Charters borrow nearly $500 million on taxpayers' dime

[Divernan]

Three Franklin Plaza, a bow-shaped eight-story building at 16th and Vine streets, once hummed with 1,700 GlaxoSmithKline white-collar workers. Today, it is empty more than three months out of the year, a lone security guard watching over the corporate art still hanging in the lobby.

From September to June, a charter school called String Theory occupies half the floors. The school acquired and renovated this premier office tower in 2013 as part of a $55 million tax-exempt bond deal, arranged with help from the city’s biggest economic development agency. It was the largest bond deal of its kind in city history.

It is also the most conspicuous example yet of a risky, expensive, and fast-growing financial scheme underpinning the rapid expansion of Philadelphia charters — a market now worth nearly $500 million. But the bond financing behind the mountain of money gets little scrutiny on whether the debt is a smart use of Pennsylvania’s limited educational dollars.

The lack of transparency can translate into deals that may be unsustainable. Shortly after moving into its flashy high rise, String Theory posted its first operating deficit. After revealing they were $500,000 in the red from paying out millions annually to bondholders, administrators told parents they were cutting certain classes and suspending bus service as cost-saving measures.

http://www.philly.com/philly/education/Philly_Charters_schools_building_boom.html
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[Fearless]

1. YAY!