Muting DC (Public Education Edition)

In less than 10 minutes on February 24, the DC charter board unanimously approved the application of Eagle Academy to abandon its plans to locate at 2345 R St. SE–a property that Eagle bought but never occupied, with a school building that Eagle constructed using DC revenue bonds (approved specifically for that location and paid with DC’s per pupil facilities funds).

Instead of locating at 2345 R SE, Eagle will rent the property to Lee Montessori, which has been advertising itself at that location in the lottery—despite not yet being approved by the charter board to be there.

The charter board’s approval of Eagle’s plans marks possibly the first time a charter school has been approved to act as only a landlord at a location that it had once promised to occupy.

But the charter board’s approval also marks an extraordinary moment in which DC has made available millions in tax-exempt DC revenue bonds for a charter school to construct a school opposed by neighbors at a property that now has liens against it, has endured multiple construction permit violations, and is in tax arrears–while the public’s role has been reduced to that of muted spectators whose chief virtue is paying for the entire thing.

Overlooking Fiscal Issues

Almost a week before the February 24, 2020 charter board meeting, neighbors of 2345 R St. SE delivered a letter to both the mayor as well as to charter board chair Rick Cruz.

Detailing construction problems at 2345 R SE, among other things, the letter outlined how Eagle Academy has almost $1.5 million in outstanding contractor liens on its property at 2345 R St. SE, filed in January and February 2020.

What makes this fiscal revelation extraordinary is that the charter board’s January 27, 2020 report for the school’s application to locate at Half St. SW (instead of at 2345 R SE) mentioned on p. 4 that Eagle doesn’t have much fiscal strength beyond its operating budget: “Liquidity was extremely low with approximately 13 days of cash on hand. Further, the school maintains a line of credit, which currently has an outstanding balance greater than its current cash on hand, further evidencing the liquidity risk.”

Yet, neither that January charter board staff report nor the charter board report dated February 24, 2020 (in anticipation of the board vote that month) showed the actual terms of Eagle’s new lease for its SW facility–nor how much remains to be paid on the DC revenue bonds issued to Eagle in 2016 for constructing 2345 R SE or even what the terms of its payment are for those revenue bonds, including interest rates.

Nor did anyone at the charter board appear to be aware of the fact that Eagle has been–and currently is–behind on property taxes at 2345 R SE. (See here for a notice of delinquency issued in 2017 and see here for the current tax bill, with interest and penalty assessed because only a portion of 2019’s property tax at 2345 R SE was paid.)

Nor did anyone seem to tie any of that to the fact that the top four administrators at the school (which educates less than 900 students) took home almost $700,000 in pay in 2017, with the school’s CEO taking in $256,000 (slightly less than DCPS chancellor Lewis Ferebee in 2019, at $280,000).

Nor did the charter board appear to consider in its report whether Eagle’s revenue bonds agreement allows Eagle to rent out 2345 R SE while still retaining the revenue bonds. (It does–but that fact was missing from the reports and, if not true, would alter the school’s fiscal situation.)

In other words, the charter board’s full approval of Eagle renting 2345 R SE and assuming yet another location starting in fall 2020 represents some amount of blind fiscal faith.

But such blind faith is in direct opposition to publicly available numbers, which show a school short on cash that has now been approved to assume more than $1 million in new occupancy costs in 2020 (relative to the amount mentioned on the last page of its March 2019 proposal here) at the same time it owes contractors and the city money.

Overlooking Permit, Notification, Approval, & Revenue Bond Issues (Whew!)

Eagle had faced a number of permitting problems while building 2345 R St. SE, including multiple stop work orders for unauthorized construction (see here and here for news stories). Neighbors who had opposed the school being there have mobilized multiple times against the construction, which according to this video they produced apparently included damage to public and private property; poor notification; a disconnect between the stated size of the building and what was actually built; and lack of any traffic study or apparent consideration for enrollment at a recently constructed DCPS elementary, Boone, close by.

Yet none of that was apparently referenced by the charter board at its meetings or in its reports on Eagle, despite the fact that the permitting troubles, along with the liens and nonpayment of taxes, appear to violate Eagle’s revenue bonds agreement with DC.

