Weekly Preliminary OS Climate Risk Review (11/11/21)

By November 18, 2021 No Comments

This week we’re looking at Ivy Academia Entrepreneurial Charter School in Los Angeles County, a charter school that aims to provide “world class standards-based education.” While the education might be world class, the School certainly isn’t receiving a passing grade in its climate risk disclosure elective. On top of that, we’ll look at economic stressors that call into question the stability of the community the School serves. 

This week’s climate risk non-disclosure schooling:

Ivy Academia Entrepreneurial Charter School, California School Finance Authority Charter School Revenue Bonds ($26,305,000)

Background: Bonds and Ivy Academia

The proceeds of the Series will be used to refund Series 2018 bonds and fund capital expenditures related to Ivy’s facilities. The Bonds are secured by the School’s gross revenues. Ivy Academia Entrepreneurial Charter School is located in the Los Angeles Unified School District and educates approximately 800 students in Grades K-12. The School is located in the San Fernando Valley region of Los Angeles not far from the foothills of the Santa Monica Mountains. 

A 20-minute drive time radius from Ivy Academia has a total risQ Score of 2.3 and a Wildfire risQ Score of 3.3.

Wildfire Risk

The Santa Monica Mountain region is an area active with wildfires. In 2018, two fires burned through the region: the Woolsey Fire burned 100K acres—88% of the area’s federal parkland and 616 structures within the park—and the Getty Fire that same year set fire to homes and forced 1,000s to evacuate. Both perimeters of these fires came within 10 miles of Ivy Academia. Geez. With fire threats coming so close in recent years, we’d expect Ivy Academia to at least provide a mention of past events…

Academia Entrepreneurial Charter School—distinguished by the red star—was 3 miles from the 2018 Woolsey Fire perimeter distinguished here as the large yellow shape on the left, 6 miles from the 2021 Palisades Fire (yellow shape in the lower middle), and 10 miles from Getty Fire (yellow shape lower right).

The POS doesn’t live up to the School’s aspiration of achieving world class scholasticism when it comes to educating investors on its near and present climate risk. In fact, the only mention of wildfire risk comes on page 50: “The Facilities will be located in a seismically active region of California and an area that may be endangered by wildfires from time to time… The exposure to fire could result in damage to the Facilities and adversely affect the ability of the Lessee to operate the Facilities or make the payments under the Lease in respect of the Bonds.”  The use of ambiguous language only does prospective investors a disservice, and doesn’t capture the gravity of wildfire risk faced by the student, parent and teacher populations within the area surrounding Ivy Academia.

The area within a 20-minute drive time radius of the school, a proxy for the School’s service area, has a Wildfire risQ Score of 3.3. A 100-year fire is expected to drive ~6% property loss in this area. Ivy Academia also has facility-level risk given its proximity to the wildland-urban interface. The 6-minute radius from the school, providing a proxy for exposure at the facility-level, has a Wildfire risQ Score of 3.1.

Health Risks and Economic Issues Combine

It’s not just the flames that threaten the livelihood of the surrounding population, it’s the dangerous plumes of smoke and ash that bellow from the fires which lead to hazardous air quality and public health concerns. In May 2021 the South Coast Air Quality Management District issued a Smoke Advisory for the region that included Ivy Academia’s campus. It advised residents to remain indoors and avoid physical activities (in other words: recess was cancelled indefinitely!). This advisory was in response to the Palisades Fire burning in Topanga State Park less than 6 miles from Ivy, and this isn’t an isolated incident — wildfires in the region regularly lead to public health advisories that limit outdoor time. 

In addition to property risk and public health concerns stemming from wildfire events, the population surrounding Ivy Academia faces economic stressors which bring into question the stability of the School’s community. Within a 20-minute drive time radius, the Percent of Income Spent on Housing Score sits high at 95, indicating housing affordability concerns within the area. At the same time, Ivy’s teachers’ salaries in 2019 ($73,794) lagged behind the state average ($82,531), as well as the Los Angeles Unified School District (LA USD) average ($78,962) (pg. A-14). Add to the fact that within the 20-minute radius of the School (a proxy for where teachers reside), 44% of residents are considered to be ‘stressed renters’ that spend more than 40% of their income on housing costs. As of 2021, Ivy had an average teacher’s salary of $63,920 compared to the LA UDS average of $78,918 — a whopping 19% less than the District average. The combination of low incomes and high housing costs contributes to the phenomenon where  new housing is developed on the outskirts of towns where development is more affordable and wildfire risk is high. risQ’s analysis found that constricted housing supply has driven human settlement in wildfire-prone areas significantly over the past several decades. 

Other disruptions: Drought

Clear and present concerns around wildfire risk, public health issues and housing affordability. Oh my. Exacerbating each one of those three critical risk factors is the fact that historic drought is currently threatening the area’s water supplies. This year, CA declared a statewide drought emergency and utilities such as Los Angeles Department of Water and Power have implemented mandatory water conservation measures. Under RCP 8.5—a greenhouse gas emissions scenario where emissions continue business-as-usual—Los Angeles County ranks in the 91st percentile for percent of months with severe drought and 96th percentile for percent of months with extreme drought under projected 2030 conditions. The uncertainty coming from drought risk could play out in a number of ways including higher rates on water usage (a measure considered by utilities to recuperate lost revenues resulting from water conservation measures), as well as limitations on residential water-use.  


