Sweetheart of Sweethearts: The Wilkinson Deal

At 6 pm on March 30, 2021, DGS (DC’s department of general services, which operates all DC’s publicly owned buildings) and the deputy mayor for education (DME) held a combined surplus/disposition meeting for the closed DCPS school, Wilkinson, at 2330 Pomeroy Road SE.

What followed was the only public outreach–exactly 1 hour–by public agencies in service of soliciting feedback on a privately executed sweetheart deal to transfer a $22 million, >130,000 square foot DC public school building into private hands.

The meeting was a result of FY21 budget support act legislation that the mayor and council presented in the first half of 2020, which not only put Wilkinson up for right of first offer, but also designated that it would be offered after only one public meeting to only one or two entities: DC Prep and/or the Charter School Incubator Initiative (CSII).

The idea appeared to be to sweeten the relinquishing by those entities of their leased spaces at the closed Birney school, which was needed to accommodate DCPS’s Excel school. The 2020 legislation bypassed DC code section 10-801, along with sections 38-2803(e) and 38-1802.09, which govern surplus designations (and right of first offer to charters) of closed DCPS schools (i.e., not to just one charter and/or to one private group privately selected by the mayor and who knows who else). Those laws also call for multiple steps of public engagement to determine public desires for, and uses of, closed DCPS buildings.

Until now, the video and chat of that March 30 meeting were unavailable to the public anywhere.

Here are the video and the chat, obtained by FOIA from DGS, after no one at DGS or DME responded to my emails asking for them.

(I also requested the video and chat of this March 30 meeting from the DME via FOIA, but got no response. The DME’s website link for this March 30 meeting shows just the DME and DC Prep presentations, with the latter outlining DC Prep’s desire to locate its Anacostia middle school, currently at Birney, at Wilkinson.)

On June 7, the mayor sent the council emergency legislation to make official the offer of Wilkinson to DC Prep—expedited to ensure that DC Prep can begin construction there in October 2021 for a start date of fall 2022. The council will likely vote on the legislation later this month or early next month—even though DC Prep has not yet been approved by the charter board to be there (at the time of this blog post, there is no publicly available application of DC Prep with the charter board to be at that location). And despite promises by the DME’s office that the March 30th meeting would be included as part of the public record and sent to the DC Council, the legislative package available publicly shows nothing of that public meeting nor the feedback gathered therein.

Feeling the love yet?

Read on for how one publicly owned school building has been wagered for private benefit without any public knowledge around the deal that made it happen or any say in it–charmingly, with a real live sweetheart in the mix.

Convenient fictions & unanswered questions

Naturally, given the lack of public input about Wilkinson’s fate, a number of basic questions were asked at that March 30 meeting, with most remaining unanswered, such as

–Why is this surplus happening when the DME has shown middle school seats are not needed?
–What other agencies gave feedback on possible uses for Wilkinson after the mayor announced its RFO in May 2020 and what other uses besides a charter school have you heard the community wants for it?
–What are the estimated renovation costs for Wilkinson, since abatement of hazardous materials (like asbestos) is an issue?
–What will DC Prep do with its property at 1619 Frankford SE (which it bought in December 2019 to locate its Anacostia middle school at), if it locates that middle school instead at Wilkinson?
–What money will DCPS or DC get from leasing Birney to DC Prep for the rest of its lease there through SY21-22?
–Are there any recent traffic studies with other development in that area?
–How can you have a surplus analysis if you never asked DC government agencies because the council said not to?

Sadly, providing answers to the public never was part of this process.

The mayor’s May 2020 legislation to dispose of Wilkinson gave right of first offer to “a charter school facility incubator that leased, or a public charter school that occupied, all or a portion of the former Birney Elementary School building as of October 1, 2020.”

That naturally narrowed the field down to only 2 entities for purchasing or leasing Wilkinson: the privately run CSII—also known as Building Hope or Building Pathways—and DC Prep, which has been leasing space at Birney under a short-term lease with CSII through June 2022.

The animating notion for all of this appeared to be keeping DCPS’s Excel school at Birney and using the entirety of that building for Excel. Recall that Excel had been a charter school renting its space at Birney, a former DCPS school put up for offer to charters after being declared surplus. Excel’s charter was revoked by the charter board in January 2018; a short time later, DCPS took over operation of the school in time for the 2018-19 school year.

But since 2011, the building that was the closed DCPS Birney school has been leased by CSII to house charter schools. After Excel became a DCPS school, DCPS paid CSII for the space at Birney that Excel as a charter school once occupied.

(Yes: DC has been paying a private group to lease back its own space.)

The 2020 legislation’s language of “a charter school facility incubator” implies that there is more than one charter school facility incubator in DC. In reality, CSII was specifically created with DC government help to BE that entity.

