How Leasing Modular Buildings Can Benefit Charter Schools
The latest annual report from the National Alliance for Public Charter Schools found that for the first time ever, the number of students enrolled in charter schools has surpassed 3 million students nationwide. According to Education Week, there are more than 6,900 charter schools in the nation, and enrollment has nearly tripled within the past decade.
Growing trends and $342 million in federal funding would appear to be positive for charter schools; however they still face their own struggles. In November of 2017, the U.S. House of Representatives voted to pass the H.R.1, the Tax Cuts and Jobs Act. Essentially, this bill restricts the resources needed for charter schools to obtain facilities. In many cases this can prevent new charter schools from opening, and existing charters from expanding.
“H.R. 1 eliminates the opportunity for public charter schools to access New Market Tax Credits (NMTCs), Private Activity Bonds (PABs), and Qualified Zone Academy Bonds (QZABs) in order to finance school facilities. This is devastating to charter schools, which often struggle to find space and lack the amenities of district schools. In some states, charter schools receive zero facilities dollars, and in all states, charter schools are dependent on finding alternative and cost-effective means of accessing capital for their buildings. Without financial instruments like NMTCs, PABs, and QZABs, charter schools would have to divert resources away from high-quality classroom instruction and into facilities.” – The National Alliance Statement
Charter schools are tuition free, independent-public schools. Each charter school receives funding based on a per pupil basis, but does not receive funding to support their facility expenses, such as construction or renovation costs. They are on the other hand reimbursed for leasing costs of a building.
Why Should Charter Schools Lease Modular Buildings
Although charter schools are not provided with funding for construction costs, they are reimbursed for the costs of leasing a building. Leasing can be beneficial for charter schools no matter what stage they are in.
- For example, new charter schools that are approved in the beginning of the calendar year have a limited number of months before the start of the upcoming school year. Renting modular classrooms will ensure that they have the facilities they need and at a price they can afford.
- For existing charter schools, they may find themselves growing and need to expand their facilities. Up-front construction costs and on-campus disturbance can create problems for schools. But with modular classroom buildings, additions can be easily added to existing facilities with minimal site disturbance.
- Some charter schools may be looking to build with permanent construction, but require temporary classrooms in the meantime. Modular classroom buildings can be easily leased for the necessary period of time and then removed when they are no longer needed.
Main Benefits of Leasing
Although they are “temporary” buildings, modular buildings are made with quality materials, and therefore built for longevity. There are 5 main benefits of leasing that really sets it apart from other types of construction or ownership responsibility.
- NO Ownership Hassles
Many schools and organizations do not want to own temporary buildings, for operational and financial reasons. Leasing gives schools access to the space they need without the requirement of ownership. Modular buildings are installed when you need them, and then picked up when you are finished. It’s that easy!
- No Borrowing
Leasing allows you to pay for the use of a temporary modular building without having to finance it through a lending institution. No borrowing means a faster timeline for you to get the space you need. Lease payments are lower than a financed purchase and your borrowing capacity is not impacted.
- No Major Repairs
Leasing a modular building typically means you are only liable for repair of damages, while wear and tear items are covered by the building dealer. Most often, big ticket items such as HVAC systems, roof, and building structure are not your responsibility. This gives you a peace of mind knowing that you won’t have to worry about any unexpected major repair costs.
- Eco Friendly
Leased buildings are able to be re-used multiple times throughout their life cycle. When your charter school is finished with the temporary modular building, it can be refreshed, re-purposed, and leased again by another organization.
- Cost Effective
There is no initial depreciation impact when you lease a brand new building.
Sometimes it makes perfect sense to construct a permanent building structure, depending on the needs of the client. However, when charter schools are concerned with funding and looking for the smartest ways to budget- leasing becomes the ideal candidate. Charter schools are growing at an increasing rate, and choosing to lease classroom space rather than renting from a conventional building will give your school the flexibility it needs to expand facilities over time.
If you would like more information on Modular Classrooms for Charter Schools, please visit us online or call us today! 877.438.8627