Florida Charter School Operator takes home 350k in rent from the school he runs

Florida is quickly becoming the laughing stock of the nation. -cpg

From the Palm Beach News Times

by Lisa Rab

When a private company aims to profit from a taxpayer-funded public school, the extra dough must come from somewhere. For Mavericks in Education Florida, the charter school chain headquartered in West Palm Beach, leasing agreements appear to be one source of cash.

Remember, Mavericks is a for-profit company, but each of its eight schools in Florida is run by a separate nonprofit. Mavericks charges the nonprofits an annual management fee for overseeing operations at the schools, and it also charges them rent.

Mavericks president Frank Biden says the company turns a profit because of its savvy real estate choices. "It's all about the buildings we buy," he says."Certainly the operation of the schools isn't profitable."

But most of the time, Mavericks isn't buying buildings --at least, not directly. It's striking deals with private landlords, then charging individual schools rent of $350,000 per year for five years, regardless of the price of the building. That's the case at Mavericks schools in Homestead, North Miami, Kissimmee, and Pinellas. Biden says part of his job is convincing landlords to buy a building, and then lease it to Mavericks at a low cost. Bear in mind, the property owner will not have to pay taxes on the facility, as long as it's used as a public school.

Often, Mavericks locates its schools in poorer neighborhoods where property is cheap. In Homestead, the school building's current market value is $1.2 million, but the school is on the hook for $1.75 million in rent over five years. That sum, combined with its $418,000 management fee, means the Homestead school paid 28 percent of its revenue to Mavericks in Education in 2010.

Mavericks manager Lauren Hollander says the company does not want to be the go-between, collecting rent from the schools, but it's tough for a landlord to "wrap his mind" around a five-year lease.

Mavericks cut out the middle man when negotiating a lease in Fort Lauderdale. Charles Barnett, Mavericks' secretary, bought a building at 424 W. Sunrise Boulevard for $2.2 million. Barnett, a lawyer in Palm Beach Gardens, purchased the building with a newly formed corporation called School Property Development LLC. The manager of the corporation is Charles Berle, who also sits on the board of the Mavericks school in Palm Springs.

Hollander says Barnett bought the school because they couldn't strike a rental deal with the previous owner.

Gary Miron, an education professor and charter school expert at Western Michigan University, says it's common for "separate but connected companies" to own the buildings that house charter schools.

"A lot of profit comes from equity accrued in the facility, or above-market leases that are paid to the company that owns the facility," Miron says.

To lease the Fort Lauderdale property, Barnett's company, School Property Development, charges Mavericks High of Central Broward rent. The cost: $350,000 a year.

http://blogs.browardpalmbeach.com/pulp/2011/12/mavericks_high_charges_charter_schools_350000_rent_fees.php