This legislative language thus obscures that relationship while casting the pleasant fiction that CSII is just another charter entity. Instead, as a very wealthy organization of well-connected DC operators profiting from DC’s taxpayer-funded charter schools, CSII is nothing short of one of the DC charter world’s most powerful operators.

Yet, once the DC Council had that legislation, the odd fictionalizing didn’t slow down. For instance, rationalizing the ungainly alliance of DC Prep, Birney, CSII, and Wilkinson, a June 25, 2020 draft report from the council committee of the whole said this (boldface mine):

DC Prep and CSII executed their short-term sublease [in March 2019] with the intent that upon Excel DCPS’ relocation [once presumed to be in 2021], CSII would sublease the entire building to DC Prep or co-locate DC Prep and another charter school in the building beginning on July 16, 2021. Because of this understanding, the Executive included this subtitle [i.e., the RFO of Wilkinson to DC Prep and/or CSII]. Given that DC Prep and the CSII entered into an agreement with the understanding that DC Prep would be able to occupy Birney after Excel DCPS relocated, the Committee believes that it is only fair that the Executive offer CSII or DC Prep with the right of first offer on another District property. Moreover, the District actually gets the better bargain in this trade, as CSII has spent millions renovating Birney, while Wilkinson needs substantial renovations, including extensive mold and asbestos remediation. Through this disposition, either CSII or DC Prep will renovate Wilkinson instead of the District having to do so.”

There are several big rubs with the bolded stuff above:

The actual lease of DC Prep at Birney with CSII does NOT support the contention that it was “executed with the intent that upon Excel’s relocation CSII would sublease the entire building to DC Prep.”

Rather, on p. 14 of that lease, a clause (#26) allows DC Prep to have a right of first offer to extend its CSII lease at Birney beyond the timeframe that the lease provides, which is for 7/1/20 through 6/30/22.

There was nothing that I could see in that lease about DC Prep’s desire or need to extend its Birney tenure beyond that 2-year timeframe–nor about DC Prep’s desire to lease the entirety of Birney at any moment.

The lease also does not appear to mention how DC Prep’s tenure in Birney would be affected in any manner by Excel’s tenure there.

Further, what is available of the DC Prep board minutes (see here for the November 2020 meeting and here for the January 2021 meeting) does not indicate at all that the intent of DC Prep was to stay indefinitely at Birney.

In fact, DC Prep purchased its property at 1619 Frankford SE in December 2019 with the express intent of building its Anacostia middle school there.

That suggests that from at least 2019 on, DC Prep had no intention of remaining at Birney beyond the term of its 2-year lease there with CSII–which it had signed (significantly earlier) in March 2019.

As it is, the stuff above in boldface also appears to be unsupported by anything in the legislation to approve the DC takeover and buyout of the CSII lease at Birney. Moreover, whatever renovations will be undertaken at Wilkinson by DC Prep would be paid directly with per pupil facilities funds from DC taxpayers (or with those funds flowing from any charter renting that space from CSII), not “instead of the District having to do so,” as the council report stated.

So it was that the council committee of the whole—and specifically its chair, council chair Phil Mendelson–shepherded a report referencing publicly unknown (and publicly unavailable) information as justification for the mayor putting a $22 million public asset into private hands without significant public comment or involvement—and all without evidence of public benefit, while denying the actual use of public money in the deal.

Taken with the public’s unanswered questions from March 30, it would seem the public was absolutely the last thing on the minds of elected officials in this transaction.

Public money, private fortunes

Last spring, there were two interesting numbers floated for Excel’s space at Birney in regard to capital spending. Per this FY21 budget document, $1.9 million was for improvements, while $1.5 million was for a lease payment for Excel through paygo.

At the June 11, 2020 council hearing, former education chair David Grosso tried, and failed, to get an answer for what the $1.9 million was specifically being used for, at one point asking explicitly whether it was a buyout of CSII’s lease. The closest he got to an answer was with DCPS’s Patrick Davis, who gave a vague nod to improvements for Excel staying at Birney (see it here, starting at the 4 hour, 31 minute mark).

But that $1.5 million remained unexplained: was it payment to buy out CSII’s lease with Excel or simply payment of CSII’s lease with DC Prep for that time period?

Before we get to an answer here, let us first ponder the sheer magnitude of money that CSII has gained through Birney.

In 2011, CSII signed a lease with DC for $733,000 a year to rent Birney. The sublet of DCPS’s Excel at Birney has brought in more than $900,000 each year, starting in November 2018 through June 2020.

On top of that, CSII has also realized profits with a sublet to Lee (almost $300,000 for SY19-20, ending in June 2020) and to DC Prep ($350,000 for SY20-21).

Fascinatingly, unlike other leases of DC-owned property that house charter schools, the lease with CSII at Birney doesn’t require a certain percentage of sublease money to be given to DC.

