$2.4M charter building got a $7.7M revamp
From the outside, Imagine Schools’ Great Western Academy doesn’t look like much of a school.
The sterile building sits at the end of a remodeled strip mall along Wilson Road on Columbus’ West Side, where an abundance of empty storefronts nearby hint of better times.
But inside the glass doors, the pristine, newly renovated charter school surprises visitors with brightly colored murals, walls of lockers lining freshly painted hallways, and a large gymnasium.
Converting the 69,000-square-foot former appliance store into a school for more than 700 kindergarteners through eighth-graders wasn’t cheap.
The facility improvements, including structural work in addition to desks, smart boards and other equipment, cost $4.4 million, or about $64 per square foot, according to information provided by school officials.
Under its finance deal, Great Western Academy had to come up with added lease payments totaling $7.7 million over the past decade to cover the renovations — $3.3 million above their actual cost — at times paying nearly $1 million a year in total rent.
According to the Franklin County auditor, the property was valued at $2.4 million in 2017. In other words, the $7.7 million the school paid for renovations was more than three times the building’s value.
The deal has raised questions about Great Western’s lease agreement with SchoolHouse Finance, a subsidiary of Imagine Schools. SchoolHouse rents the space and subleases to Great Western. SchoolHouse also financed the renovations.
State Auditor Dave Yost is investigating Great Western’s deal along with similar arrangements at other Ohio charter schools. He has questions about rent payments being excessive and contracts benefiting a company connected with the school operator. His office detailed the arrangement in a recent audit of Great Western and has found other schools with such an arrangement.
Yost spokesman Ben Marrison said, “This office has made multiple referrals to federal authorities for related-party transactions involving SchoolHouse Finance and their affiliated schools in 2014 and 2016. And last year, Auditor Yost directed his staff to conduct a comprehensive review of these arrangements.”
The report, Marrison said, will include recommendations to lawmakers. He couldn’t say when the report would be released.
Yost’s initial referral to authorities came after the Dispatch reported in 2014 that another Imagine school, Columbus Primary Academy on the North Side, was paying SchoolHouse $700,000 a year in rent, more than it was spending on teachers and staff members. Five other Imagine Schools in Franklin County had similar deals.
The following year, state lawmakers approved legislation limiting lease amounts to what is “commercially reasonable.” Great Western’s lease predates that law and is exempt from its provisions.
Marrison noted that the law, House Bill 2, also required more transparency in contracts between management companies and schools, although Yost supports doing more to tighten fiscal controls for the privately operated, tax-funded schools.
Denis Smith, a retired school administrator and a former consultant in the Ohio Department of Education’s charter-school office, said Imagine’s real estate arrangements — happening outside Ohio as well — don’t sound like a good deal for taxpayers.
“They have a very creative way of (acquiring) properties and charging exorbitant rents,” Smith said. “Due to lack of regulations, we are allowing public funds to be converted into private assets.”
By comparison, Columbus schools recently bought the former ECOT headquarters on 26.5 acres along South High Street for just under $3.4 million.