Building while Leasing

We are halfway through our current Capital Campaign to finance the 1730 Addition, and several parents have asked two questions :

- why do we need to fundraise when we charge tuition?

- why are we building on land we do not own?

Some have used one, the other or both as a reason for not supporting the campaign.

The first question has been answered elsewhere - IST's Fees are as low as possible so that we can appeal to as wide a socio-economic base as possible. To do so, we charge only what we need to cover the School's operating expenses. Capital expenses must be met through gifts, donations and fund-raising.

The second question has two answers. Firstly, despite being a school, IST still has a commercial lease and as such, the landlords provide a "vanilla" shell. As tenant, we must fit out the site to meet our needs and purposes and we must do so at our expense.

This however is reflected in the rent we pay. We have a lower rent because we made the "improvements"; if the landlords had done so, they would have recovered their costs through a significantly higher rent. We were able to control the renovations and alterations, and we have a fairly long lease term. If we amortise the improvements over the length of the lease, they look a lot more reasonable.

The second answer is that we are in negotiations over the purchase of the four sites. When we do acquire them, the landlords have agreed to exclude the added value of the improvements in reaching sale/purchase agreements. In other words, although we do not own the land and buildings today, we will; any improvements today, will be in effect a back-dated improvement in the future.