This post is part of e-Council Inc.’s “Spotlight” series, in which we feature successful EB-5 projects across different industries and business types. Some of the spotlighted businesses may be our clients’ while others are not, but all have one theme in common: SUCCESS Using EB-5 Capital.
Charter schools are gaining in popularity as a means of improving the quality of public education in the United States. Such schools are helping to improve academic performance and close the achievement gap between students in low-income and wealthier neighborhoods. A little-known fact is that many successful charter schools have benefited and been built from EB-5 funding. In this post, we will describe the charter school industry and discuss what makes it a good investment option for EB-5 Visa applicants. Finally, we will offer some examples of successful EB-5 funded charter school projects.
What are Charter Schools?
Charter schools offer free, publicly funded primary- and secondary-level education that is managed by private organizations. Charter schools are differentiated from regular public schools mainly because they enjoy a flexibility and autonomy in the design and implementation of their respective curricula, while still being held accountable to state and federal academic standards. This allows charter school teachers the freedom to be more innovative while focusing on improving student achievement. Many charter schools emphasize a core academic subject by creating a school culture or adopting a theme, such as: Science Technology Engineering or Math (STEM) education, performing arts, career-readiness, language immersion, or meeting the needs of autistic students. In addition, while receiving taxpayer dollars, charter schools often benefit from the hefty support of philanthropic foundations and private donors, which is not typically the case for regular public schools.
These characteristics make charter schools an attractive option for parents seeking the best education for their children, particularly those who are zoned for underperforming schools. Research has shown that charter schools are raising student achievement levels. Fifteen of 16 studies published since 2010 found that students in charter schools do better in school than their traditional public school peers. Children who attend charter schools are also more likely to graduate from high school than their traditional public school peers.
According to the National Alliance for Public Charter Schools, charter schools continue to disproportionately top the lists of America’s best high schools in Newsweek, US News and World Report, and the Washington Post. In fact, on these lists more than a quarter of the best high schools are charter schools. The popularity of charter schools explains why there are more than 6,700 charter schools across 42 states and the District of Columbia educating nearly 3 million children.[1]
Why Invest in Charter Schools?
In addition to serving a public good—that of raising student achievement—the positive performance of the industry makes it highly attractive to EB-5 (and non-EB-5) investors. According to an expert interviewed by the Washington Post, charter schools are a recession-resistant, stable industry with 12-14% growth a year (as of 2012). The demand for charter schools is very high, with hundreds of thousands of students being placed on waiting lists each year.[2] Another notable feature is that charter schools rely heavily on private funding, making EB-5 finds highly attractive to such institutions, particularly if traditional loans are hard to obtain. Charter schools seek funding to construct school buildings and premises, including playgrounds and fields, as well as to pay the salaries of teachers and support staff.
Other attractive features include the fact that charter schools are approved, licensed, and funded by the government and that they qualify for government authorized tax-exempt bonds after two to three years of operations. Because of the staffing needs, charter schools are also likely to not just meet, but exceed, the jobs creation requirement.[3]
Finally, charter schools have a solid track record of repaying their loans, making the loan repayment risk fairly low. According to Education Fund of America (EFA), an EB-5 investor group dedicated to U.S. public charter school investment projects, the likelihood of loan repayment is about 99%.[4] A study conducted by the Kaufman Foundation, “Debunking the Real Estate Risk of Charter Schools,” found that, on average, more than 94% of charter schools repay their loans.[5]
Successful Examples of EB-5 Funded Charter Schools
Several Regional Centers and finance funds have successfully channeled EB-5 cash into numerous charter schools around the country. For example, Education Fund of America (EFA) has provided funds to more than 20 charter schools over the last five years, comprising over $60,000,000 in EB-5 capital. The total student enrollment at EFA funded charter schools exceeds 15,000 children. One example of a public charter school funded by EFA is Champion Schools of Arizona, which was named “Charter School of the Year” in 2013 and 2014 by the Arizona Charter Schools Association. Other schools to which EFA has contributed funding include Thunderbird Preparatory Academy in North Carolina, which opened in 2014 with 542 students and received $3 million of EB-5 funds toward the $5.1 million needed to build the school. Another example is American Leadership Academy in Arizona, which opened in 2014 with 425 students and received $3.5 million of EB-5 funds toward the $6.5 million needed to build the school. Many of EFA’s schools have hit their enrollment cap by the second year.[6]
Some Regional Centers specialize in funding the construction of new charter schools. For instance, GreenAccess is a Regional Center based in Jupiter, Florida that has helped to fund 18 charter schools as of August 2015 across the state of Florida.[7] Florida Overseas Investment Center in Miami has funded 16 charter schools with a 100% visa approval rate. Each of the 16 projects has provided a ratio of at least 12 jobs created per investor, exceeding the 10-jobs-per-investor minimum. More than half of the charter school projects have already obtained I-526 approvals.[8]
e-Council Inc. is an experienced, full-service EB-5 concierge with a long track record of successfully guiding its clients through the complex EB-5 process. e-Council Inc.’s team includes attorneys, researchers, and other professionals who specialize in providing due diligence services that equip both investors and developers with the information needed to assess the viability and feasibility of opening a new charter school, as well as the likelihood that the project will pass USCIS scrutiny. Developers seeking EB-5 capital should conduct a thorough due diligence assessment at the outset of the venture to determine whether the particular project is marketable to investors and consumers, financially feasible, and EB-5 ready.
If the business is EB-5 ready, e-Council Inc. can create a Matter of Ho-compliant business plan and provide a wide range of complementary services designed to support the EB-5 application. Working with e-Council Inc. to complete all of your EB-5 documents minimizes the need for outside services from unrelated sources; all of our diverse service providers have been fully vetted and are immediately available.
To inquire about our wide range EB-5 services such as our pre- and post-project due diligence assessments and best-in-class Matter of Ho-compliant business plans, please contact us at info@ecouncilinc.com.
e-Council Inc.’s website, newsletter and other forms of communication contain general information about legal matters. The information is not legal advice, and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.
[1] National Alliance for Public Charter Schools, http://www.publiccharters.org/; IBISWorld Report, “Chart Schools in the US”; http://www.forbes.com/sites/realspin/2014/03/17/study-charter-high-schools-have-7-11-higher-graduation-rates-than-their-public-school-peers/
[2] https://www.washingtonpost.com/blogs/answer-sheet/post/the-big-business-of-charter-schools/2012/08/16/bdadfeca-e7ff-11e1-8487-64e4b2a79ba8_blog.html
[3] http://edufundamerica.com/why-should-you-represent-our-charter-school-investment-fund-program/
[4] Ibid.
[5] http://sites.kauffman.org/pdf/CharterSchools071805E.pdf
[6] http://edufundamerica.com/projects/
[7] http://www.greenaccess.us/#new-page-section
[8] http://eb5florida.com/charter-schools/