Independent Schools Facilities Revenue 101
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Transcript of Independent Schools Facilities Revenue 101
Facilities Revenue 101:Considerations for Generating Non-Tuition Revenue from Your Campus Assets
January 21, 2015
Patrick L. O’NeilPaul E. Alpuche, Jr.
Lerch, Early & Brewer, Chtd.
www.lerchearly.com
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Introductions Know Your Use Options and Limitations Facility Space Use/Lease 3rd Party Investments Sale or Long-Term Lease Next Steps
Overview
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Underlying Zoning
Each zone has list of permitted uses Most schools located in residential
zones with special exceptions In Montgomery County, religious
exemption from SE requirements Exemption for government-owned
property Accessory uses
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Lease or Deed Restrictions
Deeds (e.g., closed or surplus school sites)
Easements Covenants
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Special Licensing
Daycare/aftercare Liquor licenses Gambling licenses
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Neighborhood Relations
It pays to be a good neighbor Tree trimming, snow removal,
etc.
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Nonprofit Status and Exempt Function Income
Unrelated Business Taxable Income
Modifications
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Mitigating School Exposure
Contractual liability Indemnification Insurance
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Who is Sponsoring?
School-sponsored event (e.g., fundraiser, class, camp, etc.)
Lease to outside party Accommodating parental usage
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What is the Use and Who is Attending?
Classroom space or camps Enrolled students only or open to
outside students School coach camps
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3rd Party Investment in Enhancing Campus Facilities
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3rd Party Investment
3rd party may pay for some/all costs in exchange for exclusive use rights – e.g., tennis bubble, turf field, gymnasium, ropes course, etc.
Use analysis – permitted use vs. accessory use
Understanding partnerships with for-profits
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Value Proposition
Use analysis Appraisal Ongoing rental income (vs. one-
time windfall) Partnership with developer
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Mechanics and Costsi.e., How easily can portion of campus be sold or leveraged?
ID the available property with particularity (survey)
Obtain approvals for proposed development
Subdivision, stormwater management, forest conservation, traffic
Lease/condo option
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Mechanics con’t
Subtract costs (including development timeframe) from the value proposition
Tip: participate in Master Plan processes to increase investment opportunities
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Now What?
Review and understand your existing contracts; update as needed
Review and understand your existing insurance coverage; update as needed
Explore new uses Contact us with questions20
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Contact Us
Patrick O’Neil is an attorney at Lerch, Early & Brewer who serves as outside general counsel for independent schools throughout Maryland and DC.(301) [email protected]
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Contact Us
Paul Alpuche is a corporate attorney at Lerch, Early & Brewer who provides business counsel, tax planning and tax controversy guidance to businesses, nonprofit organizations and individuals throughout Montgomery County and the Washington metropolitan area. (301) [email protected]
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