The revenue bonds themselves are a fascinating part of this saga.

In August 2016, Eagle Academy bought the property at 2345 R St. SE. In September 2016, Eagle applied with the charter board to build a school at that location to replace its Ward 6 facility on New Jersey Ave., which it has been leasing.

Then, at the end of November 2016, council chair Phil Mendelson introduced legislation to authorize up to $20 million in DC revenue bonds for Eagle to build its school at 2345 R. The revenue bond legislation is here.

The speed with which all this happened was incredible–but what happened next was even more extraordinary:

On December 19, 2016, the charter board approved Eagle having a school at that location.

The next day–December 20, 2016–the council passed the Eagle revenue bonds legislation.

That order of events meant that DC revenue bonds were being considered by the council for a use before the charter board had even approved that use.

As if to highlight the seemingly predetermined outcome of both Eagle’s DC revenue bonds and its approval by the charter board to be at 2345 R SE, the language used in the legislation to describe Eagle and its property at 2345 (then called 2403 Naylor) is in the present tense. The presentation was, so to speak, as if Eagle had already landed there.

The revenue bonds agreement itself, drawn up on May 1, 2017 between DC and Eagle, reveals more fascinating detail.

Unlike other, larger DC revenue bond offerings, the DC revenue bonds issued to Eagle appear to never have been offered on any bond market. Rather, they were simply tax-exempt money loaned to Eagle directly by John Marshall Bank, which assumed the risk of the loan to Eagle.

Interestingly, the person who signed Eagle’s agreement for that bank was Thomas Nida. You will recall that as the chair of the DC charter board, Nida resigned that post in February 2010, after the Post reported in December 2008 that as a banker with mortgage interests in DC charter schools, Nida was conflicted in his role in determining which charter schools got approved.

(BTW, I was unable to find this story on the Post website by searching under Thomas Nida or the story’s author, David Fallis. I also was unable to find any Post story about Nida’s resignation–though it appears from a search of ProQuest that the Post never covered Nida’s resignation as charter board chair, which (if true) is pretty amazing. Oh, and none of this showed up in google searches I made, except inasmuch as charter lobbying group FOCUS cut and pasted part of the story on its website. Please let me know if you have different luck.)

Although that 2017 loan agreement between DC and Eagle states that DC has loaned the money to Eagle, the bank itself appears to be taking that risk. This practice is common for local nonprofits with DC revenue bonds; it allows them to access low-interest financing through the sale of the bonds without risk to DC, because DC’s only connection to those nonprofits is its good name on the bonds.

However, there is a caveat to that happy money with regard to DC charter school revenue bond financing, inasmuch as DC is directly paying all DC charter schools taxpayer money for their facilities, through per pupil facilities allocations.

That is, DC charters are not just some nonprofits that happen to be in DC. They are, literally, getting taxpayer funds from DC for their facilities that may also be benefitting from revenue bonds.

So to the extent that a default or other problem arises with DC charters’ DC revenue bonds, it is unclear to what extent DC is fiscally implicated or has authority to claim the property that taxpayer funds, literally, have paid for.

(And yes, Virginia, DC charters do default on DC revenue bonds! For instance, check this out, from December 2019, for Chavez, which is now looking to revivify its middle school at its Parkside facility. Recall that this school was shut down by the charter board in December 2017 for poor performance. The charter board helpfully left open the possibility of it reopening–per its March 2019 approval of Chavez’s restructuring. At this point, reopening the Parkside middle school may be a fiscal necessity for Chavez, as a way to pay off the defaulted bonds. BTW, I could not find the charter board information directly on its website. There doesn’t appear to be a transcript for the December 2017 charter board meeting, and it appears charter board staff reports intended for board meetings are not included in the charter board website search engine. But you can get a better picture of Chavez’s interesting finances starting on p. 89 of the March 2019 transcript here.)

In the case of Eagle’s revenue bonds, the liens and permitting issues appear to violate Eagle’s revenue bonds agreement with DC–and, for all anyone knows, may also violate the agreement that Eagle has with its bank for those revenue bonds.

