Credit Enhancement for Charter School Facilities

To provide grants to eligible entities to assist charter schools in acquiring, constructing, and renovating facilities by enhancing the availability of loans and bond financing.

The Department makes annual competitive Credit Enhancement grants to public and private nonprofit entities (such as finance authorities and community development financial institutions) that assist charter schools in acquiring, constructing, and renovating facilities by enhancing the availability of loan or bond financing. Grantees must deposit grant funds into a reserve account that is used to, among other things, guarantee and insure debt to finance charter school facilities and guarantee and insure leases of personal and real property. These credit enhancements are intended to reduce risk to lenders, thereby creating access to credit or lowering interest rates and borrowing costs for charter schools.

A public entity, such as a State or local government entity, a private nonprofit entity, or a consortium of such entities may apply.

Public charter schools as defined in ESEA Section 4310.

Grant recipients must deposit the funds received under this program (other than funds used for administrative costs) in a reserve account established and maintained by the entity for this purpose. Amounts deposited in such an account must be used by the entity to help charter schools access private-sector capital for acquiring, renovating, or constructing facilities. Reserve accounts must be used for one or more of the following purposes: (1) Guaranteeing, insuring, and reinsuring bonds, notes, evidences of debt, loans, and interests therein; (2) Guaranteeing and insuring leases of personal and real property; (3) Facilitating financing by identifying potential lending sources and encouraging private lending and other similar activities that directly promote lending to, or are conducted for the benefit of, charter schools; and (4) Facilitating the issuance of bonds by charter schools or by public entities for the benefit of charter schools, which may be accomplished by providing technical, administrative, and other appropriate assistance, including the recruitment of bond counsel, underwriters, and potential investors and the consolidation of multiple charter school projects within a single bond issue.

Funds under this program are available for the Department of Education to obligate by September 30 of the fiscal year in which they are appropriated. Once these funds are obligated, they must be expended from the Federal account in five years. In addition, two years after the grantee's receipt of grant funds, the Secretary may collect any or all funds in a reserve account if the grantee has not made substantial progress or is no longer using the funds for their specified purpose.

Preapplication coordination is required. Environmental impact information is not required for this program. This program is eligible for coverage under E.O. 12372, "Intergovernmental Review of Federal Programs." An applicant should consult the office or official designated as the single point of contact in his or her State for more information on the process the State requires to be followed in applying for assistance, if the State has selected the program for review.

The selection criteria contained in EDGAR, 34 CFR 75.209 and 75.210 are used to evaluate applications. For additional information contact the program office.

The Department of Education awards these grants on a competitive basis. The program office notifies successful applicants of awards and negotiates and awards grants. Contact the program office for more information.

The range of approval/disapproval time is approximately 60 to 120 days following the application deadline.

The Department has historically made only one-time awards under this program.

The General Education Provisions Act hearing procedures regarding recovery of funds are applicable to this program.