Financing

Thurgood Marshall Academy Public Charter High School

School Information: 350 students enrolled in grades 9-12.
Facility: 50,820 square foot building
located at 2427 Martin Luther King Jr. Ave., SE Washington, DC 20020
Project Cost: $13.2 million, $260/sf
Building Hope Investment: $1.2 million
Schedule: Renovation of historic DC Public School building and construction of a new wing completed in 2005.

Thurgood Marshall Academy (TMA) opened in 2001 and quickly outgrew its temporary space. It serves African-American students, 70% of who qualify for free or reduced-price lunch. In 2003, the school signed an agreement with the District of Columbia to purchase the historic Nichols Avenue public school building. TMA renovated the building and added a new wing at a cost of $13.2 million. This expansion allowed the school to accommodate a total enrollment of 350. The project also included improvements to an adjacent elementary school and playground. The school moved into its renovated space in 2005. The new facility includes 21 classrooms, a library and media studies center, 3 science labs, a technology lab, and a moot courtroom.

The financing for the project was highly complex and included a taxable loan from a commercial bank ($8,000,000), a below-market taxable loan from the District of Columbia State Education Office ($2,000,000), a Qualified Zone Academy Bond (“QZAB”) ($700,000), a second below-market taxable loan from Building Hope (total $1,200,000), funds from a City Build grant ($1,000,000), and funds from a direct federal appropriation ($1,000,000).

Building Hope facilitated the financial transaction in three ways. First, we provided a bridge loan in the amount of $700,000 as part of our $1.2 million total assistance. This loan filled the gap in financing caused by a delay in the funding of the QZAB. Second, we provided the last dollars needed to complete the financing for the project. Third, we subordinated our debt to all other lenders and provided our loan at very favorable terms (2% interest rate, interest only year 1 and 25 year amortization). Building Hope’s loans and favorable terms created a viable financing strategy that allowed the school to take its transaction to closing and, at the same time, minimize its debt service. TMA was able to finish the project on time, expand its enrollment as planned, and focus its resources on educating its students. The school entered into a New Market Tax Credit transaction for its long-term financing.

Photo credits: Maxwell Mackenzie for Building Hope