For these reasons, the neighbors of 2345 R SE who the week before the February 24 charter board meeting wrote to the mayor and Rick Cruz with their concerns about Eagle’s development there explicitly asked for defeasement of the revenue bonds given to Eagle. They were asking the right people: the DC revenue bonds program is overseen by the deputy mayor for economic development, a mayoral appointee, and the possibility that one or more of Eagle’s revenue bonds agreements were being violated was of immediate material and fiscal interest to DC taxpayers and (presumably) also to the body securing the public trust therein, the charter board.

But the neighbors got no reply from the mayor–nor from anyone at the charter board.

And less than a week later, the charter board voted unanimously for Eagle.

Suppressing Public Information

Eagle had filed its application with the charter board to not locate at 2345 R SE on December 9, 2019. The application made clear that the school wanted to assume the lease of a new location, on Half Street SW, and either sell or lease the school at 2345 R SE. The application was to be discussed at the charter board’s January 2020 meeting, on January 27.

On or near January 24, 2020, per its usual practice before a board meeting, the charter board staff posted its own report, on its website, concerning Eagle’s application. The report mentioned on p. 3 that Eagle would be leasing its school building at 2345 R to Lee Montessori.

But some time later, without public notice and without changing the date of that report, the charter board deleted that report, substituting this one instead.

The difference? All mention of Lee was deleted from the latter report. (See here for a comparison of the two documents.)

On February 19, charter board spokesperson Tomeika Bowden responded to an email I sent to her and the entire charter board about this. Bowden noted that “from time to time we revise memos after they are made public. In the case of the memo you describe, we did so to allow the schools to inform their communities prior to reading about it in a DC PCSB memo. The change in the memo was immaterial to the matter before the board, which was Eagle Academy PCS.”

While that January 27, 2020 charter board report was indeed intended for the purpose of examining Eagle’s actions (not Lee’s), the fact that the report was edited after it was publicly posted, without saying explicitly what the edits were, why they were made, nor the fact that it WAS edited, amounts to public deception.

Not to mention that Lee had a signed lease at that point with Eagle for 2345 R SE; it had been advertising itself at that site on My School DC for weeks; and it apparently was also advertising that location to the neighborhood, inasmuch as some neighbors reported receiving flyers about Lee locating there.

Moreover, while that specific January 27, 2020 report was indeed about *Eagle*, the timing of Lee leasing Eagle’s building and being listed in the lottery were one and the same with Eagle’s application to not be at 2345 R SE.

Sadly, this wasn’t the charter board’s first rodeo obscuring public information about Eagle.

After Eagle applied on March 8, 2019 to have two buildings under one name (Fairlawn), with one building its (current but soon-to-be-closed) New Jersey Avenue SE facility and the other at 2345 R St. SE, the charter board issued a report dated April 22, 2019–the very day the charter board would meet to vote on that change.

But the charter board’s 4/22/19 report on Eagle for that meeting noted something extraordinary on its first page:

“Pending no public comment against the proposal, a vote will also occur on April 22, 2019. To date, the DC Public Charter School Board (DC PCSB) has not received any written public comments. The Board will discuss all public comments received prior to its vote, and will postpone the vote if public comment in opposition is received.”

And indeed, if one looks at the charter board website materials for that April 2019 meeting, there are no public comments included!

But a neighbor of 2345 R SE–Camille Joyner–in fact sent two emails on that day in public comment against Eagle to the email provided for that comment, public.comment@dcpcsb.org. The first email was sent at 12:41 am, and the second was sent at 7:27 am.

See them here and here.

Joyner received separate replies to both emails (at 10:18 am and 10:23 am) from public.comment@dcpcsb.org. Both replies said “Thank you for your public comment. Your comment has been received.”

Later on April 22, 2019, at the charter board meeting, another neighbor of 2345 R SE, Jackie Brown, testified against Eagle.

And later that evening, the charter board approved Eagle’s plans.

Such (literal) erasure of the public by the charter board with respect to Eagle has continued into 2020.

For instance, at the January 27, 2020 board meeting, SW resident Grace Hu testified with concerns about Eagle, noting that Eagle’s new SW facility has a target enrollment of 250. But because Eagle did not outline a plan for hitting that enrollment, the result is that Eagle may market itself to families who otherwise would go to DCPS’s Amidon-Bowen, which is nearby.

