School is still in session at Neighborhood Charter School in the Bronx.
The school has wide hallways, a chess classroom and multiple 3D printers. It was designed, in pedagogy and construction, to educate children with autism. The school cost $29 million to construct.
Neighborhood Charter School is one of three charter schools on a two-block stretch of Mott Haven. Combined, they educate around 1,500 students. The buildings were renovated and constructed by Civic Builders, a nonprofit that provides financing and renovations for charter schools.
The 23-year-old Civic Builders recently for the first time borrowed through the public tax-exempt municipal bond market to construct a building for Bold Charter Schools.
"Bond investors are more likely to make available the amount of capital that we need for these expensive projects," Civic Builders CEO David Umansky said.
Bold Charter School will be in the same area as Neighborhood Charter School. In fact, it will be one of ten charter schools that have found a facility through Civic Builders in the South Bronx.
Constructing Bold will cost $70 million in total. $23 million of that funding comes from the new markets tax credit, according to Umansky. $9.5 million will come from Civic's balance sheet. The remainder is municipal bonds.
The Build NYC Resource Corporation issued $44.2 million of unrated tax-exempt bonds for Civic Builders in a negotiated deal on May 28. D.A. Davidson and PNC were co-lead managers, with Nixon Peabody as counsel.
Civic Builders started construction last week, Umansky said, and is slated to finish in 2027. Around five years after Bold Charter School moves in, the school will issue bonds of its own and buy the building.
Charter schools in New York, where Civic Builders mostly operates, have an easier time obtaining facilities than in most parts of the country.
Charters receive a fixed amount of money for every student they teach, and in New York the city and state Department of Education is required to give them any unused property — a vacant wing of a school, for instance. If there's nothing available, Umansky said, the city and state will pay the charter school's rent and construction fees — up to $5,800 per student, subject to annual adjustments for inflation.
The rental assistance is separate from the school's operating funding, Umansky said, meaning there's no incentive not to use the funds. Bold is already paying the state's rental assistance to Civic Builders; once the school buys the building, it will use the rental assistance to pay debt service.
Since this policy took effect in 2014, the schools that Civic Builders works with have funded their buildings using only their state rental assistance.
Civic Builders began in 2002 to assist New York City charter schools with real estate and development. After a decade, the nonprofit applied for and received the new markets tax credit, a federal subsidy to fund economic growth in low-income areas, according to Ross Hoffman, Civic's real estate investment manager.
When Civic began allocating the new markets tax credit, it became a "quasi-lender," Hoffman said. It took the next step and launched a $400 million lending product in partnership with the
The fund has issued more than $1.5 billion of loans to schools across the country. Most of those loans last around five years, and schools often refinance them by issuing tax-exempt bonds, Umansky said. The fund's loans currently carry around a 6% interest rate.
When Civic Builders develops a facility itself, Umansky said, the schools typically pay rent for five years after construction has completed, then purchase the building at a discount in a transaction also financed with municipal bonds.
Civic is preparing to sell Neighborhood Charter School its facility for around $24.5 million, rather than the $29 million that it cost to develop. Bold Charter School will be able to purchase its building for around $59 million, Hoffman said.
The firm creates a structural "incentive" for schools to purchase their buildings, Hoffman said. Once a school has purchased its building, Civic makes a return of around 5% on its equity.
"Their lease payments are effectively helping buy down their future purchase price," Hoffman said.
Traditionally, Civic has financed their construction with tax subsidies and private, taxable debt, Hoffman said. Its foray into the public markets last month was a new experiment. The projects that Civic Builders develops, especially the ones in New York City, are so large that it's difficult to find enough money from private lenders.
Earlier this year, Civic Builders issued tax-exempt debt for a project in Maryland, Umansky said, but it was privately placed. He was happy with the results of the Bold deal.
"I think we did pretty well for a non-rated deal," Umansky said.
The bonds priced at yields from 5% for a 2035 term bond maturity to 6% for the $30.4 million 2060 term bond maturity, according
The bonds are subject to optional redemption in 2032 at 100%, according to the
Civic Builders closed on a bank loan a week after their private loan and the rate was around 40 basis points higher, Umansky added.
The firm plans on using bond financing in future transactions, Umansky said, although he doesn't anticipate any such deals until next year.
Hoffman said Civic is better prepared for future bond deals, "now that we've gone through this process of issuing tax-exempt debt, and now that we're at least a known entity in the New York municipal space."
More than 8,000 charter schools educated more than 3.7 million students around the U.S. in 2022-23, according to the National Alliance for Public Charter Schools.
In 2024-25, New York state had 351 charter schools serving over 180,000 students, according to the
Charter schools are a growing sector in the municipal market — and
Municipal Market Analytics reported in February that charter schools in its credit impairment database had nearly quadrupled since 2022.
But in Civic Builders' 23 years of existence, it has experienced "zero losses," Umansky said.
"Part of what we bring is an astute eye to risk," Umansky said. "All we do are charter schools. So we know how to do a credit assessment of a charter school."
Issuing bonds on behalf of charter schools isn't necessarily new, said Alan Wohlstetter, president of the School Improvement Partnership. Civic Builders' revenue — rent and loan repayments from a network of vetted charter schools — isn't that different from the
"An organization like Civic Builders is critical to the growth of the charter school sector," Wohlstetter said. "It's great to have them participate."
Receiving a loan or developing a building through Civic Builders helps schools eventually get much more favorable bond rates, Wohlstetter said. Charter schools can change rapidly in their initial years and often fluctuate in size and mission.
26% of charter schools
All of this makes investors nervous. Civic Builders' loans and development allow schools to avoid the bond market until they're more established and the risks have receded, so they get better rates when they eventually do issue bonds, Umansky said.
This strategy does have its detractors; Burris is one. New York public schools are struggling to find space thanks to statewide class size mandates, Burris said. Charter schools don't have this problem because they can shrink their class sizes just by limiting their enrollment.
"Imagine you live in the Bronx, and there's the public school down the block, and it's an old school and has leaky pipes, and the heating system's not working particularly well. And then all of a sudden, a brand new school pops up two blocks away. Well, what are you going to do?" Burris said. "Of course, the parents are going to be attracted to that brand new school. And I find that to be very unfair, because you have the one sector that's getting privileged when the other sector is not."
