The State Comptroller’s Office, in a recent audit, faulted Global Concepts Charter School for the process it used to lease a site for its high school, saying the school will pay about $2.3 million more than necessary for the building over the next five years.
The school did not ask the state for a copy of its annual list of vacant and unused buildings during its site selection, according to the audit.
Global Concepts also did not conduct a proper analysis of possible sites, the audit said.
“We found that the board did not demonstrate that it used an appropriate process to ensure it obtained a suitable site at a reasonable cost,” auditors wrote. “School officials did not provide evidence that the board performed an appropriate cost analysis of the selected site or alternative sites.”
Three years ago, the school’s board decided to establish a high school program to supplement its existing program of kindergarten through eighth-grade program.
In 2009, school officials agreed to a 15-year lease for a building at 30 Johnson St. that had been owned by the Lackawanna School District, according to the audit. The lease was with a company that had purchased the building from the district for $35,000.
The audit does not name the company but identifies it as a subsidiary of a construction company that Global Concepts had hired two years earlier to renovate its elementary school.
The company that owns the building is Nexgen Development, according to a spokesman for the state comptroller, and formed in 2009 as a subsidiary of Telco Construction.
Annual lease payments started at $260,000 in the first year until reaching $480,000 for 2013-14. After five years, Global Concepts can exercise an option to buy the building for $2.9 million.
State auditors found that by the time the school can buy the building, it would have already paid more than $2 million toward the lease, plus about $200,000 in taxes. Once those costs are added to the purchase price, the school would pay $5.1 million in those five years for the building, auditors said.
“The CEO gave us various and, at times, contradictory explanations regarding why the board chose a lease-to-buy approach rather than acquiring and renovating the building itself,” the audit states. “He initially stated that the school did not have adequate financial resources to purchase, renovate, and equip the building. However, our review of the school’s financial records indicated that the school had available resources to finance the purchase and phased renovations.”
In response to a request for comment for this story, school officials released a five-paragraph written statement, largely reiterating points they made in their official response to the audit.
Dawan Jones, president of the school’s board of trustees, said in the statement that the audit “found no hint of evidence of wrongdoing or misappropriation.”
“While reporting that they did not have ‘appropriate evidence’ of ‘a thorough cost analysis prior to selecting a site,’ the auditors speculated from three years later that better alternatives might have been ‘feasible,’” Jones said. “While admitting that they had a lack of evidence of the alternatives available, the auditors nevertheless gave an ‘estimate’ of savings they surmise might have resulted from other options.”
School officials did not request a copy of the state’s list of vacant and unused buildings, auditors said, and also did not provide evidence that they had done an appropriate cost comparison of possible sites.
In a written response to the audit, Jones said the audit failed to recognize that Global Concepts collaborated with the state Education Department through the expansion process. Charter schools are not required to request a state list of vacant properties, he wrote.
The board had hired an architect to evaluate sites and estimate costs, Jones wrote and the school gave evidence to the auditors of three site studies. “For the report to conclude that there was no evidence of a process or consideration of other sites is inaccurate and prejudicial,” Jones wrote.