This is a printer-friendly version of an article from Zip06.com.
08/07/2018 12:00 AMWhen the Board of Selectmen (BOS) called a special meeting on Aug. 2 to continue discussions over a potential one-year lease with Our Lady of Mercy Preparatory Academy (OLMPA) for Island Avenue School, the hope may have been to push the conversation forward, but the meeting ultimately produced more questions than answers. After an hour of discussion, the two parties still had no set timeline to arrive at a decision, a lack of communication became evident, some frustration was bubbling, and an ultimatum had been tossed on the table.
OLMPA has been looking at Island Avenue School as a potential temporary home for the school since news broke that the home of current Our Lady of Mercy School (OLM, which is run by the Archdiocese of Hartford) on Neck Road would be closed at the end of this academic year. While the archdiocese chose to merge OLM with St. Mary School in Branford, some members of the OLM community chose to form OLMPA and seek a school site closer to Madison.
As part of its schools consolidation plan, Madison had earlier announced it would close the Island Avenue School after the 2018-’19 school year. Selectmen and members of OLMPA had been reviewing financial statements and issues like liability to see if leasing Island was a viable option after the Madison Public School District formally turns the building over to the town in 2019.
In July, the BOS expressed concern over some of OLMPA’s finances and was reluctant to move forward to the public with a potential three-year lease agreement. Instead, the BOS opted to continue discussions with a one-year lease option on the table. Selectmen pulled together a rough list of terms and conditions it would want to see in a lease agreement, which then led to Aug. 2 meeting at which the Board of Finance (BOF) was included in the discussion to offer input.
On Board for One Year?
To start the meeting, Selectman Bruce Wilson reviewed the document he pulled together highlighting the town’s requirements for a one-year lease. Some requirements include that the lease be for one academic year ending in June 2020 with no renewal or extension and with a total upfront payment of $535,000; that any capital needs be paid for by OLMPA; that the lease be “triple net,” meaning that all operating expenses be paid for by OLMPA; and that the town have reasonable access to the building during the term of the lease.
BOF members asked Wilson if he or other board members had received any feedback from OLMPA on that document. When Wilson said “No,” BOF members immediately wanted to know if OLMPA was even open to the idea of a one-year lease.
“The document in front of us says there would be no legal right to an extension under this agreement, but it does not and could not prevent a subsequent agreement for a second and or third year and that would put us in a very different posture,” said BOF member Bennett Pudlin. “I want to understand why OLMPA feels one year is adequate or if in fact they do. It presupposes then that this is just a way station to a permanent home. I would like to understand those plans.”
OLMPA’s John Picard gave a response that puzzled a few board members.
“I am not exactly sure where the one-year lease came from,” he said. “I know I didn’t ask for it, but to answer the question, what has changed [is that] we have always wanted a home here in Madison and we are still exploring options as we speak to have a place that is permanent, and the additional year would be beneficial to us in terms of allowing us a little more time.”
When BOF members asked if Picard actually didn’t know where the request came from, BOS members jumped in and said the request for a one-year lease came from another OLMPA member, Vlad Couric. Couric’s proposal was made to selectmen prior to the board publicly introducing the idea of a one-year lease, according to town emails.
Picard said he didn’t want to get into semantics and he couldn’t speak for everyone at OLMPA, but he thinks everyone can get behind the benefit of a one-year lease to give the school more time. When asked by the BOF if anything on the proposed document was a hard and fast stop for OLMPA, Picard said one item stood out to him.
“I haven’t fully digested it all myself,” he said. “The only thing is the payment up front. Most of our families don’t pay their tuition up front, so I would hope there would be a little wiggle room there.”
Insurance and Liability
The conversation continued, based upon the assumption that a one-year lease was an option for both parties. BOF members then started going through some concerns they had after reviewing Wilson’s document. BOF member Judith Friedman pointed out a lack of clear language surrounding indemnification.
Town Executive Assistant Lauren Rhines said she reached out to the town’s insurance carrier, CIRMA, on that matter and she had received language from the company that would have to be built into any final lease agreement.
“OLMPA must hold the town harmless for any and all claims,” she said. “There is also specific language that would hold the town harmless for any and all claims or instances of molestation, as this is a school, so we went above and beyond anything that we would have done in a normal lease agreement because of the nature of it being a school. That is per the insurance company. That was their requirement. The insurance company will not allow us to sign the lease agreement without that language in the lease agreement.”
Other points raised by the BOF centered on financial concerns. Wilson said the town did have financial concerns originally, but the nature of the one-year lease helped alleviate a majority of them.
“In a one-year agreement, if we were to have that rent money up front, the cash flow conversation substantially goes away,” he said. “We don’t need to be worried about their cash flows. They have fulfilled their obligations to the town and then the rest is up to them. They have demonstrated repeatedly that their starting balance is sufficient to do that. They are not going to need to borrow money if they have a starting balance of over the annual school year rent. The financial conversations kind of went away when we started to shift it to a one-year conversation.”
