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Predevelopment

Predevelopment. Suzanne Keech Corporate Managing Director, Studley, Inc. June 2010. Facilities Process Overview. Why Is Predevelopment So Important?. Real estate—second highest expense for schools Financial viability — dependent on “smart” decisions

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Predevelopment

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  1. Predevelopment Suzanne Keech Corporate Managing Director, Studley, Inc. June 2010

  2. Facilities Process Overview

  3. Why Is Predevelopment So Important? • Real estate—second highest expense for schools • Financial viability—dependent on “smart” decisions • Quality of space—linked to student performance • Error/misstep—significantly impacts space quality and cost 3

  4. Thurgood Marshall Academy’s First School

  5. Blue Castle/Thurgood Marshall Academy Facilities

  6. Predevelopment Topics • The process • The team • Site selection • Qualitative and quantitative evaluation • Ownership vs. lease • Feasibility analysis • Sources and uses document • Pro forma • Due diligence

  7. The Predevelopment Process • Step 1: Build the team. • Step 2: Review and refine the educational facilities plan. • Step 3: Identify all feasible real estate alternatives. • Step 4: Evaluate each alternative.

  8. The Predevelopment Process • Step 5: Rank alternatives. • Step 6: Recommend site to Board of Directors. • Step 7: Negotiate terms and finalize documentation.

  9. The Team

  10. Selection Criteria for Team Members • Qualifications/experience on similar projects • Professionals dedicated to project • Fee structure • References

  11. Advice for Building a Successful Team • Hire based on qualifications/experience, team, references, and fee. • Outline scope of services, method of payment, and time frame for completion in each contract. • Exercise right of termination if performance is unsatisfactory.

  12. Site Selection: Qualitative Evaluation Criteria • Property’s conformance to education specifications • Location • Condition of property and physical features of site

  13. Site Selection: Qualitative Evaluation Criteria • Lease terms • Length of term • Sublease and assignment • Renewal rights • Legal and timing issues • Other risk factors

  14. Site Selection: Quantitative Evaluation Criteria • Lease or own • Economic terms—purchase price or lease rate • Budget • Operating—cost of utilities, repairs and maintenance, taxes (if applicable) • Capital—cost to improve the space, renovate the existing structure, or build a new one

  15. Ownership or Lease: Economic Terms 15

  16. Ownership: Advantages and Disadvantages 16

  17. Lease: Advantages and Disadvantages

  18. Feasibility Analysis • Process of combining the economic terms of each alternative with the economic resources of the school • Key documents • Sources and uses • Pro forma

  19. Sources and Uses

  20. Pro Forma

  21. Due Diligence • Conduct environmental survey. • Conduct title search and review. • Ensure conformance with zoning. • Identify the “unknowns” and ensure that both the risk and associated monetary obligations are accounted for in the program. 21

  22. Predevelopment: Key Take-Aways • Ensure team synergy. • “Am I responsible for that?” • Outline scope of work in every contract. • Feasibility analysis demonstrates school’s long-term economic viability. • Who created that budget anyway? • Refining and updating the budget at every stage is critical.

  23. Q & A

  24. Thurgood Marshall Academy’s Home

  25. Suzanne Keech Corporate Managing Director, Studley, Inc. P: 202-624-8504 >F: 202-624-8555 E-Mail: skeech@studley.com National Charter School Resource Center 1100 17th Street NW, Suite 500Washington, DC 20036-4632 Phone: 877-277-2744 Fax: 202-223-8939 E-Mail: charterschoolcenter@learningpt.org 25

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