Q&A: Will the New Charter School Bill Impact CRE?

Joey Blakley, vice president at Foundry Commercial, discusses the controversial legislation and shares his insights on the effects this new bill might have on commercial real estate.
Joey Blakley, vice president, Foundry Commercial

A new school law, the controversial House Bill 7069, has been causing quite a stir in Florida since coming into effect in 2017. The recent change in legislation targets charter schools and includes a series of provisions that support the creation of an expansive educational system outside of the public school districts’ control. In other words, county school boards are now required to share local tax revenues—such as their construction budget—with private charter schools, among other clauses.

Another significant change brought on by the bill is the creation of Schools of Hope—a new charter school network. More precisely, the legislation encourages out-of-state charter school operators to move into regions where the nearest traditional public schools have persistent low ratings. Construction work, renovations or repairs at the new facilities get funded through local tax revenue granted by school districts. Board approval is not required for the allocations.

Joey Blakley, vice president of the Religious, Education & Not-For-Profit Group at Foundry Commercial, believes the new legislation could impact the commercial real estate market by empowering smaller operators to build or expand their charter schools due to funding from the county. Blakely told Commercial Property Executive how the bill influences new construction and what type of real estate assets developers might target.

What was the status of charter school development before the passing of HB 7069 and how has it changed since?

Blakely: It’s difficult to track charter school development, but according to the state, 34 new charter schools opened in the fall of 2017. Schools just started getting the new share of property tax funds, so it may be a year or two before we see significant changes. We expect to see charter schools use the funds to help expand and upgrade current facilities and develop new ones.

How does the new legislation impact the commercial real estate market?

Blakely: The new legislation should help continue to fuel the growth of charter schools, which becomes a potential buyer pool for vacant land and existing retail, office, industrial, church and school buildings.

Is there a market for the development of the so-called “Schools of Hope” in Florida?

Blakely: Two charter school operators have been approved and two others have recently applied to show that there is interest in being involved in the program. We will be watching the initial schools that will open within the program to get a sense of the future possibilities in the region.

Does the bill serve as a unilateral advantage for charter school development or does it benefit the public school system as well?

Blakely: There are a number of items in the bill that relate to traditional schools. For example, the bill sets aside $140 million to provide extra funding for up to 25 low-performing traditional public schools as well as to help fund Schools of Hope. I think the competition will push the traditional schools to continue to innovate and improve, especially in the lower-performing areas where they will now be held to the same level of accountability as charter schools.

Some examples of this accountability include the following, if a traditional public school receives below a C grade for three consecutive years: 

  • reassign students to another school and monitor the progress of each reassigned student
  • close and reopen the school as one or more charter schools, each with a governing board that has a demonstrated record of effectiveness
  • contract with an outside entity that has a demonstrated record of effectiveness to operate the school, which may include a district-managed charter school in which all instructional personnel are not employees of the school district but are employees of an independent governing board composed of members who did not participate in the review or approval of the charter

Charter schools can be forced to close when receiving three consecutive grades below C.

Image courtesy of Foundry Commercial