Which means that all that money above what CSII is paying DC to rent Birney—by my calculation, about $500,000 per year for the last two school years—is gross profits.

So, if we accept that the $1.5 million in the FY21 budget was for renting Birney from CSII for Excel, we now come to the interesting intersection of Birney, DC Prep, Excel, CSII, and Wilkinson: namely, the buying out of the Birney lease with CSII so DCPS could assume complete ownership and operation of Birney again.

That legislation, approved in February 2021, specified $7.5 million for CSII’s Birney lease buyout. The legislation made clear that $7.5 million figure was determined via a number of factors, “including the Tenant’s [CSII’s] current debt payoff amount which funds were used primarily for capital improvements of the Property and a net present value calculation of the Tenant’s remaining lease income.”

In early March, I asked council chair Phil Mendelson how much CSII put into renovating Birney—and he noted that in 2015, CSII paid almost $11.5 million to renovate Birney for Excel.

I just wish I knew how he got that figure.

The legislation itself shows that CSII owes more than $6 million in loans for the construction. Thus, the buyout amount suggests CSII is making money on this deal (because 7.5 + 6 > 11.5)—unless the difference here (about $2 million) is the buying out of the remainder of Excel’s lease at Birney with CSII with a profit (if the FY21 accounting of $1.5 million for the lease buyout is being used).

But who knows? It’s not clear how anyone in the public can know how much CSII actually spent in renovations at Birney or what the value-add for the public is in this buyout. The fiscal sufficiency review on the buyout legislation suggests it’s all cool—without going into any of this.

In addition, the public doesn’t know the fiscal particulars regarding DC Prep remaining at Birney for SY21-22.

For instance, the February 2021 legislation buying out CSII’s lease at Birney provided that the lease terms for DC Prep would remain in place until its termination at Birney in June 2022.

But it is not clear whether this means that DC will receive the same amount of rent from DC Prep for SY21-22 ($536K) that CSII would have received for that second year of DC Prep at Birney–and whether that money will be going directly to DCPS, DGS, or some other entity in DC government.

Complicating matters considerably is the fact that no lease between DGS/DCPS/DC and DC Prep at Birney is publicly available.

As it is, every single DC official I have asked about the terms of DC Prep at Birney for SY21-22 has never given me an answer, including council chair Phil Mendelson, the DME’s staff, and DGS.

Those are not the actions of public actors prioritizing the public.

Sweethearts everywhere—except the public

At the April 24, 2017 charter board meeting, the board declined by a 4-3 vote to approve several things for DC Prep:

–a new elementary to start in SY2018-19;
–a new middle school in Anacostia to start in SY2020-21; and
–an enrollment ceiling increase that would account for those new seats. 

You can see the transcript of that meeting here. One of the biggest sticking points was the school’s high suspension rates.

Turns out, DC Prep soon thereafter had its own (charter board) sweetheart:

At its June 19, 2017 board meeting, the charter board amended its agenda during the meeting (per the request of board member Don Soifer) to include a vote on DC Prep’s elementary and middle school expansions.

At that June re-vote, the board passed both, 5-2. (See the transcript here.)

BEGA (DC’s office of ethics and government accountability) later determined that this alteration of the agenda at the June charter board meeting with a vote violated the open meetings act by not giving notice to the public.

But the charter board refused to revisit its June 19, 2017 vote.

So it was that all it took to get DC Prep’s Anacostia middle school approved in 2017 was 1 changed vote—and a willing board to allow it to happen quickly, out of the public’s notice.

Given all that, it should not come as a surprise that when the charter board voted at its November 18, 2019 meeting to approve DC Prep’s Anacostia middle school location at Birney, the board memo noted that the campus had already been approved at the board’s April 2017 board meeting (boldface mine):

“DC Prep PCS already operates five other campuses and was approved in April 2017 to open two additional campuses, pending inclusion of the campus locations in the school’s charter agreement.”

Regardless, at that November 2019 charter board meeting, noting community discord regarding DC Prep’s desire to locate its middle school eventually at the property at 1619 Frankford SE that DC Prep finalized its purchase of in December 2019, DC Prep CEO Laura Maestas said that “if we can secure an alternative site for our permanent location [of the Anacostia middle school], we will resell the Frankford Street site.”

Only a few months later, in May 2020, the plan to award Wilkinson to DC Prep and/or CSII came to public light. 

Unfortunately, whatever conversations between the mayor’s office, DC Prep, and CSII occurred before and after that May 2020 announcement happened behind closed doors—with the public able to get only occasional glimpses.

