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Milwaukee schools turn down $1 million from choice school for ‘ridiculous’ deal

By   /   October 20, 2013  /   2 Comments

By Adam Tobias | Wisconsin Reporter

MILWAUKEE — An administrator for a Milwaukee private school in the parental choice program doesn’t believe Milwaukee Public Schools is getting much of a bargain by trying to push a sale-and-leaseback arrangement with one of its vacant buildings — a deal one lawmaker last week declared “stinks to high heaven.”

St. Marcus Lutheran School Superintendent Henry Tyson says his private school has made a better offer to the district. Tyson tells Wisconsin Reporter St. Marcus repeatedly has offered to purchase the former Malcolm X Academy in cash for its fair market value.

“There’s absolutely no doubt that it’s (worth) well over $1 million,” Tyson said of the property.

But MPS officials have a different opinion on what they consider to be the most beneficial solution.

MPS Superintendent Gregory Thornton told the Legislature’s Committee on Government Operations and State Licensing last week that selling the empty Malcolm X facility to a private firm for $2.1 million and then leasing it back for $4.2 million over 50 months is “probably the best deal in town.”

But is that what’s best for taxpayers?

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NO SALE: St. Marcus Lutheran School Superintendent Henry Tyson says the private school offered Milwaukee Public Schools more than $1 million for the former Malcolm X Academy, but the district opted to pursue a deal that has been criticized by one lawmaker as “ridiculous.”

MPS officials claim the district will “break even” in the partnership with 2760 Holdings LLC because the $4.2 million in public funds would be used to renovate the idle structure, which has stood vacant for nearly six years.

But MPS could get more than $1 million right now if it chose to sell the 170,000-square-foot idle building to St. Marcus, which would invest an additional $4 to $7 million for improvements, Tyson said.

“None of that would be a taxpayer expense,” he added. “It would all be privately funded.”

Tyson also said MPS’ decision to turn down the voucher school’s offers is just further proof that the district is shutting out choice schools because, “it’s more worried about its market value.”

But Michael Bonds, president of the Milwaukee Board of School Directors, doesn’t think there is any validity to that claim because MPS leases out buildings to several charter schools.

While that is true, those charter schools are affiliated with MPS, according to documents provided by C.J. Szafir, education policy director for the Wisconsin Institute for Law & Liberty.

WILL, a Milwaukee-based conservative public-interest law firm, recently called out MPS and the city of Milwaukee, charging the district with playing “shell games” and the city with violating the spirit of a 2011 state law that gives Milwaukee the power to sell empty facilities.

Szafir said information gained by open-records requests show that MPS has displayed a repeated pattern of hostility toward private schools, the school choice program and charter schools not connected to the district.

“MPS wants to do everything they can to prohibit those schools from purchasing unused school buildings,” Szafir added.

When MPS does sell a structure, the contracts usually include a deed restricting the new owners from ever selling the parcels to a choice school, Szafir said.

That also is the case with the term sheet between MPS and 2760 Holdings LLC, State Rep. Joe Sanfelippo, R-West Allis, told the Committee on Government Operations and State Licensing last week.

But Bonds said St. Marcus’ proposal has been turned down because the board sees more value in providing a new school that also will include a community center.

Under the arrangement with 2760 Holdings, a deal Sanfelippo called “ridiculous” and charged “stinks to high heaven,” the city or MPS would buy back or lease about half of the property after the initial four years, and 2760 Holdings would keep the remaining portion to build apartments and possibly retail outlets.

Bonds predicted the potential living units and businesses will put millions of dollars on the tax rolls.

But David Fortney, a systems analyst and project leader for the city of Milwaukee, wasn’t so quick to make that rosy projection.

Fortney said the amount of tax revenue will depend on the rental payments from the apartments and retail spaces.

“You could have such a wide range of variance between all those extremes that it’s impossible to estimate,” he said.

Others also have questioned the demand for another Milwaukee public school.

Although MPS is reporting a fall enrollment increase of about 40 students, the district has lost 1,000 or more pupils in each of past nine years.

MPS also has 14 other vacant school buildings, according MPS records.

But Bonds said the board decided to select Malcolm X Academy for the community center because the structure will provide support services to a neighborhood that is “one of the most economically depressed areas in the whole state.”

The school board started discussing such a facility in August 2012 and officials say that need was validated during a community planning session attended by several state and city entities, according to MPS spokesman Tony Tagliavia.

Bonds also said that MPS is not turning its back on St. Marcus because the school has been offered three other buildings for its planned expansion project, which is anticipated to house between 900 and 1,000 students.

Tyson called those offers “weak and unreasonable” because he has no doubt the board knew the facilities could not accommodate St. Marcus.

Tyson also says the pending transaction should have been put out for competitive bid, which would be required under the proposed Assembly Bill 417, co-sponsored by Sanfelippo and Sen. Alberta Darling, R-River Hills.

“We want an open, fair, competitive, transparent process where the governing bodies and the public can look at them side-by-side and determine what the best deal is,” Tyson said.

Still, some school officials are saying they are pursuing the development plan with 2760 Holdings because MPS or the city will have the option of buying back half of the building for $1.

Although that agreement has been tossed around, JCP Construction President James Phelps, who partially owns 2760 Holdings LLC, said the plan is not set in stone.

It’s the company’s intention to enter into a long-term lease with MPS after the four-year contract, according to Phelps.

Nevertheless, MPS will have the first right to purchase or rent the building, Phelps said.

The two parties would work on the future terms over the next 50 months, he added.

Although the collaboration with 2760 Holdings LLC has been authorized by the school board, it still needs to be approved by the Milwaukee Common Council since the city owns the property.

Attempts to reach Council President Willie Hines Jr., who represents the district that includes the Malcolm X school, and other city aldermen were unsuccessful.

Contact Adam Tobias at atobias@watchdog.org

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Adam Tobias

  • Pat Schuppe

    Milw. School dist. turning down A million , what next calling those in High School crimials if they don’t go through the meatle detacker . That’s ridiculous.

  • Glen

    Hahaha you peice of crap private schools think you are all that and yet do a worse job in actually educating our young people as test have finally shown. and WR has never told the truth on any story they have ever written, so all who comment in their favor are just as ignorant.