(The 250 target enrollment number is mentioned explicitly on page 2 of Eagle’s December 2019 application.)

But at the charter board meeting on February 24, to approve Eagle being at its new SW location, board member Saba Bireda alluded to Hu’s testimony. The Eagle representatives replied that 120 families had already signed up to be at that new SW location. The ensuring conversation between them then noted that it was all OK, because Eagle wasn’t asking for an enrollment ceiling increase, but just moving to another facility to serve students Eagle “already serves.”

(Apparently, 120 is the new 250!)

Possibly worse, none of the public testimony on Eagle at the January 27, 2020 meeting is available on the website for either January’s or February’s board meetings.

That is, the only public testimony included in the materials for the February meeting is a summary of January’s public testimony and a link to video of the entire meeting. The summary omits Hu’s outlining of Eagle’s lack of due diligence regarding demand and community engagement in SW–and summarized my own and other public witness testimony incorrectly.

What is all the more extraordinary about this is that I sent my own and the other testimony (not Hu’s) by email to a charter board staff member, Barbara Boyd, on January 27, 2020 at 5:33 pm–then re-sent both via email to Rick Cruz, the board chair, on 1/28/2020 at 10:36 am.

In other words, the charter board could have easily posted two of the three public comments from the January 27, 2020 meeting on its website for its February 24, 2020 meeting.

Instead, the charter board not only did not post those public testimonies, but also summarized them incorrectly.

Which set the stage for the misconstruing entirely of one public comment at the February 24 board meeting, such that what Eagle said in response never actually addressed any of the public concern.

And the charter board was cool with it.

Prioritizing Private Interests

In 2011, the DC city council gave Eagle a really good deal: a free lease for 25 years at DCPS’s closed McGogney school. While the initial legislation mentioned a 25-year lease with a 25-year renewal, the lease appears to have been for 75 years total, according to the last page of Eagle’s December 2019 charter board application.

The lease was predicated on the school renovating the building and providing community services in partnership with Howard University, including mental health services, dentistry, and recreation—for which it would get per pupil facilities allocations, not to mention a boost from its DC revenue bonds.

But a call to the school’s nurse this week made clear that the medical services promised to the community have not yet started. And according to the person answering the phone at the school this week, the school’s pool is similarly unavailable to the public.

Nonetheless, Eagle’s fortunes have taken truly remarkable turns.

For instance, the charter board requires a school to achieve Tier 1 status before any change in its locales can be approved; the tier system is the charter board’s rating system of its schools, and, like the STAR rating system used for both charters and DCPS, is largely dependent on test scores. (The tier system has three levels, while the STAR system has five.)

In 2016, Eagle was approved for a change in its locales while only one of its two schools was rated at Tier 1. The next year, both of Eagle’s schools had dramatically lower test scores, with one at Tier 2 and the other at Tier 3. In late 2019, however, when Eagle applied again for a locale change, both of its schools had a short time before realized dramatically higher test scores, such that both achieved Tier 1 status.

According to the data here, an historical analysis of PMF ratings for each charter school, no other charter schools for the last few years have moved two tiers in one year.

That certainly doesn’t mean it’s impossible: Eagle appears to have less-than-average re-enrollment rates, which suggests that student turnover may be a factor in its test scores. And closed schools that may have jumped several tiers in one year are not included in the charter board’s historical analysis of tiering.

Community members raised these issues–but were seemingly ignored.

More to the point is that Eagle’s purchase of the property at 2345 R St. SE for $1.6 million in August 2016, before it was ever approved to be there, has proven remarkably astute.

Not only was it a lot of land for the price (nearly an acre), but it has risen steadily in value with the rest of DC real estate in the interim.

Yet, while that happened and Eagle’s plans for the property moved forward, important concerns–whether fiscal, construction-related, tier-related, bond-related, outreach-related—were minimized, misconstrued, deleted, or simply ignored by DC leaders.

In plain sight.

Repeatedly.

This terrible deletion of the public–and the public interest–by a wide variety of public actors in DC sets the stage for other DC charter schools to do the same: successfully leverage public money for what is, in the end, solely a private real estate investment.

Don’t mute DC, indeed.

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