Before you sign a letter of intent (LOI) for a school facility, there are critical items to verify. An LOI signals serious interest and often triggers due diligence costs, so you want to confirm the fundamentals first. Work through each category before putting pen to paper.
Zoning & Use
If zoning doesn't allow school use, nothing else matters. Confirm this first.
Zoning allows educational/school use (or CUP path identified)
No deed restrictions or covenants limiting school use
Setback and parking requirements can be met
Outdoor play space available or park within walking distance
Building Code & Occupancy
Determines what code upgrades the building needs before you can open.
Current Certificate of Occupancy (C of O) classification determined
Required occupancy classification identified (E, A-3, or B; the building official decides based on use)
Maximum occupancy supports your enrollment target
Change-of-use requirements assessed (sprinklers, fire alarm, ADA)
Square Footage & Layout
Confirms the space actually fits your program. Use the Space Calculator to determine your required sf.
Total square footage matches your Space Calculator estimate
Classroom count and sizes work for your class structure
Restroom count meets fixture requirements (1 per 25 students per gender)
Layout changes and architectural plan needs identified
Tenant Improvements (TI)
TI cost can make or break a deal, especially for leases. Know the scope before you commit.
Determined whether TI is needed for your intended use
Preliminary TI cost estimate obtained
Clarified who pays for TI (landlord allowance vs. tenant)
TI timeline aligns with planned opening date
Location & Enrollment Viability
A great building in the wrong location won't fill seats. Run a Community Analysis for this address.
Community Analysis completed for this address
Sufficient school-age children in the catchment area
Competitive landscape assessed (nearby schools, available capacity)
Accessibility evaluated for families (transit, parking, drop-off flow)
Financial Readiness
Know your total costs before committing. Due diligence alone can cost thousands.
Lease or loan terms reviewed with the AI Prompt Guides
Lease terms within per-student budget threshold
Due diligence costs understood (architect, engineer, attorney, environmental)
Funding sources identified for move-in costs (deposit, first/last, TI)
Financial readiness before the LOI
Beyond the property itself, confirm your organization is financially ready for this commitment:
Board-approved financial model: Does your five-year model show this facility cost works at projected enrollment levels?
DSCR analysis: Will your debt service coverage ratio stay above 1.1 during growth years and reach 1.15+ at full enrollment?
Predevelopment funding: Have you secured funding or commitments for the costs that come between the LOI and lease signing (environmental assessments, architectural drawings, legal review)?
Lender conversations: Have you assembled your primary folder (charter standing, organizational capacity, academic performance, demand data, financial health) and had preliminary conversations with potential lenders?
Frequently asked questions
What is a letter of intent (LOI) for a school facility?
A letter of intent is a non-binding document that signals your serious interest in leasing or purchasing a property. It typically outlines proposed lease terms, rent, tenant improvement allowances, and timeline. Signing an LOI often triggers due diligence costs, so verify all fundamentals before committing.
What should a school verify before signing an LOI?
Verify six key areas: zoning and permitted use, building code compliance and E-Occupancy feasibility, adequate square footage for current and projected enrollment, tenant improvement scope and allowance, location and enrollment viability, and your organization's financial readiness including DSCR analysis and board-approved projections.
Sources and review
Last reviewed October 24, 2026 by SchoolStack.
Building Hope facility planning benchmarks Per-student square footage, facilities margin, DSCR and MADS targets, and the readiness factors lenders review, from Building Hope's charter facility portfolio.