Financing of schools and educational infrastructure

The drawings of the new school are quite impressive: an open building made of wood, a modern dining hall, a huge sports hall with seven courts and green outdoor areas through which a restored stream snakes. The Martin-Behaim-Gymnasium in south-eastern Nurem­berg will have everything it needs to become a future-proof location for up to 1,500 pupils and 160 teachers once it is completed in 2026. The nearly zero-energy building will be equipped with such things as a photovoltaic system and geothermal energy units for electricity – and, depending on the season of the year, for heating and air conditioning. Construction planning is also based on sustainability: the companies are using recycled concrete made of materials from the old building.

Helaba and Sparkasse Nürnberg are financing the project. The loan-issuing process functions differently here than it does for larger infrastructure projects or companies. The approximately €175 million is being provided as part of a public–public partnership with WBG Kommunal GmbH, a municipal builder of flats in the city. This type of partnership pays off for everyone involved.

“We can provide low interest rates and a long term to the project because of the credit­worthiness of a public institution – the city of Nuremberg in this case,” Thomas Oster­mann said. Ostermann, Deputy Department Director for Project Financing at Helaba, structured the loan at Helaba. He noted that there was a very good chance that the loan would be repaid – a fact that makes good financing terms possible. The loan would not be written off even if, in an extreme case, the city could no longer make payments. “Munici­palities are covered by a wide range of instruments, including the municipal compen­sation scheme and the financial equalisation scheme among Germany’s states,” Ostermann said.

Such a project becomes even more involved if it is outside Germany. Helaba also finances schools in Austria, England and Ireland, for instance. The financing structure differs from the approach taken in Germany because public–private partnerships are frequently used in the area of education in particular. This involves close relationships between public-sector customers and private-sector contractors. These contractors not only build the schools, but also maintain ownership of them and operate them by doing such things as offering janitorial services or maintaining the buildings. They receive payments from the municipality for this work. “We work with our international offices in these models as well as with local solicitors to ensure that the project complies with local law,” Greif said.

School financing is a key aspect of Helaba’s sustainability-focused business activities. These activities have an environmental as well as a social dimension to them. “Schools are one of our special focal points because they play an important role in social matters,” said Petra Sandner, Chief Sustainability Officer of the Helaba Group. “We regularly review new transactions and financing projects to determine whether they contribute to one of the 17 Sustainable Development Goals of the UN.” One of these goals, Number 4, is quality education, something that functional and modern building help to provide. “Modernising the education infrastructure is something that desperately needs to be done, in all areas,” Sandner said. At the same time, the long-term improvement of educational quality is particularly important in urban areas because it can help to create a stable, future-proof society, she added.