Expenses – Financial Flexibility Ability to Reduce Budget, if Necessary Endowment or Fundraising Program 6