Our client Jackson County recently made a $2,500,000 loan to Summit Charter School to help finance the construction of a new high school facility in the southern part of the County.

The County made this loan pursuant to legislation enacted near the end of the 2023 General Assembly session, as part VI of House Bill 219. This legislation allows, but does not require, counties to lend or give money to charter schools for capital purposes. Jackson County decided to make a 3-year construction loan at an interest rate approximating the County’s current return on its cash investments. 

The law requires that the loan be to a “charter school,” but as is often the case the charter school itself has limited resources, so Jackson County required a guaranty and other security from the school’s supporting foundation – we wanted to make sure the people that actually had the money, promised to pay the money. The County is a lender, not a borrower, so there are no LGC implications, and there are no particular procedural hoops in the law.

We like this project because:

            *It’s public-private cooperation. The County will end up with increased public school facilities and educational opportunities for a relatively minor investment, certainly compared to what it would cost the County to provide the capacity on its own.

            *At the same time, the County took firm steps to protect its position by securing the loan in several different ways. We always worry about public-private partnerships where the public entity ends up with disproportionate risk, but here the County made sure things were tied up and had no fear about asking for what it wanted.

*The County was willing to try something new. To our knowledge this may have been the first loan made under the new legislation. It’s always easy to say “no” to a new initiative, but here the staff and the Board saw a benefit to the County and its residents by stepping across a frontier.

We’re interested to see how widespread County loans (or grants) for charter school capital projects become. It’s not a difficult technical or legal process; it’s about a county’s making a policy decision.

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