THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Charter school plots its future growth

Administrators defend $4.4m purchase, but some question its timing

The former Immaculate Conception School at 306 Highland Ave. in Malden houses Mystic Valley Regional Charter School's grades 9-12. The former Immaculate Conception School at 306 Highland Ave. in Malden houses Mystic Valley Regional Charter School's grades 9-12. (Jonathan Wiggs/Globe Staff)
By Kathy McCabe
Globe Staff / May 6, 2010

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MALDEN — Chevy vans and trucks dotted the 4-acre car sales lot on Eastern Avenue for decades. But turf playing fields and a gymnasium are in its future as Mystic Valley Regional Charter School’s campus spreads to a new corner of Malden.

The school paid $4.4 million in cash last month for the old Davidson Chevrolet site on Route 60. The purchase is the most expensive the school has made since its founding 12 years ago in rented space. Since then, the charter school has amassed a $10.1 million real estate portfolio that includes three houses, two school buildings, and a fire station leased to the city.

The acquisition has raised new questions about charter school funding, just months after the state put additional financial limits on charter schools. Some wonder how Mystic Valley was able to pay millions of dollars in cash for the car lot, at a time when public school districts are scrambling for dollars.

“What I want to know is ‘How do they get that type of money?’ ’’ asked Bob Miller, founder of Malden Taxpayers for Accountability, a nonprofit group that led an unsuccessful drive to overturn the city’s pay-as-you-throw trash disposal program. “Is it the corporation that owns them? Or is it the money they’re receiving per child that they have been able to accumulate?’’

The school, which has 1,350 students in grades kindergarten to 12, most of whom come from Everett, Malden, Medford, and Melrose, had $15.9 million in net assets, including $5.6 million in cash, as of June 2009, according to the school’s most recent annual report filed with the state Department of Education.

When it began in 1998, Mystic Valley developed a capital plan that called for saving money each year, with the goal of one day making a major real estate purchase, said Neil Kinnon, a school founder and chairman of the school’s five-member board of trustees.

“We saved the money,’’ said Kinnon, a Malden city councilor whose children attend the charter school. “If we didn’t have something to spend it on, we didn’t spend it.’’

Charter schools are not eligible to apply for funds from the state’s School Building Author ity, which oversees financing for public school construction projects. Instead, the state funding formula for charter schools allows a per-pupil facilities fee each year. For the current school year, charter schools received $893 per child for facilities. Like tuition dollars, the money is paid to charter schools by a student’s home school district, which is reimbursed in full by the state.

“Facility financing is the biggest challenge we face, outside of academics,’’ said Dominic Slowey, spokesman for the Massachusetts Charter Public School Association, a nonprofit group that represents many of the state’s 61 charter schools.

The Davidson Chevrolet purchase will remove a large commercial property from city tax rolls. The property this year generated just over $85,000 in tax revenue, city records show.

Mayor Richard C. Howard said the city tried to steer Mystic Valley toward other sites in Malden, but the loss of the property tax revenue isn’t alarming. “It’s never good when property comes off the tax rolls,’’ said Howard, whose children attend the school. “. . . the [$85,000] isn’t going to make or break our budget. They’ll be creating some much-needed open space that will benefit the city.’’

Up to the time the Davidson property is turned into playing fields and a gym, the school will have to pay commercial taxes. “Until they start working on it to make it a school facility, it will be taxed,’’ said Robert Donnelly, the city assessor. “But after that, we can’t tax them.’’

The school pays real estate taxes on houses it owns on Jacob and Salem streets, which are used for faculty housing and office space. The tax bill for the current fiscal year is $13,946.94, according to the city assessor’s office.

Mystic Valley’s expansion comes as other local charter schools are investing millions of dollars in new facilities. Since 2008, charter schools in Haverhill, Lawrence, Lowell, Somerville, and Tyngsborough have received a total of $20.5 million in bond financing and loan guarantees from MassDevelopment, the state’s real estate financing arm.

But in the future, it might not be so easy for charter schools to expand.

The state’s new education reform law includes limits on how much a charter school can save. A school may still set money aside for facilities, as long as a capital plan is filed with the state. But schools can only carry over 20 percent of surplus money at the end of a school year.

That cap, which aimed to quell charter school critics, does not apply to capital investment.

“There was a feeling that charter schools were squirreling away too much money,’’ Slowey said. “But the Legislature decided not to restrict how much schools can put aside for new facilities or renovations, probably so it would not impact [financial agreements] the schools have with banks and other mortgage holders.’’

Mystic Valley opened in 1998, renting space from the city in the old Maplewood School. As more students enrolled, the school rented space next door at the former St. Joseph School, where it still has lower grades.

Additional space was leased in Melrose and a Catholic school in Everett. “We were kind of like nomads,’’ said Kinnon. “It is very difficult, for a school the size that we are, to find space in an urban area for a single location.’’

Since 2005, Mystic Valley has borrowed $8.8 million, including $3.3 million in bond financing from MassDevelopment, to buy or refinance real estate, public records show.

Not everyone thinks Mystic Valley’s real estate expansion has been good for education.

“I’m very upset the money hasn’t gone for the kids,’’ said Annie Oppedisano, a Mystic Valley parent. “They make these acquisitions, but the [buildings] aren’t really serviceable. The buildings are too small.’’

Mystic Valley bought the Maplewood School in 2004 from the city for $2.4 million in a deal that included the adjacent fire station. The city rents the station from the school, at a cost of about $30,000 per year, as it scouts for a new quarters.

The high school is at the former Immaculate Conception School on Highland Avenue, which Mystic Valley Charter purchased in 2007 from the Archdiocese of Boston for $2.7 million. But neither location had adequate gym facilities, so the school rents space from a Baptist church in Malden. It also leases athletic fields from the city.

Now Mystic Valley is looking to stake out its own turf. The school intends to hire a designer to draw up plans for new playing fields and a gymnasium on the old car lot. It’s not clear how it’ll foot the bill, however.

“My guess is we will build and bond to pay for it,’’ said Kinnon, noting the school still has a line of credit. “This site is a perfect fit for us.’’

Kathy McCabe can be reached at kmccabe@globe.com.

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