In recent years, Ivy Academia Entrepreneurial Charter School has had wildfires disrupt the communities surrounding the School, yet fails to disclose climate risk to prospective investors. Despite Ivy Academia’s location in the high-cost-of-living San Fernando Valley, the School is underpaying its workforce compared to similar employers in the area. The community stressors resulting from wild risk, air quality issues, housing affordability, and drought concerns in the region lead to a community outlook that is anything but status quo.

Honorable Mentions

Alamo, TX (risQ Score 3.2, Hurricane risQ Score 2.7) $5,025,000

Alamo rests on the southern border of the United States in the Rio Grande Valley. As one of the gateways to Mexico, Alamo has a climate known for farming and citrus groves. In contrast, the area sits close to the Gulf of Mexico and can experience hurricanes and inland flooding. Unfortunately, the issuer fails to mention climate change or any mitigation plans in the 180+ page POS, so let’s fill in some blanks. 

Proceeds from the sale of the $5 million in bonds will be used for the City’s outstanding obligations and for the payment of the bonds’ issuance. The City—approximately 7 square miles—is ranked 90th percentile across all U.S. cities for property losses from combined physical hazards, with GDP impairment ranking in the 93rd percentile nationally. Heat Stress adds more climate stressors to the City of ~18,000. According to RCP 8.5 projections, Alamo is likely to see over 200 days above 90℉ in 2030, which puts it in the 98th percentile. Alamo’s socioeconomic status should also be spotlighted. 33% of Alamo’s population (Social Impact Score 87) lives below the poverty line (Poverty Concentration Score 94). Without financial stability, low education (87), and low prestige employment (89), health problems rise (Persistent Health Obstacles Score 96); ~40% of adults lack health insurance. 

Port of Houston, TX (risQ Score 3.3, Flood risQ Score 3.3) $315,950,000

Six ports (risQ Scores 3.33.4) make up the Port of Houston, located south of the City of Houston. The proceeds of the Bonds will be used to partially pay for the costs for the design, construction, property acquisition, and equipment of the Houston Ship Channel Expansion Channel Improvement Project, as well as pay the costs of issuance of the Bonds (pg. 2). The risk disclosure seems to be nothing more than boilerplate sentences about climate change (pg. 39) and potential weather-related catastrophes (pg. 42). Seriously, you can copy/paste it into Google and find several instances of the same wording. Considering that Houston has been centerstage for hurricanes and flooding, this isn’t good enough. 

The Bayport Terminal sees the highest risQ, with a risQ Score of 4.2 at a 6-minute radius. Flood risQ has a Score of 4.3 and hurricane storm surge ranks 94th percentile nationally. A Cat 5 event drives ~67% property losses. Bayport and Barbours Cut was recently closed due to system failures, so one would think that addressing climate within their improvement project would be a net benefit in case the next hurricane decides to wreck the Gulf Coast, literally sinking improvement efforts. Barbours Cut (risQ Score 3.9 at 6-minutes) doesn’t fare well against climate either; Hurricane risQ Score of 3.2 and storm surge ranks 83rd percentile nationally, a Cat 5 event drives ~55% property losses. With oil and gas production as a cornerstone of the Houston economy, the Port of Houston is a hub for Carbon Transition Risk. Keeping with Bayport Terminal, industry and electricity production rank 97th and 96th percentile, respectively for national scope 1 emissions. Feel free to check out the full collection of terminals via Port of Houston in our UI. 

Davie, FL (risQ Score 3.8, Hurricane risQ Score 3.2) $36,890,000

Davie is a stone’s throw from Florida’s eastern coast, making it a prime target for coastal hazards. The Town ranks in the 99th percentile nationally for property VaR from both hurricane flood and hurricane wind. With a relatively high Nonwhite/Minority Population Score of 70, the Town exemplifies the environmental justice consequences of flood risk. The POS notes that hurricanes, sea level rise, and rising water tables all pose concerns for the Town (pg. 36). However, the Town has shown a dogged commitment to climate adaptation. These bonds will fund the construction of a new Town Hall Structure as well as the Davie Wetlands Park (pg. 2). The Wetlands Park is a 115-acre site expected to be developed with 55 acres of stormwater retention, 30 acres of wetlands, and 30 acres of upland (pg. 3). The Park will provide additional drainage capacity and help mitigate flooding. This flood reduction strategy is in addition to various drainage improvements, water storage areas, and a Stormwater Master Plan (pg. 37). To combat hurricane winds, the Town has fortified their fire stations (pg. 37-38). 

Heat stress and drought are also in the cards. The risk of severe drought by 2050 ranks in the 99th percentile under RCP 8.5 conditions. Similarly, the number of days above 90˚ F by 2050 under RCP 8.5 conditions is in the 95th percentile. Equally high is the Town’s per capita emissions from electricity production. To that end, the Town has released a Sustainability Action Plan which inventories emissions and establishes sustainability goals at the municipal and community level. The town also participates in the Broward County Property Assessed Clean Energy Program (PACE) which helps residential and commercial property owners to finance energy efficiency, renewable energy and wind resistance improvements (pg. 36). On both the mitigation and adaptation front, Davie is on the ball.

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