It’s no secret that many U.S. public school districts are weighed down by aging and outdated school buildings that undermine their education mission. Yet, funding for capital projects can be hard to come by. The United States faces a projected shortfall of a staggering $85 billion in funding—annually—for maintenance, operation and capital improvements, according to the 2021 State of Our Schools Report: America’s PK-12 Public School Facilities. For public school districts, the quest for funding means not only pursuing the traditional approach of the bond request, but also looking for new solutions such as sale-leasebacks and public-private partnerships (P3s).

In the private sector, many corporations have used the sale-leaseback strategy to access equity in their owned properties. If your school district owns its administrative facilities, a sale-leaseback potentially could help unlock new funding for district-wide facilities needs.

In a sale-leaseback transaction, your district would sell its administrative facilities to private investors. Then, your organization would lease the facility you already occupy—paying rent instead of mortgage installments. With smart negotiation, the lease can be structured so that your district retains some control over the space it occupies.

A sale-leaseback can typically be executed in 60 to 120 days, providing a fast track to funds for facilities needs. Where a corporation would likely face tax liabilities for the facility sale proceeds, your school district would receive an exemption as a public sector organization.

Of course, not every administrative building will be a good candidate for a sale-leaseback—or you might not actually need the entire facility. If your organization is continuing provide remote work options as was customary during the COVID-19 pandemic, you may find you need less square footage and different types of workspaces. Other considerations include how much of the mortgage remains to be paid and whether your district offices could cost-effectively access higher-quality offices by leasing a different facility.