Angela Johnston Derby Parent Definitions Sale Lease back An - - PowerPoint PPT Presentation

Angela Johnston Derby Parent

Definitions

Sale Lease‐back “An arrangement in which one party sells a property to a buyer, and the buyer immediately leases the property back to the seller” Public‐Private Partnership Not a business partnership, where partners share in decision making and risks & rewards. Instead, a business deal defined in a contract negotiated between 2 parties – a landlord & a tenant.

Elements:

• BWDSB negotiate an agreement for the sale of

Derby school (land & building) and subsequently lease it back for a defined term

• A private investor (individual, corporation, NPO)

purchases the property from BWDSB, operates the maintenance aspects of the facility, and makes all required improvements

• BWDSB would make lease payments to the

investor over the defined term

• Contract could be structured such that BWDSB

could buy the property back at the end of the term

Benefits:

BWDSB perspective:

• Converts an existing asset into cash, which can be

used elsewhere (capital project needs, operating needs, future lease payments)

• Removes the capital burden of renovating Derby

school from BWDSB

• Shifts the responsibility for managing the financing,

planning, design & renovation construction of Derby to a private entity, while retaining control

• ver the education purpose
• Potential to create a model that could be applied to

schools throughout rural Ontario

• Promotes a positive relationship with community

partners

Benefits:

Investor’s perspective:

• Steady cash flow for a defined term
• Tax write offs in the form of depreciation on the

building

• Property may be available at end of term for

their own purposes (ex. rental property, land value)

• Return on investment

Benefits:

Overall benefits:

• Cost effectiveness of outsourcing renovation

costs to local contractors by competitive bidding process

• Creation of jobs in our community
• Renovations to school to support the high

quality educational program it already has (grants, AODA)

Challenges:

• In‐depth analysis of the financial aspects of the

transaction (fair value determination, operating costs, renovation costs)

• Negotiation with local municipality in regards to

property taxes

• Develop a model
• How to identify a prospective investor?
• Request for bidders?
• How to evaluate a proposal?
• Who will monitor lease & agreements?
• How to measure building standards?
• Policies prohibiting a partnership with the private

sector?

• Deal must be customized to meet objectives

Summary:

• The existing financial infrastructure does not

meet existing needs

• Need to think outside the box to arrive at a

solution