"Wealthy investors and major banks have been making windfall profits by using a little-known federal tax break to finance new charter-school construction."
"The program, the New Markets Tax Credit, is so lucrative that a lender who uses it can almost double his money in seven years.
"In Albany, which boasts the state's highest percentage of charter school enrollments, a nonprofit called the Brighter Choice Foundation has employed the New Markets Tax Credit to arrange private financing for five of the city's nine charter schools.
"Under the New Markets program, a bank or private equity firm that lends money to a nonprofit to build a charter school can receive a 39% federal tax credit over seven years.
"The credit can even be piggybacked on other tax breaks for historic preservation or job creation.
"By combining the various credits with the interest from the loan itself, a lender can almost double his investment over the seven-year period.
"No wonder JPMorgan Chase announced this week it was creating a new $325 million pool to invest in charter schools and take advantage of the New Markets Tax Credit.
"But many of those same schools are now straining to pay escalating rents, which are going toward the debt service that Brighter Choice incurred during construction."