For instance, according to minutes from DC Prep’s January 2021 board meeting, board members acknowledged discussions around Wilkinson since August 2020. Indeed, at the March 30, 2021 disposition and surplus meeting, DC Prep’s representative noted that the school’s plan until summer 2020 had been for its Anacostia middle school to locate at the 1619 Frankford SE property. That changed, he noted, when the 2020 legislation was passed with the sweetheart deal for Wilkinson. At the March 30 meeting, DC Prep’s representative held out the possibility that both its Anacostia elementary and middle schools could be located at Wilkinson, while noting that the future of the Frankford property was up in the air.

Minutes from the November 2020 DC Prep board meeting indicate that the school had by that time undertaken lease negotiations for Wilkinson. But in a March 4, 2021 email to me regarding the terms of the offer of Wilkinson, council chair Phil Mendelson said DGS told his staff that it was not negotiating regarding Wilkinson and DC Prep, but had been discussing the process by which the school would be offered per DC code 10-801.

Interestingly, at its January 26, 2021 meeting, the DC Prep board discussed the school’s desire to locate at Wilkinson in fall 2022–and the possible hurdles that DC code 10-801 could present (in terms of public notification and meetings) for hitting that deadline.

So: what constitutes negotiation? And why worry about DC code 10-801, given that both the mayor and council chair had ensured by summer 2020 that the legislation offering Wilkinson would bypass DC code 10-801 and limit public feedback?

As it is, the June 7, 2021 legislation to gift DC Prep with Wilkinson was presented on an emergency basis, supposedly to ensure that construction by DC Prep at Wilkinson can start by October 2021. That was the deadline that DC Prep’s board worried at its May 18, 2021 board meeting it needed to meet in order for the school to begin at Wilkinson in fall 2022. It seems DC Prep’s needs were heard loud and clear at the mayor’s office.

Voting on that emergency legislation may be as early as the end of June. While a hearing and vote will occur on the permanent legislation at some (unspecified) time later, one question stands out:

Who would vote against the permanent legislation once construction (authorized by the emergency legislation) was underway?

Likewise, another question stands out:

Who on the charter board would vote against DC Prep locating at Wilkinson once it undertakes renovations there?

So goes a done sweetheart deal for a public asset by public actors:

Out in the open, but without the public’s knowledge of the private conversations and actions that made it possible at every step of the way and prioritized the benefit of private actors–all without regard for public benefit or even what the public actually thinks. (Really: you couldn’t even post the March 30, 2021 meeting video and chat?!?)

And that’s not even getting to a real sweetheart in the mix!

In 2017, at about the same time that DC Prep was expanding into Anacostia, KIPP DC floated a possibility of locating one of its schools at Wilkinson. At that point, Wilkinson had never been put up for charter offers, so the reference was weird and seemingly a mistake.

But starting with the 2018 master facilities plan, Wilkinson was strangely absent from school planning documents circulated by the DME.

So a real question exists whether CSII and/or DC Prep signed their Birney lease in March 2019, well before DC Prep would ever locate there, with advance knowledge that there would be a potentially lucrative trade-off on the horizon with Wilkinson.

This is not merely an idle question:

On March 1, 2019, Lee Montessori signed a lease with CSII for space at Birney for SY19-20, ending on June 30, 2020. 

A few weeks later, on March 27, 2019, DC Prep signed a lease with CSII for space at Birney for SY20-21 and SY21-22, to start on July 1, 2020.

Ana Harvey signed both leases, as the representative for CSII.

At that time, she had a reported (romantic) association with council chair Phil Mendelson. (See here and here.)

In September 2019, Harvey left CSII. The November 2019 public financial disclosure filing for council members (covering January through June 2019) has the following question: “Was your spouse, registered domestic partner, or dependent children employed by a private entity or did they engage in any business endeavors during the previous calendar year for which they received compensation of $200 or more?”

On his form, council chair Mendelson checked “no” in answer to that question. It is not clear whether that is because Harvey is not his spouse or “registered domestic partner” or whether there was no “business endeavor”–or both.

[Confidential to DC’s board of ethics and government accountability: Maybe it’s time to revise this form a tad, since close friendships, roommates, and/or long-term dating partners can constitute conflicts of interest, too.]

Regardless, the timeline of events surrounding Wilkinson (with the building from 2017 potentially considered by a charter school without having been officially put up for public offer as well as entirely left off official lists of DCPS facilities) suggests that more than a few people in DC education circles had plans for Wilkinson that did not involve the public–with both Harvey and Mendelson involved at various points along with mayoral personnel.

To be sure, the public cannot know why DC Prep signed its lease at Birney more than a year before it took possession of space there for its Anacostia middle school, even as DC Prep purchased another location for that same middle school (the property at 1619 Frankford SE).

But the timing of these events, and the way in which they have come to light (with literally just 1 hour of public input and without answers to basic questions posed therein), have distinctly and unerringly benefitted private actors at public expense through behind-the-scenes leveraging of a public building by public actors.

Seems the public never had a chance to win the hearts of those public actors.

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