Hope Academy received its charter from Eastern Michigan University and began operations as a public school academy in 1998, enrolling 288 students and offering grades K-2. The Academy added a grade each year from 1999-00 through 2001-02 school years to offer grades K-6. The Academy’s enrollment had grown to 500 students in 2010-11, reaching building capacity at the current facility. To expand the Academy’s program and to address the sizable waiting list, they needed a larger facility. The Academy will offer K-8 at the new facility, adding 7th and 8th grades in 2011-12 and 2012-13, respectively.
The Academy is located in Detroit, Michigan. The new facility which was owned by the School District of the City of Detroit (“DPS”), is approximately 1.2 miles from the current site. The proceeds from the Series 2011 Bonds were used to acquire and renovate an existing approximately 125,000 square foot public school building. The renovation on approximately 60,000 square foot of space (west portion) is expected to be completed in August of 2011. The Academy will offer grades 6th and 7th at the new Facility starting in the fall of the 2011-12 school year. The balance of the Project is expected to be completed by December of 2011. The Academy expects to move the balance of the students following upon the completion of the project.
As a result of the long operating history, strong management team, prudent fiscal management, good enrollment history and good working relationship with Eastern Michigan University the Academy received a BBB- rating from Fitch Ratings.
Clear Scope worked with the Academy to determine the appropriate debt level to meet the Academy’s budget and developed a timeline that met the Academy’s objectives to move into the new facility the following school year. Clear Scope Advisors recommended and the Academy elected to issue the Bonds through MFA in order to take advantage of the grant dollars. The Academy was able to use $500,000 of appropriated funds from the States of Michigan to fund their debt service reserve fund. Funding the reserve with appropriate funds decreased the amount the Academy had to borrow effectively creating a zero percent loan for the reserve amount. Clear Scope Advisors worked with the Underwriter to structure the financing to appeal to investor. The Underwriter undertook a strong sales effort and was able to secure investors. The transaction was a 30 year, fixed rate, BBB- rated financing with an average coupon of 8.125%.