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Evaluating Turnkey Developer Options

The charter school facility development process, from start to finish, can be rife with uncertainty and risk under normal circumstances without careful planning, adequate capital, and the right team and expertise.  For some charter schools, particularly newer ones or ones that have limited staff and financial capacity, a common approach to navigating this uncertainty and risk is to engage a turnkey developer.  There are a number of organizations, both nonprofit and for profit, that provide charter schools comprehensive facilities solutions, from site identification and acquisition, design, construction, financing and so on. The Charter School Growth Fund has put together very useful, succinct primers on deciding whether to engage a turnkey developer and whether to leverage a nonprofit or for profit developer here and here.  SchoolBuild, another facility resource for charter schools facilitated by LISC, has a number of articles that are also helpful in this topic area, including how to decide whether to work with a developer, an overview of the different facility development models, and the key questions you should be using to vet a potential development partner.

COVID-19 can potentially add uncertainty and risk to your facility plan.  As a school leader or board member, you may now be looking at turnkey developers as a way to mitigate some of that uncertainty and risk.  The important thing to note here is that the new COVID-19 challenges, particularly those during pre-development, construction, and construction closeout, do not necessarily go away by engaging a turnkey developer.  The developer may have more capacity, experience, and expertise to mitigate those challenges, or contractually the developer may assume more of the liability or ownership of consequences of those challenges.  While it is still early, we will likely see some developers step up and into the COVID-19 fray and go in one of two directions.   Either turnkey developers will actively limit their contractual exposure, or they will assume some of the risk and uncertainty but price their fees accordingly.  In other words, in the short-term for new projects, it may be reasonable to expect turnkey developers to charge some premium above what they would have otherwise charged prior to COVID-19 in exchange for assuming more risk.  In addition to the typical financial analysis associated with evaluating a developer’s proposal, you may need to consider if you can afford any new premium in pricing, and whether it is worth a decrease in charter school risk.

SchoolPrint is a free service to charter schools who need assistance in identifying and working with quality construction service providers, or general assistance in navigating the facilities process. We provide the blueprint schools need to successfully complete their facility projects. If your current facility situation has been further exacerbated by COVID-19 and you need expert advice, please feel free to email us at SchoolPrint@lisc.org. 

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