Rocketship Asks City for Help Securing a $35 Million Loan

A private nonprofit charter school chain wants the city to act as a conduit financer for a $35 million loan to build another campus and make improvements at a couple others. Rocketship Education, owned by San Jose-based Launchpad Development Company, will ask the City Council to approve the bond issuance when it meets Tuesday.

The loan would pay for a fourth Rocketship in the Alumn Rock Mayfair neighborhood on South Jackson Street ($11 million) and for projects at already completed campuses on Story Road ($14 million) and Dobern Avenue ($10 million).

If approved, the loan would come from the California Municipal Finance Agency, an organization lambasted by State Treasurer Bill Lockyer for its lack of oversight. Rocketship critic Brett Bymaster pointed to an op-ed Lockyer wrote earlier this year.

“They’re governmental entities operating with authority provided and limited by state law,” Lockyer wrote for the Sac Bee. “But in practice, they’re private businesses masquerading as governmental entities. Their business models provide fertile ground for conflicts of interests and virtually no oversight of how their public funds are spent.”

Rocketship has been lauded for improving standardized test scores among primarily low-income students, and it’s in the running for a Race to the Top grant. But it’s also met with fierce opposition from some residents and educators, who argue that the nonprofit chain siphons off state and federal money that would otherwise help improve public schools. Bymaster and a group of other San Jose residents launched an anti-Rocketship website to stifle the company’s expansion.

Bymaster says he’s worried about the loan being financed through a cagey joint-powers agency and that money going to Rocketship could get diverted to expand the company in other states.

More from the San Jose City Council agenda for December 10, 2013:

• The city needs to be more transparent in the way it calculates overhead versus direct costs, according to an audit up for review.

• Residents wouldn’t mind another ¼-cent sales tax or renewing a library parcel tax for another nine years, according to a recent city-sponsored poll.

• Instead of rebuilding a burnt-down historic home, the city may accept a $1.9 million insurance settlement and have it totally demolished. The Kelley House was built in the 1860s and was rebuilt after a fire destroyed it in 1909. More than a century later, in 2012, another blaze gutted the home. The city suspected arson, but couldn’t prove it. City staff said the home could be rebuilt, but propose accepting the insurance payout instead.

• That labor agreement between the city and the Police Officers Association that would give officers a 10-percent raise over the next few years comes up for approval.

Plans to crack down on medical marijuana collectives are up for review. But we already told you that.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408-535-7611

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

9 Comments

  1. I believe the requirement for approval is from Section 147(f)(2)(A)(i)

    My reading is that the City of San Jose could approve the arrangement, but so could the County of Santa Clara and the Santa Clara County Office of Education.

    I think it should be up to the County Office of Education to approve the loan.  I’m not going to vote for any councilperson (for mayor or otherwise) that votes to approve this.  Liccardo will of course have to recuse himself too.

    Why is the City of San Jose wasting valuable staff time on this stuff?

  2. Just to follow up on my earlier post.

    All three of the schools were chartered by the Santa Clara County Office of Education.  These are the same folks that want to exempt their charter schools from the the City of San Jose’s zoning regulations:

    http://www.sanjoseinside.com/news/entries/10_14_13_rocketship_charter_school_tamien_santa_clara_county/

    Since the County Office of Education has chartered all of these schools, it clearly has “jurisdiction” over all of these facilities, and is therefore capable of signing for the loan.

    Why should the City of San Jose bend over backwards to help an agency that bullies it?  Let the County Office of Education sign for the loan.

    • Sorry to keep doing this, but here is the text of 147(f)(2)(A) that relates to jurisdiction.

      (ii) each governmental unit having jurisdiction over the area in which any facility, with respect to which financing is to be provided from the net proceeds of such issue, is located (except that if more than 1 governmental unit within a State has jurisdiction over the entire area within such State in which such facility is located, only 1 such unit need approve such issue).

      http://www.law.cornell.edu/uscode/text/26/147

      The Rocketship issuance does not require the City of San Jose’s approval, because the County and the County Office of Education also have jurisdiction over the 3 school sites.  The approval really should come from the County Office of Education, because it chartered the schools.

      • The city shouldn’t be in the business of financing schools that the County Board of Ed authorized so I agree that they have the jurisdiction and responsibility to work with Rocketship.  If they can infact take money out of the state to build schools in other states that should be an immediate NO to the bond guarantee.  Rocketship should stand or fail on its own and figure out a business plan that allows for the growth that is sustained by families and the money they get for students otherwise they’re no different than the dependent and dysfunctional traditional districts. 

        The city of SJ isn’t in the business of schools even though they have an interest in their success overall.  Stay focused San Jose and take care the employee and pension issues first before taking on “work” that isn’t your own!

  3. New market tax credits are the driving financial force behind Launchpad development, and the Liccardo-kohl Garcia family fortune.
    This concept of tax credits for property development in the name of education is old hat all across the east coast and midwest.
    NMTC is another tool for the rich developers to buy land at a discount, extract every penny of tax credit, and ride the real estate appreciation wave for a few years until they bulldoze the school down and build another high rise development in its place.
    There is no altruism in this game. Just greedy slumlords.

  4. Let me guess, the “Honorable” Councilmember Sam Liccardo (husband to Rocketship Lobbyist J. Kohl-Garcia Liccardo)  will recuse himself from the vote but does he also recuse himself from any discussion on the matter in the calendared discussion/debate before the vote or the “cloak room” lobbying / vote-counting that goes on amongst councilmembers outside of calendared meetings?

    (posted on the MW fb page…you know why)

  5. PO, you looked like the clown you are in your metal can float in the LOS GATOS CHILDREN’S CHRISTMAS PARADE.  Could you hide any lower in your seat?  What no parade in San Jose due to your budget cuts you had to go to another city!