PNC Capital Markets LLC (PNCCM) was the sole manager of the Chester County Industrial Development Authority’s $50.9 million Revenue Notes Series 2024 for the Avon Grove Charter School. The public, tuition-free school in West Grove, Pennsylvania is expanding thanks to an $84 million low-interest loan from the U.S. Department of Agriculture (USDA).
The PNC Capital Markets team collaborated with the school and its municipal advisor on the bond anticipation note underwriting. The financing package was facilitated by the largest revenue anticipation note for a charter school in the history of the USDA Rural Development Program. The USDA loan enabled construction to begin on the 83,000-square-foot expansion project earlier this year.
The Need:
Avon Grove Charter School had been operating in modular buildings at its State Road campus for over two decades—serving more than 2,200 students from kindergarten through high school in cramped and outdated facilities.
School administrators and board members spent years assessing the school's facilities and fundraising for a new building to educate students in grades 7 through 12. The school considered various options for improved facilities, including purchasing or renting other buildings, but none of them proved viable. Ultimately, they decided that new construction was the best path forward, but securing the necessary financing was a significant obstacle.
The Solution:
Executive leadership from the school met with the PNC team in October 2022, to discuss their vision for a new building. The school had worked with the head of PNC’s Charter School Group, on previous bond issues, and knew that PNC had the skill and expertise to help customize a financing solution. The school subsequently put out a request for proposals and reviewed presentations from four different firms before making a final decision.
PNC differentiated itself through its personalized approach and understanding of the school's needs. The PNC team provided a clear and transparent proposal, ensuring that even board members without a finance background could understand the complex details of the project.
“Relationships matter when you’re doing something as involved as this project,” says Donna Archer, Chief Financial Officer at Avon Grove. “PNC demonstrated that they really knew what we needed. And they were already familiar with how our charter school and our board operates.”
Avon Grove’s USDA loan application included providing extensive documentation and meeting compliance requirements. PNC was also instrumental in helping the school navigate the complexities of obtaining an investment-grade, short-term bond rating from Moody’s without impacting Avon Grove’s long-term Standard & Poor’s rating.
PNC served us very well on this project. Our success serves as a model for other charter schools seeking to expand their facilities and enhance their educational offerings.
Results
With Avon Grove’s $84 million loan from the USDA, the school has already broken ground on a new $52 million building. Upon completion of the new facility, the revenue notes will be refinanced, along with the remaining balance of Avon Grove’s Series of 2017 bonds at an interest rate of 3.6%, providing additional savings. The USDA loan also provided funds to cover capitalized interest, as well as the cost of issuing the bond financing notes. The financing package is expected to save the school an estimated $15 million throughout the life of the loan.
The new facility will include 27 flexible classrooms, 10 science laboratories, a learning center, a new gymnasium, and extensive exterior improvements. “Support from the USDA represents a significant milestone for both Avon Grove and the broader charter school community,” says Kristin Bishop, CEO at Avon Grove. “It demonstrates that charter schools can successfully secure substantial funding for large-scale projects, even in rural areas.”
Overall, the Avon Grove Charter School project exemplifies the power of perseverance, strategic partnerships, and a commitment to providing exceptional educational opportunities.
For more information, visit PNC’s Charter Schools Financial Solutions web page.
