Livermore Officials Try to Block Charter School Financing Bond

By Doug Oakley
Staff Writer
LIVERMORE -- A charter school operator here is selling investors a $30 million municipal bond to finance the purchase of a new high school building, a seldom-used tactic for charters that has drawn the ire of the local school district which tried to block it.

The bond offering to individual and private investors is the second multimillion offering for building purchases undertaken by Tri-Valley Learning Corporation in three years. It already is paying off a $27 million bond it floated in 2012 for the purchase of its elementary and middle school campus here. 

Tri-Valley CEO Bill Batchelor said borrowing money from investors and paying about 6 percent interest frees up the charter school from having to lease old, dilapidated buildings from the school district, buildings that have often been closed for some time. 

"We don't have the ability to levy taxes like school districts do, so that's why we do these bonds," Batchelor said. 

Officials from the Livermore Valley Joint Unified School District, which authorized Tri-Valley's charter, worry the school is taking on too much debt and will end up diverting its operating budget to bond payments. In an attempt to scuttle the deal, the district paid an outside lawyer to speak against the bond issuance during a hearing to certify the bond's tax exempt status at the Alameda County Board of Supervisors earlier this week. Supervisors ignored the pleas, however, and unanimously approved the bond. 

"We're not opposed to them at all," insisted Chris Van Schaack, assistant school district superintendent who was interviewed after the hearing. "The only problem we have is if they get themselves in too much debt it becomes our problem. We authorized their charter, and if they are paying $1 million in yearly payments, they might not have money to pay for textbooks and to provide the academic program they promised in their charter petition. And the fact that they told us nothing about it, that kind of scared us." 

Batchelor counters that the school district just "doesn't like charter schools." 

"I was surprised to see them publicly oppose this," Batchelor said. "They have never formally come to us with questions or concerns about the financing that they have been aware of for a long time. I have to speculate that their concerns are just about our permanence in the community." 

The money from the bond money will go to purchase a building for the Livermore Valley Charter Preparatory, a high school which is currently in a building owned by the Livermore Valley Joint Unified School District. And in a complicating twist, the bond will be partially paid back by a separate private school Batchelor is partnering with that will share the new building. Batchelor said he will manage the private school for which he does not yet have a name. 

Batchelor's Tri-Valley Learning Corporation also runs two charter schools in Stockton and one in San Diego. 

Batchelor said his Livermore charter schools, which have about 1,500 students, exist because parents want an alterative to the school district. 

"In places where school districts are doing well, there are no charter schools," Batchelor said. "Charters come in to these areas where parents believe an additional education choice is a necessity." 

Van Schaack said that if his district truly didn't want the charter in Livermore, it would not have included it in a recent parcel tax which brings them about $375,000 a year. 

Nicolas Watson, senior facilities adviser for the California Charter School Association, said about 40 charter schools out of about 1,200 in the state have used municipal bonds to buy facilities in the last year. That's a little over 3 percent of the total. 

"But it's grown in popularity in recent years," Watson said. "I think the bond market and investors are getting more comfortable with charter schools and how they are funded. There are not a lot of options for charter schools that want to buy or build buildings." 

Watson said school districts that worry about charter schools taking on too much debt should help out more financially. 

"They could spend some of their revenue to help with charter school facilities if they are opposed," Watson said. "We don't have any dedicated funding for buildings. We don't want schools to have to spend money on buildings that they could be spending on academics. There's no doubt we would prefer to have a steady spending mechanism for facilities, but that's not the way government works in California." 

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