What lengths will MPS go in order to avoid selling an empty school to a competitive choice school? They are willing to sell the empty Malcolm X school for $2 million, only to lease it back to themselves at $1 million per year for the next four years, all while paying for their own improvements.
On Monday evening, after weeks of bad public relations over not selling the empty Malcolm X school to St. Marcus, the Milwaukee School Board voted to sell the empty building - to themselves.
The Milwaukee Board of School Directors voted Monday night to take the first step in the sale of the Malcolm X complex. It authorized the administration to request the City of Milwaukee sell the building to 2760 Holdings, LLC. MPS buildings are owned by the City of Milwaukee, so the sale must be approved by the Milwaukee Common Council.
The building is being sold to 2760 Holdings, LLC for the purchase price of $2.1 million. 2760 Holdings would develop the space. There is an option for Milwaukee Public Schools to lease back any space used for MPS educational purposes. The sale marks the completion of a multi-year process that will result in a multi-purpose facility that includes an MPS school.
As always, the devil, and in this case the corruption, is in the details.
According to sources close to the deal, here is how this works.
1.) Malcolm X School was sold to JCP Construction for $2.1 million in order to avoid selling the building to St. Marcus.
2.) Under the property terms, just 50% of the square footage of the empty Malcolm X School will be used for educational purposes. The rest will be used for residential, retail, and community use. St. Marcus of course would use the entire property for educating students.
3.) The 50% portion of the Malcolm X school that is for education purposes will be leased back to the Milwaukee Board of School Directors at $1.1 million annually for a period of 50 months (just over 4 years).
4.) MPS is selling the building to JCP for $2.1 million, who will then lease the building back to MPS for over $4 million over the next four years. At the end of the lease, MPS has the option of purchasing the property using the credit they have paid with the lease. They are leasing the building to themselves. It is smoke and mirrors.
5.) Finally, and perhaps worst of all, the property deed for the Malcolm X school with have a restriction that reads, "Property shall not be used for any use that has the effect of diminishing the annual average number of pupils enrolled in Milwaukee Public Schools." This ensures the building cannot be used by St. Marcus or any other private or choice school.
In sum, MPS is jumping through hoops and spending loads of District money in order to give the appearance of selling the empty school, but in reality leasing it to itself.
Meanwhile, a high quality, high performing, community-supported voucher school, the Board of Directors of St. Marcus Evangelical Lutheran Church has approved a full cash, market rate offer for the former middle school and is ready to proceed with the purchase and development of the property for the benefit of the children and families in the immediate community.
Corruption at it's worst.
UPDATE: MPS Responds
I was disappointed that an article was posted on RightWisconsin.com without making any attempt to contact Milwaukee Public Schools for a response.
Here is some simple information that your readers deserve to know that we would have shared had you inquired about the lease terms:
- The dollar amount missing from your calculations is the $4.2 million, at minimum, the developer will spend to open the building. That dollar amount is essentially a wash with the lease amount – putting taxpayers ahead due to the $2.1 million sale price of the building.
- If you had contacted us about the developer rather than using information from an unnamed source, we would have shared that the partners in 2760 Holdings LLC include leaders from JCP Construction as well as KBS, one of the most well-known, respected and effective developers in the city and state. You may be familiar with several of KBS’ projects including the Marquette University Law School, the MU school of Engineering and Cambridge Commons, Kenilworth Place and Riverview Terrace, all new dorms built at UWM.
Executive Director of Community Engagement
Executive Director, Milwaukee Public Schools Foundation
Department of Community Engagement
Milwaukee Public Schools