Buck Financial Blog

In June 2021, 20 years to the month after Buck Financial Advisors was formed to specialize in charter school facility finance, the company closed two transactions which put it over the $5 billion mark of charter school financings.  Buck Financial will cross the 200 charter school transaction threshold soon, has closed transactions in 18 states and will be hitting the 20 state mark soon, as well.

Many of these transactions have been fixed-rate, fully amortizing tax-exempt bonds.  But, the beauty of being an independent financial advisor is that you aren’t “married” to a single financing source.  Other types of transactions Buck Financial has closed for charter schools include New Markets Tax Credits, bank loans, CDFI loans, private sources, subordinate debt, Qualified School Construction Bonds, Qualified Zone Academy Bonds, Bond Anticipation Notes, and probably several others I can’t quite remember.  It has also been fun to combine several sources of funding to bring in more than one form of subsidy to benefit charter school clients on numerous occasions.

The charter school industry has come quite a long way since the first financings in the early 2000s.  We’ve seen the growth of charter management organizations, tens of millions in philanthropic dollars donated, high quality organizations being asked to cross state lines into new states, public teacher union push-back, the hypocrisy of the Democratic Party’s pretense to care about low-income and minority families be laid bare, and several states which developed credit enhancement programs to assist charter school facility financing.  All along the way, families have continued to be drawn to this public school option, as national charter school enrollment and the number of students on waitlists have consistently grown over these two decades.  People want choice, and there are many high quality charter schools available to give them that choice despite opponents’ efforts to thwart that ability to choose.  It is important the charter school industry stay focused on students and avoid becoming that which it first rebelled against almost 30 years ago in Minnesota.

A heartfelt thank you to all the clients of Buck Financial, and the numerous professionals and others with whom long-term relationships have developed.  Its been an honor to serve you and work with you, and I am very gratified that many relationships have transcended the business world and become personal friendships.  And, neither charter schools nor Buck Financial Advisors are done yet.  Looking forward to seeing even more growth and improvement in the industry over the next decade, and assisting even more high-quality charter schools change the life trajectory of the students and families they serve.

In June 2021, two Great Hearts regions closed tax-exempt bond issues to fund growth in those regions.

GreatHearts America – Texas (GHAT) began operations in 2014 with two leased facilities.  After the 2021 financing, GHAT will be poised to operate 15 schools on ten campuses in the San Antonio and Ft. Worth and surrounding area.  This year, GHAT issued $84,535,000 in bonds under the Bond Guarantee Program of the Permanent School Fund (PSF).  GHAT maintains a Baa3 underlying rating from Moody’s Investors Service, which qualifies them for the PSF.  This is the third issue for GHAT under the PSF, with total outstanding PSF debt of around $208 million under a single Master Trust Indenture.  GHAT expects to enroll just over 7.700 students in Fall 2021, and grow these 16 schools’ enrollment to over 11,800 by Fall 2025.  This financing will fund two new schools for GHAT in San Antonio and Ft. Worth, as well as fund additions to schools in Irving and San Antonio.

GreatHearts Arizona (GHAZ) began operations in 2004, typically starting out in leased facilities.  Some of their earlier facilities had been financed via direct placements with various investors.  In 2014, Buck Financial helped design a Master Trust Indenture (MTI) structure in 2014, in which year we began a gradual shifting of outstanding debt towards the MTI.  After completing financings in 2014, 2016, and 2017, GHAZ hasn’t issued debt under this MTI until this year, in which they issued a total just over $59 million.  Most of GHAZ’s 2021 issue ($52.4 million) is enhanced by the Arizona Public School Enhancement Program, and qualifies for a AA- rating from S&P Global.  The remaining $6.6 million was unenhanced.  GHAZ carries a BBB- underlying from S&P, and as such is one of the highest rated credits under the enhancement program.  The 2021 financing provided funds for two new campuses in the greater Phoenix area, as well as additions to two existing campuses.  With this financing, all 21 schools operated by GHAZ will be financed under their MTI.  Enrollment for Fall 2021 for GHAZ is expected to be about 14,100 students, growing to 15,300 by Fall 2024.

For 35- and 30-year debt for GHAT and GHAZ, respectively, both issues received a all-in TIC beginning with the number 2.  For GHAT, 2.69% and for GHAZ, 2.86% including the unenhanced portion of the AZ deal.  Not too shabby!

Buck Financial Advisors served as financial advisor to both GHAT and GHAZ.  Robert W. Baird & Company, Inc. served as underwriter for both transactions, and Warren Charter Law served as borrower’s counsel for GHAT and GHAZ.  Rounding out the GHAT team are the Arlington Higher Education Finance Corporation as issuer, McCall, Parkhurst & Horton LLP as bond counsel, and Quarles & Brady LLP which served as underwriter’s counsel.  Locke Lord LLP served as counsel to the issuer.  For GHAZ, the bond were issued through the Arizona Industrial Development Authority.  Serving as bond counsel was Engleman, Berger P.C.  Quarles & Brady again served as counsel to the underwriter, and Kutak Rock served as counsel to the issuer.

Congratulations to the students, families and staff of both GreatHearts regions.