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Low Income Investment Fund

Low Income Investment Fund. Charter School Facilities Institute National Charter School Conference. Brian Prater, Director, California Lending and Strategic Opportunities June 28, 2010. Who We Are.

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Low Income Investment Fund

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  1. Low Income Investment Fund Charter School Facilities InstituteNational Charter School Conference Brian Prater, Director, California Lending and Strategic Opportunities June 28, 2010

  2. Who We Are • National CDFI headquartered in San Francisco with offices in Los Angeles, New York and Washington D.C. • Has participated in projects in 26 states, but primarily focuses on West and East coasts. • Makes loans to build affordable housing, charter schools, childcare facilities, and other community facilities • Business lines include direct lending, structuring loan participations, capital raising, fund creation/management and loan servicing • Has been allocated $139 million in New Market Tax Credits since 2007

  3. What We’ve Done • $740 million deployed since inception (1984) • $5.1 million of additional investments leveraged • Created and supported: • 54,000 units of housing • 123,000 spaces for child care • 2.5 million square feet of commercial or facility space • 44,000 spaces for school students

  4. General Underwriting Guidelines • 5 C’s of Credit • Character • Capacity • Capital • Collateral • Conditions

  5. General Underwriting Guidelines • Analyze the Following: • Borrower/Tenant • Project Financials • Real Estate • State and Local Climate • Other External Conditions

  6. Borrower Characteristics:Management • Management analysis is a critical underwriting area for charter school loans • Important factor in borrower’s ability to maintain and increase cash flow (primary source of repayment) • Look for experience: • Management capacity • Board capacity • School principals • Teachers • Understand the growth plan

  7. Borrower Characteristics: Management • What to look out for: • Hostile relationship with local District/Authorizer • Key person/founder risk • Tension between board & management • Insufficient resources to handle growth

  8. Borrower Characteristics:Program Quality • What to evaluate: • Performance (Academic) • Strength of Parent Organization • Mission • Curriculum • Teacher/Staff Quality • Educational Resources • Assessment • Target Population

  9. Borrower Characteristics:Program Quality • What to look out for: • Difficulty of retaining quality staff • High student turnover • Program experience/knowledge may be centralized • Low probability of charter renewal/revocation • Insufficient community and/or political support for expansion

  10. Borrower Characteristics:Financial Capacity • Balance Sheet • Examine ratio of Debt to Equity • Look at trends in Unrestricted Net Assets • Analyze liquidity • Contingent liabilities • How many other guaranties is the Guarantor providing? • Is the guaranty meaningful?

  11. Borrower Characteristics:Development Capacity • Key questions: • Has the Borrower ever purchased a property? • Has the Borrower ever developed a building? • Is the Borrower retaining a development consultant? • Check references

  12. The Project:Assessing the Real Estate • Location • Value – Loan to Value • Lien Position • Zoning and Entitlements • Highest and Best Use/Other Uses • Environmental Issues • Local Charter School Market

  13. The Project:School Operating Pro Forma • Revenues: Public, Private, Philanthropy • Expenses: Personnel, Operating, Facilities • Enrollment and Average Daily Attendance (ADA) • Projections vs. Historical Operating Expenses • Debt Service Coverage Ratio and Other Measures • Trends and Growth Patterns • Turnover and Waiting Lists • Sensitivity/Refinance Analysis

  14. Contact Us Low Income Investment Fund www.liifund.org Judith Kende Brian Prater Director Director New York Region California (212) 509-5509 x.11 (415) 489-6157 jkende@liifund.orgbprater@liifund.org

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