Why is the OUSD Board planning to give a sweetheart 40 year lease to a large charter chain essentially rent free, giving up more than $17 million in unrestricted general fund revenue that our students desperately need?

oh yes its free

Earlier this month, our Oakland Unified School District (“OUSD”) Board voted to cut nearly $20 million from next year’s unrestricted general fund budget, eliminating restorative justice programs, foster youth case managers, shuttering libraries and laying off more than 100 people.¹ The Board is also moving forward with plans to close up to 24 schools as part of the Blueprint “Portfolio Plan” pushed by GO Public Schools (“GO”)², while at the same time using the 7-11 committee to declare some properties as “surplus” in an effort to generate unrestricted general fund revenues. So why is OUSD forgoing more than $17 million in funds which could be used to provide critically needed services to students?

Aspire Public schools is a  national charter school chain which operates 7 schools here in Oakland. When Golden Gate Elementary was closed by OUSD in June, 2005 for “underenrollment,” the campus was immediately taken over by Aspire Berkley Maynard t, and they have had a series of multi-year leases for the campus ever since. In the most recent lease, which expires on June 30, 2022, ASPIRE is paying up to $456,000 per year to use the facility. In addition, ASPIRE is responsible for performing upgrades to the site, including boiler and thermostat repair, fire system upgrades, bathrooms, water and plumbing replacement, exterior resurfacing, roof and window repair or replacement and removal of the old kindergarten playground equipment. This work was to be paid for by Aspire, with $1.5 million chipped in by OUSD via “rent credits” that are spread out over the life of the lease Under this lease, if continued, Aspire would pay OUSD a net amount of $17,618,997 over the forty year term of the lease.

Now, OUSD is proposing to offer to the charter chain a 40 year lease³ for a total lease payments of approximately $2.3 million, more than $17 million less than the current lease rate over the term of the lease! $17 million in UNRESTRICTED GENERAL FUND REVENUE that could provide years of critical services to OUSD students. This is simply unconscionable and must be rejected by the board.

There is a real question as to whether Aspire should be given a long term lease at all. OUSD staff recently gave Aspire Berkley Maynard an equity score of 2 out of 5, noting that it serves fewer low income, special education and English learners than OUSD schools – which begs the question why OUSD is planning to reward Aspire for not serving all kids with this extraordinary lease term. At the very least, OUSD should include in the lease a set of expectations and penalties for failing to serve high need students.

Aspire plans to “modernize” the property to “offer pride to the students, parents, faculty and staff” of its school – and they want OUSD to pay for it!

On May 24, 2017, the OUSD Board agreed to allow Aspire to seek “Prop 51” funds⁴ to modernize the Golden Gate campus “at no cost to the District.” no cost

Since that time, Aspire has had $900,000 in rent credits to make improvements and upgrades to the site, but is now seeking up to an additional $20 million in Prop 51 funds to make bigger improvements for their own students who will occupy the school for the next 40 years.  This includes some of the same items they were already allowed $900,000 in rent credits for, plus ADA upgrades, repaving the parking lot and playground, upgrading Information Technology and plumbing systems and installing a new playground.

In the first fifteen years of the lease, Aspire will pay OUSD about $40,000 per year to use the facility, one tenth of what they would be paying under the existing lease, after the rent credits are used up. OUSD staff claims that this is necessary because Aspire will be making payments on the loan at the same time⁶. Yet even after the loan will be paid off (30 years)⁷, Aspire will only be paying $130,000 per year, some $350,000 less than they would be under the existing lease, and less than half of what we would be entitled to collect under the bare minimum Prop 39 rate – which is structured, in theory – based on the actual facilities costs⁸.

In addition, Aspire is a large charter chain with substantial “philanthropic” resources which could and should be tapped to cover the cost of this upgrade. According to the Aspire website, they have the following “generous” donors:

aspire donors
From the Aspire Public Schools website: https://aspirepublicschools.org/support/

Why are OUSD students being forced to pay for the upgrades to the Aspire charter chain campus when Aspire has such incredible wealth available to it?

OUSD Claims that we should pay for these upgrades because ultimately the property will revert to us forty years in the future – as a 40 year old building!

When OUSD gave Aspire permission to seek out the Prop 51 funds, it was clear that it would be Aspire’s responsibility to pay for them – “at no cost to the District.” Now Aspire and OUSD staff claim that this obscenely low facilities use fee is appropriate because OUSD will maintain ownership of the facility, and in 40 years we will benefit from the increased value of the property. The problem with that argument, however, is that at the end of the lease (whether in 40 or more years, if extended) OUSD will end up with an outdated building that it has already determined it does not need⁹.

The “useful” life for a school building is between 30 and 40 years, according to the National Center for Educational Statistics¹⁰. New playground structures last 15 to 20 years. A roof might last 40 or 50 years. If Aspire upgrades and modernizes the facility in 2025, by the time OUSD gets it back, the “upgrades” will be 35 years old! This is exactly why our Board told Aspire in 2017 that any facilities upgrades will be “at no cost to the District.” These upgrades do not substantially increase the value of the property at the end of the lease term – they add value at the time and in the 20 to 30 years after they are made, time in which only Aspire will benefit from those improvements! It makes no sense for OUSD students to be paying for them by OUSD failing to charge a reasonable facilities fee throughout the term of the lease¹¹.

It is incredibly offensive that at the same time that our school board is slashing the budgets of school sites by half and eliminating critical student services, they are considering offering a sweetheart deal to a huge charter chain which results in the loss of $400,000 per year to OUSD kids. This school should not even be considered as a candidate for a long term lease given their poor record of serving vulnerable students. If the board ignores its own policy and moves forward with this long term lease, the board must ensure that it is, in fact, “no cost to the District” by charging a reasonable facilities use fee for the entire lease term.

footnotes:

  1. The one thing the board did NOT agree to do was to eliminate the OUSD Police, something that the Black Organizing Project and the community have been advocating for years. https://sanfrancisco.cbslocal.com/2020/03/04/oakland-school-board-votes-not-to-eliminate-school-police-despite-heated-meeting/
  2. Read more about this here: https://ousdparentsunited.wordpress.com/2019/06/30/alameda-county-grand-jury-slams-the-ousd-school-board/
  3. The lease consists of a 15 year initial term and two unilaterally executable options of 15 and 10 years, for a total of 40 years.
  4. Prop 51, the California School Facilities Program, provides funds for modernization of school properties through a combination of grants (which do not need to be repaid) and loans
  5. Even the existing lease is a bargain – if Aspire were to rent the same space on the open market they could expect to pay more than $2.5 million per year instead of under $450,000.
  6. Interestingly, the low rent begins immediately, even though the Aspire staff admitted recently that they will not immediately begin loan repayment.
  7. Aspire says that it needs a minimum 40 year lease in order to qualify for a 30 year loan repayment.
  8. Director Gonzales has expressed concern that OUSD might be on the hook for loan repayment in the event that Aspire closes the school and walks away from the loan – after not receiving rent, OUSD could possibly have to pay off a loan for a school that they say they don’t actually need.
  9. If student populations change over the next 40 years, this campus will not be available for growth, so OUSD will have to repurpose or construct other buildings to house any increased enrollment.
  10. https://nces.ed.gov/surveys/frss/publications/1999048/
  11. Another issue with the lease as written is that it does not increase the facilities fee in the event that Aspire decides not to seek the entire $10 million loan

 

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