20-year lease passed for Cherokee Charter building
by Michelle Babcock
June 28, 2014 12:00 AM | 3119 views | 5 5 comments | 23 23 recommendations | email to a friend | print
Danny Dukes
Danny Dukes
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The board governing two Georgia charter schools approved a 20-year lease that begins Monday for the building now housing Cherokee Charter Academy, with a base rent about 60 percent higher than last year.

Board members on the Georgia Charter Educational Foundation, responsible for governing and funding Cherokee Charter Academy, unanimously approved the 20-year lease agreement during a meeting Wednesday, with a base rent of $1.16 million a year, according to the final lease document.

The rent expense went up 59.9 percent, from $726,000 in fiscal 2014, to $1.16 million for fiscal 2015, and GCEF member and Cherokee Charter Local Governing Councilman Danny Dukes said the rise in rent costs for the building was anticipated.

“The increase was from a below market lease rate to a market lease rate of $12 per foot,” Dukes explained. “This facility was in foreclosure when we moved in. The owner was looking for cash flow out of the property. They have now sold the property, pending a closing, and the new buyer/investor was seeking market rent.”

Council members planned for the increase in rent, Dukes said, and the expense was included in the proposed budget for the 2015 fiscal year.

Local Governing Councilman Sean Jerguson said the school had been expecting the higher rent expense since the governing board received a deal on the rent in previous years.

“The lease, prior to now, was below fair market value in order to get the school established and move forward,” Jerguson said. “This is now a 20-year lease, so it’s long term.”

Jerguson explained the new lease has a base rent cost, but the rent could go up or down in future years, depending on “inflationary factors” tied to the Consumer Price Index.

“The board took very great care in doing due diligence to find out what the fair market value was of other similar property in the area,” Jerguson said. “It was a well-negotiated lease, looking at the long term benefit on behalf of the students.”

Dukes explained the fair market rent value was agreed to after the board researched similar lease circumstances.

“We did due diligence and identified three to five properties, non-retail with triple net leases, like our proposed lease,” he said. “We determined that the agreed upon price was at or just below the median.”

Dukes added some maintenance costs were negotiated into the lease, to be shared by the GECF and the landlord.

For example, the heating, ventilation and air conditioning system repair costs are to be shared during the next five years, the lease shows.

The GECF signed the lease with landlord Red Apple at Cherokee Charter Academy, a Florida-based for-profit arm of Charter Schools USA — the company that manages Cherokee Charter Academy.



Comments
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Cherokee Parent
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June 30, 2014
GREAT! Another half million of GA taxpayer money heading to Florida. And this benefits the kids how? Like Danny Math pointed out, this doesn't add up.
Karl Marx
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July 01, 2014
Here is another uninformed Anti-School Choice Zealot who can't read. Let me help, I believe the article said the "Landlord" would be getting the increase...So where does the landlord live? Well the article didn't say, What it did say was they had been renting the property for FAR UNDER market rate and the increase was expected and planed for..... Not that any facts matter to your smear campaign.
Danny Math
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June 30, 2014
If they know this is where they want to stay for the next two decades, why doesn't the school buy the building? A 20-year mortgage would cost half what this "market rate" rent is costing them, plus they would own an asset. Who is buying the building? Who is profiting from this 60% rent hike? And why do Dukes and Jerguson think it's such a great deal?
Karl Marx
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July 01, 2014
Mr. Math,

Did you actually READ the article? Or is you incoherent ramblings just another Anti School Choice rant? Yep as I thought just another rant.
Danny Math
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July 04, 2014
Choice at any cost (and for a privileged few) is not a conservative principle, Karl. Call me a cynic, but when the Charter School's state funding allotment goes up a half million dollars for the coming year and then the profiteering charter school company immediately raises the rent by half a million dollars, someone ought to at least question it. A triple net lease is nothing to brag about, unless you are the landlord, because it means the school pays all property taxes, all insurance and all repairs and maintenance-- and Danny the financial wizard apparently forgot the property taxes AGAIN and incurred a $2,000 late fee. Check the online tax bill for 2126 Sixes Road.
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