School days: demand for classrooms is fueling charter school growth in South Florida, and presenting opportunities for Coconut Grove-based developer Alliance Cos

South Florida CEO, May, 2005 by Jaclyn Alcantara

Children are quite literally the future for commercial real estate brokerage firm Alliance Cos., which aims to make building schools 75 percent of its business within the next three to five years.

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The CEO of Coconut Grove-based Alliance, Robert Cambo, has teamed up with Fort Lauderdale-based charter school operator Charter Schools USA Inc. to develop charter schools--part of Alliance's plan to diversify its investments and lower its risk factor.

"We really decided after Sept. 11 [2001] that we wanted to shift and take, basically, a little bit less of a commercial risk," Cambo says. "We had really shifted the company to a more development oriented company."

While still brokering several million square feet of commercial space last year, the company also sold approximately half a million square feet of its own development, Doral Commerce Park. The company has around $80 million of development currently in the pre-construction stage.

In Session

Cambo's initial plan to diversify his company involved only commercial development--a seemingly natural progression for a commercial real estate broker. But it was at one such project, nearly a year ago, where Cambo met future business partner Jonathan K. Hage, president of Charter Schools USA (CSUSA).

Hage was looking at an Alliance building as a possible school site. As the two talked, shared experiences emerged: Both were former employees of Florida Gov. Jeb Bush at different times in their lives. Cambo began his career working for Bush's real estate company, Bush Realty, and Hage was director of research for Bush's Foundation for Florida's Future during the creation of the law allowing for charter schools, passed in 1996.

The two say they quickly developed a profound respect for each other. Hage describes Cambo as a "very dynamic CEO" and Alliance as small enough to focus on CSUSA's needs, but not too small to meet its demands.

"Robert [Cambo] is the strongest partner we've had in really understanding our market," Hage says.

For Cambo, professional goals to diversify Alliance's revenue stream, coupled with personal frustrations over a school system that could not meet the needs of his autistic son, gave him the incentives he needed to join forces with CSUSA.

The advantage, Cambo says, of a charter school over a public or private school is that it provides a private school-like setting with public money. Though his four children all attend private schools, Cambo says he knows that most families in South Florida cannot afford private school tuitions, which can reach up to $20,000 a year. Charter schools, by contrast, he says, provide one alternative for those who cannot afford such steep tuition costs, and they appear to be gaining popularity. Florida has 301 charter schools serving around 83,000 students, or approximately 3 percent of the state's students, and 52 new charter schools will be opening in Florida this year alone, according to a report put out by the Florida Consortium of Charter Schools.

Hage says CSUSA operates 26 schools on 19 different campuses throughout Florida, which provide education for about 14,000 students, but that 7,000 to 8,000 children are on waiting lists to get into these schools.

Alliance is currently in the pre-development stage on three charter schools, with another seven or eight sites under consideration for future charter school development. Alliance and CSUSA plan to open their first school together this August--North Lauderdale in Broward County, which is an existing structure that will be renovated by Alliance. The two other schools underway, Palmetto Bay in Miami-Dade County and Palm Bay in Brevard County, are scheduled to open in August 2006.

The arrangement between Cambo and Hage has Alliance developing and building the schools, then leasing the property to CSUSA, which receives a state charter for a set amount of money per child for each year. The charter specifies minimum standards and requirements a school must meet to receive funds and continue operation.

Cambo says that cases of charters being revoked are rare, and Hage adds that the press has perpetuated a myth that most charter schools are mired in debt. "The press tends to report on all charter schools as if they're monolithic," he says, "We're able to recover debt after the first couple of years. They run in the black." Often the charter schools deep in debt, he says, "are operated by 'mom and pops' that are rather small and under-capitalized."

CSUSA raises private funds on top of what the state allocates for charter schools, and because it is one of the larger and fastest growing charter school companies in the nation, their clout gives them credibility with donors.

"We've had a lot of support from banks who have really taken the time to understand the charter school model," Hage says.

Influence

Cambo, who came to Miami with his parents and two brothers on the freedom flights from Cuba in 1961, attended college in Washington at George Washington University and started working for Bush Realty, also known as InterAmerican Investments, in 1984. The company was founded and run by Jeb Bush and real estate developer Armando Codina. In 1994, Cambo left to launch his own commercial real estate brokerage firm, Cambo Realty, which he says started as a "one-man shop."