Baker Mitchell companies benefit directly from Charter Day nonprofit he started

June 29--A StarNews analysis of documents provided by the Charter Day School Inc. shows that the nonprofit group owns very little, if any, of the land, buildings, furniture or equipment used by its three schools. Instead, the schools rent most of their material goods from founder Baker Mitchell's two for-profit companies -- Roger Bacon Academy and Coastal Habitat Conservancy.

For the 2013-14 school year, Charter Day School in Leland and Columbus Charter School in Whiteville paid Mitchell's Roger Bacon Academy about $1.5 million to lease their buildings. As part of their contract, the schools also agreed to pay property taxes and insurance, which totaled another $90,000; and building upkeep, for another $200,000. Douglass Academy, housed in the Peabody Building on North Sixth Street in downtown Wilmington, is leased from the nonprofit Friends of New Hanover County Community Action for $1 per year.

The company plans to open a fourth school, South Brunswick Charter School in Southport, this fall.

Mitchell incorporated both the Roger Bacon Academy for-profit education management company and the for-profit Coastal Habitat Conservancy school equipment and supply rental company in early 1999. He founded the first nonprofit charter school four months later, according to records from the N.C. Secretary of State's Office.

Mitchell currently serves as the secretary for Charter Day School Inc.'s board of trustees, is the president of the management company and is the registered agent for the rental company.

That means Mitchell leads the company that manages the schools and the company that rents equipment to the schools and is an officer on the schools' decision-making board.

Brunswick County Superintendent Edward Pruden has been calling for better transparency of these charter schools for months.

"It appears to be a closed loop of circulating money that all ends up in the management company Mr. Mitchell owns," he said.

Pruden said traditional public schools are subject to open records laws and the state's charter schools should be, too.

In recent years, state legislation has resulted in charter schools getting more state and local money to support their education goals but hasn't pushed for more public information about those funds.

"I think it's time they take another look at that and level the playing field," Pruden said. "And make all entities that receive public funds reveal where every penny goes."

Financial records provided to the StarNews by John Ferrante, chairman of the Charter Day School Inc.Board of Trustees, show that lease agreements between Coastal Habitat and Leland-based Charter Day School Inc. started as early as Dec. 13, 2003.

Agreements between Roger Bacon and the schools were signed in 2005 and 2007.

Management agreements dated before then have not been released.

Initially, Mitchell signed most binding documents on behalf of Coastal Habitat and Roger Bacon and an illegible signature signs for the school.

After Mark Dudeck joined the Roger Bacon Academy about seven years ago, he began signing many of the documents. Dudeck serves as chief financial officer for Roger Bacon and Coastal Habitat companies and is an authorized officer for Charter Day School Inc.

Buildings and maintenance

Charter Day and Columbus Charter schools were constructed for use as charter schools. Both schools lease the buildings and property from Roger Bacon.

Charter Day, on 50 acres in Leland, was the first built, in 1999-2000, and is valued at $5.548 million, according to Brunswick County property records. For the 2013-14 budget year, Charter Day paid $696,344 to rent the buildings. Via the lease contract with Roger Bacon, the school also agreed to pay the property taxes and insurance, as well as building maintenance. In 2013-14, taxes and insurance totaled $30,000; maintenance ran $98,700.

Columbus Charter, built in 2006 on 92 acres owned by Mitchell's Coastal Habitat Conservancy corporation, is appraised at $1.36 million, according to Columbus County property records. That school paid $797,237 in rent for the 2013-14 school year, according to the school's profit-and-loss statement. Property taxes and insurance totaled $68,000; building maintenance was $106,980.

Douglass Academy opened its doors last year at North Sixth and Red Cross streets in Wilmington.

Initially, Roger Bacon Academy officials approached New Hanover County Schools about the empty Lakeside High School off 16th Street, but no agreement could be reached between the two groups.

Mitchell proposed renting the building for $1 a year for 30 years and committed Roger Bacon to renovations, including asbestos removal and repairing the leaky roof. According to New Hanover school officials, they countered with a $72,000-per-year lease for 15 years.

Bill Hance, assistant superintendent of operations for the school district, said that figure was 66 percent less than the cost per square foot calculation the district uses in other leases because of the condition of Lakeside.

Mitchell previously described preliminary plans, however, for Roger Bacon to purchase land and construct a new school facility for Douglass Academy.

In addition to the $1 building lease payment to the Friends of New Hanover County Community Action group, Douglass paid $1,200 in property insurance and $342,980 in maintenance. No property taxes were paid by the school, according to the school's 2013-14 budget.

Equipment rentals

Based on documents provided to the StarNews, Charter Day School Inc. in 2003 began a series of two-year leases with Mitchell's Coastal Habitat Conservancy for equipment, furniture and computers.

Documents indicate leases prior to 2003 were executed, but they were not released to the StarNews.

The leases, some of which overlap with others, do not specify what has been rented. On June 25, the StarNews submitted additional public records requests to obtain more details about the leases, as well as other financial information about how the schools are managed and operated.

For example, for the 2005-06 school year, Charter Day School in Leland paid four separate lease agreements to Coastal Habitat that totaled $9,210.29, according to documents.

On average, 84 percent of lease amounts are paid for during the designated two-year term. Remaining balances have been routinely tacked on to other leases, according to the documents. Though the school group did not release information about leases after 2011, Charter Day School spent $144,742 on equipment rentals during the 2013-14 school year, according to the school's budget and profit-and-loss statement.

Equipment lease agreements for Columbus Charter are similar to those for Charter Day as they overlap with other property agreements.

Mitchell authorized most of the agreements and Dudeck authorized others.

Columbus Charter spent $95,641 on equipment, furniture and computer rentals for the 2013-14 fiscal year.

Douglass Academy spent $15,300 on equipment, furniture and computers.

Charter Day School Inc. plans to open South Brunswick Charter School this year at 4128 Vanessa Drive in Southport. The school will eventually be located on a 45-acre site on Sunset Harbor Road near N.C. 211, according to Roger Bacon Academy Inc. officials. The StarNews will continue to follow that expansion.

Caitlin Dineen: 343-2339

On Twitter: @CaitlinDineen

___

(c)2014 the Star-News (Wilmington, N.C.)

Visit the Star-News (Wilmington, N.C.) at www.starnewsonline.com

Distributed by MCT Information Services