Good morning, CharterFolk.
Today we are pleased to share a Contributor Column from Mark Medema, the Co-Founder of FRED, the Financing and Real Estate Development initiative for charter schools
We provide a bio for Mark below.
Mark Medema started as an infrastructure engineer and urban planner in Chicago. He quickly realized that cities needed more than physical infrastructure, they needed to tap all of their intellectual infrastructure to thrive, especially in financially distressed neighborhoods. After watching a ‘60 Minutes’ episode about a charter school on a VHS tape, he joined the fledgling CMO and made the mistake of asking “Where will we put all our schools?”. Having been told, “We dunno – go figure it out”, he’s still trying to figure it out twenty-some years later. He has worked with schools to help them grow, he has worked with non-profit lenders to help increase their supply of low-cost capital, and he has worked with policy groups to help untap public funding and subsidies for school facilities.
Convening Folk to Take On The Number One Problem Inhibiting the Growth of Charter Schools
According to some CharterFolk, “Facilities” is now the number one problem inhibiting the growth of charter schools across the country. Once upon a time, it was authorization and approvals, then it was start-up funding, and then it became the talent pool of edupreneurs. If the “Facilities” challenge is now in the same ballpark as these long-standing impediments to growth, it’s really going to require all-hands on deck. And that means we need a deck to bring all the hands together to find more solutions to this problem. We have to build a community of practice to enhance the entire ecosystem of facility solutions locally and nationally.
Meet FRED
We introduced FRED to build this community of practice. It’s an acronym for Financing and Real Estate Development. If you’d prefer to think of your favorite FRED, be my guest. Some have suggested it’s TED’s little brother. If there is a TED Conference, TED Talk, and TEDx, then there’s no reason we can’t have a FRED conference – which we did. Last month, FRED brought together more than 150 leaders, advocates, and service-providers to attend the first national Charter School Facility Conference in over a decade in NYC after the NYCSA conference. This summer, we facilitated a couple FRED Talks on Green Funding. Not sure what a FREDx would look like yet. (I hope I don’t learn what a cease-and-desist letter looks like.)
Why do we need FRED now? For one thing, finding space is harder – all the small spaces are gone. The churches that we used to lease 20 years ago, the YMCAs – they’ve all been bought up. Another fact is that construction costs and land costs have skyrocketed compared to the increase in public education funding. And now that we’ve gotten bigger as a sector, we should flex our muscles. The 8,000 schools across the country probably have a book value of property worth more than $100 billion dollars. Compare that to the largest U.S. REIT’s whose book value is somewhere around $50-60 billion. I know we cringe when we are compared to franchise models, especially McDonald’s. But McDonalds learned something when they determined they’re not a hamburger company, but instead a real estate company that happens to sell hamburgers. The book value of all McDonald’s real estate property is about $50-60 billion as well. As a sector, we have a massive real estate portfolio – and this creates opportunities. When it comes to finding new solutions, we have to do it together. That’s why we have FRED now — to grow a genuine, action-oriented community of practice to strengthen the entire ecosystem of facility solutions.
We view this ecosystem as having three key components.
Real Estate Development Process. First, we provide unbiased resources to the real estate development process including how to build your team and secure funding. There are lots of folks who can solve a facility project, although if a school leader needs help, they may not know where to turn. We don’t expect schools to become experts in this. We can’t train everyone to be a real estate developer and these are not DIY projects. There are lots of risks inherent in real estate projects. School leaders need to know who to call and how to build a team – they are really good at building teams across many other functions. With support and resources, they can assemble the right facilities team, too.
We should launch a hotline to help school leaders develop teams, taking a cue from the recent Thanksgiving tradition. Little did I know, but apparently there is a phone line 1-800-BUTTERBALL for those of us who blow up our deep fryers with frozen turkeys. We could use 1-800-CHARTER or something like that to help school leaders build their teams (…the number is already taken).
State and federal policies. Second, we’ll bring folks together on policy issues, both state and federal. Every year, states pass facility policies. Nationally, we don’t pay too much attention to them, and we often think they are small steps. Each new piece of facility legislation passed at the state level actually generates $50 to 100 million dollars of new funding for our sector. We need to learn from others about smart state policies and strategies to advance them.
And then we have Federal policies. Whether you were happy or sad on November 5th, this Administration and Congress cannot be ignored. Now is the time to ask for help. We need an ambitious federal agenda, even if it’s focused more on the Department of Treasury than the threatened Department of Education. Many of us were surprised to learn the previous Administration offered somewhere around $30 billion dollars for sustainability programs through EPA and other agencies. Whether you thought it was easy going “green” or not, many sustainable projects that didn’t pencil in the past may now be feasible.
Systemic facility-related solutions. Third, we need to look beyond individual projects and develop systemic solutions. For example, how do we take advantage of tanking commercial real estate values. There are lots of empty buildings and we’ve talked about adaptive reuse a few times in the media. How do we make that a bigger national story? I often half-jokingly suggest to school leaders, “If you were to go to one conference this year (besides FRED), you really should go to the International Council of Shopping Centers”. Why didn’t Bed, Bath and Beyond become Binders, Books, and Blackboards when they went bankrupt?
Another example is allocation of New Market Tax Credit. The latest round of awards were announced last month but more importantly, the deadline for the next round of NMTC applications is in a few weeks. Has every school called the organizations applying for NMTC awards to make sure their projects are listed in these upcoming applications? We need a better way to help charter schools get in the queue for these tax credits.
Other ideas that came up at FRED include, “Why don’t we have our own charter school bank in this country (or maybe it should be a charter school credit union)?”, “Should we be building teacher housing for charter schools?”, and “How do we train and develop school-level finance and facility talent”.
Join the Community of Practice
What else can FRED do to help the sector move forward? How can schools, vendors, state associations, education champions, and funders build a thriving regional and national charter school facility ecosystem? Should we focus on policy, funding, technical assistance? All of the above? Something else?
Please share your thoughts and become part of the community of practice. We can make progress if we speak up and ask questions, no matter how simple or difficult the questions may sound – just like we encourage our students to speak up. The classroom is more enriching when everyone participates and “Facilities” needs to become more enriching – it’s going to require all-hands-on-deck because our kids are depending on us. To share your ideas, send me a note mark@fredcharter.org.