The Massachusetts Board of Elementary and Secondary Education
Charter Schools - Information Regarding Approval of Loan beyond Charter Term for Innovation Academy Charter School and Lowell Middlesex Academy Charter School
|To:||Members of the Board of Elementary and Secondary Education|
|From:||Mitchell D. Chester, Ed.D., Commissioner|
|Date:||October 16, 2009|
Under the charter school statute, M.G.L. c. 71, § 89(j)(6), a charter school may incur temporary debt in anticipation of receipt of funds, but requires approval of the Board of Elementary and Secondary Education (Board) if it wishes to agree to repayment terms that exceed the duration of the school's charter. At its October 21, 2008 meeting, the Board voted to delegate to me the authority to approve such loan requests.
Innovation Academy Charter School
The board of trustees of Innovation Academy Charter School requests approval to enter into a loan agreement for $400,000, as described in a letter to the Department dated September 8, 2009. This loan agreement is for a loan with a ten year term from Century Bank of Medford. The loan will bear interest at a rate established at the time of closing, based upon the then-current Federal Home Loan Bank of Boston Classic 10-Year Advance Rate, plus 2.5%. This financing will be utilized to pay for renovation of approximately 50% of the space in the school's Tyngsboro facility to provide additional classrooms. The loan will also allow for improvements in the HVAC systems and for the build-out of code compliant bathrooms on the fourth floor of the building.
Lowell Middlesex Academy Charter School
The board of trustees of Lowell Middlesex Academy Charter School requests approval to enter into a loan agreement for $2,340,000 of debt, as described in a letter dated September 28, 2009. The proposed loan is for 30 years, adjustable after five years, at an estimated rate of 4.5%. The school has applied to MassDevelopment for tax-exempt financing and a loan guarantee fund application in conjunction with Enterprise Bank and Trust of Lowell. The loan will provide the necessary capital for the acquisition cost of the property at 55-67 Middle Street. The property will provide the necessary space for the school's program and allow for full enrollment.
The final loan agreement(s) must contain the following language:
The parties to the loan(s) acknowledge and agree that the Commonwealth of Massachusetts, including but not limited to the Board and the Department of Elementary and Secondary Education, provides no representations or guarantees with respect to these loans and has no liability for any portion of the loans. Furthermore, specifically and without limitation, the Board's approval of the loan has no impact on any action that the Massachusetts Board of Elementary and Secondary Education may choose to take in the future with respect to probation, revocation, or renewal of the school's charter.
These written acknowledgements will be required of any new lenders should there be changes to the parties to the loan(s).
The Department of Elementary and Secondary Education has reviewed these requests and they are reasonable and consistent with the charter school statute and regulations. This memo provides written confirmation of my approval of these loan term repayment requests pursuant to M.G.L. c. 71, § 89(j) (6). This approval is explicitly conditioned upon the inclusion of the above-referenced language in the loan agreement(s).
If you have any questions regarding this amendment or wish to see the school's full request, please contact Mary Street, Director of Charter Schools, at 781-338-3200; Jeff Wulfson, Associate Commissioner for School Finance and District Support, at 781-338-6500; or me.