District/School Administration Administration
The Massachusetts Board of Elementary and Secondary Education

Charter Schools - Approval of Loan beyond Charter Term for Martin Luther King, Jr., Charter School of Excellence

Under the charter school statute, 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. Martin Luther King, Jr. Charter School of Excellence requests approval to enter into financing agreements that extend beyond the term of the school's current charter.

Proposed Loan

Martin Luther King, Jr. Charter School of Excellence (MLK) is a Commonwealth charter school beginning its third year of operation. The Friends of Martin Luther King, Jr. Charter School of Excellence, Inc. (Friends) is a 501(c)(3) Massachusetts non-profit corporation with the corporate purpose of supporting the MLK Charter School.

The board of trustees of MLK requests the Board's approval to enter into loan agreements in partnership with the Friends for approximately $6.0 million for up to a 30-year term in order to partner to purchase, renovate, and equip an industrial building at 285 Dorset Street in Springfield for the school's will issue tax-exempt bonds and provide a loan guarantee, with preliminary approval already granted by MDFA. Federal new market tax credits may also be used.

The purchase of a facility will allow the school to consolidate its program into one site (the school currently operates out of two buildings), eliminate the insecurity of needing to secure space in a piecemeal fashion for each school year, and support the school's effort to build a strong school culture. MLK will rent the facility from the Friends for an amount that will cover the Friends' facility costs but not generate a profit. The school anticipates that the facility will be ready for use in time for the 2009-10 school year.

MLK is currently working with several lenders, including Hampden Bank and the Bank of Western Massachusetts, which expect to provide financing this project.

All parties, including both current lenders, have acknowledged in writing their understanding 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. They have also acknowledged in writing that specifically and without limitation, the Board's approval of the loan has no impact on any action that the Board may choose to take in the future with respect to probation, revocation, or renewal of the school's charter. The proposed motion approving this loan agreement request is explicitly conditioned upon the inclusion of this language in the loan agreements themselves. These written acknowledgements will be required of any new lenders should there be changes.

The Department has reviewed this request, and it appears reasonable and consistent with the charter school statute and regulations. With the safeguards explained above and agreed to in writing by the schools and its lenders, I recommend that the Board approve this request as presented.

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, at 781-338-6500; or me.