Wilson also noted that the school has a couple of levers to pull financially with tuition and enrollment. Based on statements made by OLMPA to Guilford and Madison officials, the school is looking at an enrollment of roughly 30 students for grades 4 to 8 next year and anywhere from 20 to 50 students for grades pre-K to 3.
Town Finance Director Stacy Nobitz said she, too, is more comfortable with the financials under a one-year agreement with one exception.
“The only concern that I would have based on the cash flows is if any capital item comes into play,” she said. “Say the roof caves in. Are they liquid enough to cover something major like that?”
A study of the mechanical, electrical, and plumbing (MEP) systems in the school conducted in 2015 suggested the town needed to start investing in capital improvements. However, the town has no plan to invest significantly in a building it plans to close this June.
“A catastrophic failure could happen to one of the systems, but it is probably not a very high probability event and we can certainly better understand that risk by going through the building this winter and next summer and understanding that,” said Wilson. “The short answer is a major catastrophic failure or the eminent risk of a catastrophic failure would mean that we can’t lease the building.”
As Madison students are still in Island and the school is considered fully safe, all board members seemed to agree that trying to guess the possibility of a worst-case scenario isn’t helpful, but understanding how much risk the town is willing to undertake is.
“For anyone to vote on something, I think people need to understand what they are voting on, very much factual and understand the risk to the town—the good and the bad that both the town and OLMPA would agree on,” said BOF member Mark Casparino. “We have to boil it down because not all folks are as close to this as we are, so we need something basic so people can understand what the risk to the town is.”
While members of OLMPA chimed in that the school would meet all of the town’s insurance requirements should something happen, BOF member Ken Kaminsky said people need to remember that insurance doesn’t cover everything.
“The chance of something catastrophic happening is very, very small and they have liability insurance, but it doesn’t always cover everything and a lot of the time it goes after the deepest pockets and in this case it would be the town,” he said. “There is risk associated with entering into this type of arrangement with a private entity.”
Speak Now
In the midst of the debate over risk, Picard stood and said he just wanted to ask one question.
“If we are trying to find something to not to do this, let’s just say it now so we can go on, but if we want to work together to see this happen, [let’s do so] because it is more than just $500,000; there are families involved there are kids involved,” he said. “There are a lot of families in Madison and there are a lot of families from outside of Madison. We can all find a lot of reasons not to do this, but I think there are a lot of good reasons to do this.”
First Selectman Tom Banisch said the town has been negotiating in good faith, but at the end of the day he always has to make sure the town comes first. However, he agreed that the conversation needed to get moving.
“I think this thing has gone way off the rails and it’s time to bring it back to a reasonable conversation about the possibilities they are willing to accept and then we need to move it on if we are going to do this,” he said. “Either do it or get off the pot.”
Getting On with It
The BOF has no formal role in approving any lease agreement, but at the beginning of the meeting, Wilson said the BOS was “hoping to have the benefit of the sage wisdom of the BOF.” The BOF did not disappoint.
Toward the end of the meeting, BOF Chair Jean Fitzgerald stood, clarified the need for a timeline, the importance of getting all parties on the same page and seeking a legal opinion, and pulling together a document with all questions and concerns that need to be addressed before this moves forward.
The BOF produced its formal list of questions and concerns the day after the Aug. 2 meeting.
“So I think where we are right now is [the BOS] will now take this [document], meet with OLMPA, and the BOF will also take a look at the document with Stacy [Nobitz],” she said. “We will go through any concerns that we have, and whenever you finish whatever you have, we will jointly meet with everyone so we can try to streamline this process and then decide how to move forward with this. Does that sound fair?”
Banisch said he would speak to the town attorney about how long it would take together a lease document as the selectmen nodded at Fitzgerald’s suggestion.
“I just want to understand,” Banisch said with a laugh. “You [Fitzgerald] are summarizing, you’re not telling us what to do right?”
“Oh not at all,” said Fitzgerald. “However if someone needs it, I am willing to give them a timeline.”
Getting to this Point
Parents and families from OLMPA first came before the BOS on April 9 to discuss the potential of leasing Island Avenue School. Closing Island is part of the BOE response to declining enrollment; as of now the plan is to close the school in June 2019.
OLM, located at 149 Neck Road in town, is the main Catholic K to 8 school serving Madison and Guilford since 1954. Over the past few years, the school community has been left in a state of flux following an announcement that the school’s lease would be terminated and then a more recent announcement early this year telling parents that the school building would close at the end of this academic year and the school be combined with St. Mary’s School in Branford.
Following the news of the imminent closure, some OLM families banded together to begin looking for ways to separate the school from the local parishes to form an independent school grounded in the Catholic faith, and find a permanent home, ideally still in Madison.