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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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  • 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

  • Quality of space—linked to student performance

  • Error/misstep—significantly impacts space quality and cost

3


Thurgood Marshall Academy’s First School


Blue Castle/Thurgood Marshall Academy Facilities


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


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.


The Predevelopment Process

  • Step 5: Rank alternatives.

  • Step 6: Recommend site to Board of Directors.

  • Step 7: Negotiate terms and finalize documentation.


The Team


Selection Criteria for Team Members

  • Qualifications/experience on similar projects

  • Professionals dedicated to project

  • Fee structure

  • References


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.


Site Selection: Qualitative

Evaluation Criteria

  • Property’s conformance to education specifications

  • Location

  • Condition of property and physical features of site


Site Selection: Qualitative

Evaluation Criteria

  • Lease terms

    • Length of term

    • Sublease and assignment

    • Renewal rights

  • Legal and timing issues

  • Other risk factors


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


Ownership or Lease: Economic Terms

15


Ownership: Advantages and Disadvantages

16


Lease: Advantages and Disadvantages


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


Sources and Uses


Pro Forma


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.

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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.


Q & A


Thurgood Marshall Academy’s Home


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

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