830 Bay Boulevard: too much building and/or financial risk for the Chula Vista Elementary School District?
The troubled United States University is looking to break its lease on 830 Bay Boulevard in Chula Vista.
In 2013, the Reader’s Don Bauder reported the school was fined for falsifying Pell grant loan applications and shortly after was placed on probation by the Western Association of Schools and Colleges.
Bayfront Charter High School has leased classroom space from USU since 2014. If the university breaks the lease, the high school faces difficult choices. The high school is an extension of Mueller Elementary charter school, which is authorized by the Chula Vista Elementary School District.
The executive director of the charter, Dr. Kevin Riley, shared options at the December Bayfront Leadership Council. He said the school could search for alternative locations, build the program on Bay Boulevard, wait for a fluke opportunity, or start to dismantle the high school.
At a subsequent meeting, Riley told staff and parents that Carlton Management proposed a 15-year lease on the same property, at a cost of just under $10 million. As the sole lessee of 830 Bay Boulevard, the charter school would bring significant risk to the district.
Minutes from the board meetings of both Mueller Elementary and Bayfront High indicate parents and staff have concerns about the proposed lease.
These concerns were corroborated when some Mueller parents alerted the Reader to the venture. The parents fear that if Bayfront High assumes the lease, it will deplete the finances for the elementary and middle school, and they suggest that a disproportionate amount of the elementary school’s resources has already flowed to the high school.
A November 6, 2015, letter from the Chula Vista Elementary School District to Riley was obtained by the Reader. The letter, written by the assistant superintendent for business services, expressed the district’s concerns about the proposed lease.
One concern is that charters must be renewed every five years by the authorizing agent. The district opines, “there remains the possibility that Mueller could become nonoperational…as a result of voluntary dissolution, insolvency, or revocation of its charter by the District.” The 15-year lease exceeds the charter’s 5-year renewal period.
In the letter, the district redacted the proposed base rent schedule for Bayfront High. The district tells Riley:
“While the rental amounts and operating expenses for this facility may be considered reasonable in the private sector, these figures appear excessive when considering that the use of the facility is to house a charter school whose budget is derived largely, if not entirely, from public funds.”
The admonition continues, “While Mueller may be able to appropriately budget for this expense in the short term, it is difficult to project whether this would be sustainable over a [redacted] period if Mueller experienced a loss in revenues [e.g., due to declining student enrollment] or other unanticipated shortfalls.”
Then the district gives Riley some real estate advice: “We also note that under the current version of the Lease, Mueller’s payment of approximately [redacted] in rent over the [redacted] period would not entitle it to any ownership interest in the facility.”
The letter concludes by saying because the transaction and financial commitment is significant, the lease agreement should be brought before Chula Vista Elementary School board.
Some have indicated that Chula Vista Elementary trustee Glendora Trempor may have a conflict if the lease goes before the board. Trempor has a family member who attends Bayfront Charter High and sits on the Bayfront High Community Council.
In a February 17 interview, Riley said there will be a closed session workshop on February 18 at 5:00 p.m., where he hopes to gain consensus from the Bayfront board. He said the lease was just made available and confirmed that it is in the ballpark of 15 years and slightly less than $10 million.
Regarding parents’ concerns, Riley said, “I don’t know where all the hysteria comes from, but it always happens when you open a new program. We are in a financially fortunate time in the funding cycle in the state because of the Local Control funding formula.”
Bayfront has also been approved for SB740 funds. Riley said the bill, which targets low-income students, provides reimbursement for charter schools that are not on district properties. He believes 75 percent of the school’s lease will be paid through SB740 for at least five years.
“I started as principal at Mueller in 2000, developed the middle school and now the high school. I’ve put in an awful lot of time and energy into growing the program. In our opening year [Bayfront High] dipped into Mueller’s budget for a couple hundred thousand, but that’s not excessive for a start-up. Mueller’s budget will be healthy for the life of the lease.”
Disclosure: The author’s daughter is on the bargaining team for the Chula Vista Educators. The charter school is not a member of the bargaining unit. Also, the author of this article graduated from Mueller Elementary.