In One School Deal, Chairman Played Three Roles

By James V. Grimaldi and Theola Labbé-DeBose
Washington Post Staff Writers
Sunday, December 14, 2008

Thomas A. Nida often has played two roles when District charter schools enter into real estate deals. As a banker, he has arranged loans to the schools or their landlords. And as chairman of the public board that oversees charters, he has approved the schools' borrowing and spending.

But in one episode, Nida ended up wearing three hats.

The deal centered on the old Kingsman public school, a Northeast landmark that closed in 1993 because of declining enrollment. Kingsman became an eyesore and a haven for drug dealers, with punched-out windows and peeling paint cascading onto the floors. In 2003, a charity bought the dilapidated edifice from the city for about $300,000 and began to renovate it for charter schools.

Nida was the bank officer who handled the initial $2.45 million construction loan to the tax-exempt organization, Charter School Development Corp., known as CSDC. Soon after, Nida was appointed to the Public Charter School Board and began taking official actions that affected CSDC and its tenants. Then, as a banker, he refinanced the loan. After that, he joined the nonprofit group's board of directors, where he further helped expand its financing to obtain city revenue bonds.

Finally, in July 2006, Nida made a move that led to a financial windfall for CSDC. He led the effort and cast the deciding vote that shut down one of the two charter schools renting space in Kingsman, clearing the way for the other tenant to purchase the 54,810-square-foot building.

CSDC made almost $1 million from the sale. "We made a nice gain on it," said Frank Riggs, the former California congressman who is the group's chief executive, "which we need, to be candid with you, to offset the risk for properties we own in northwest Indiana."

Nida did not disclose his multiple roles in the Kingsman deal at a public hearing, according to a transcript, or before the vote, according to two charter board members who voted against the closure. Nida also has not listed his CSDC board membership on the financial disclosure forms he filed with the city. Nida said yesterday that he did not think he needed to disclose the position because it was unpaid.

In an earlier interview, Nida acknowledged his multiple roles but said he kept each of them separate. He said his official acts on the public charter board are always based on the needs of schoolchildren and are not influenced by his banking job or his unpaid position at CSDC.

"Any consideration that would have involved CSDC for better or worse was not a consideration in my decision," Nida said. "That hat that I wear on a charter board is what is best for the students, as far as I'm concerned. And if there is a financial consideration, good or bad, that is a distant second issue."

The board's 2006 decision to close Sasha Bruce charter school, with more than 260 students in grades seven through 11, left Options Public Charter School, which at the time had 240 middle schoolers, as the sole occupant of the Kingsman building. Options itself had almost been shut down by the city three years earlier, after management turmoil and news reports that its principal had an undisclosed criminal record. In the interview, Nida said the decision to close Sasha Bruce was based on its "lousy academic performance" as a result of management problems. "They were going down the toilet academically and financially," he said.

Board minutes reviewed by The Washington Post show that Nida had recused himself from one vote in 2004 related to Sasha Bruce's enrollment, although he said he could not recall why. But there is no public record that he ever recused himself from the discussions about closure. At a public hearing requested by Sasha Bruce to challenge the board's plan to revoke its charter, Nida led the questioning, suggesting there was financial mismanagement.

Officials from Sasha Bruce vehemently contested Nida's characterization. "There was nothing wrong with our financials," said Deborah Shore, executive director of Sasha Bruce Youthworks Inc., a related nonprofit that has a board of directors separate from the school and remains active in its 34th year serving runaway and homeless children.

Shore and other school officials told the charter board that although Sasha Bruce had run budget deficits in three of its first four years, it had a net of $118,000 because of a surplus in one year.

About a week after the hearing, the charter board voted at a special meeting outside of its monthly sessions. Board spokeswoman Nona Richardson issued a news release reporting that the vote was 3 to 2 (there were two vacancies on the seven-member board) to revoke the charter, but there were no meeting minutes taken. Richardson said recently that no breakdown of the vote was recorded.

It was only the third time that the board has revoked a school's charter. The decision, weeks before the start of the school year, sent the students and their parents scrambling to find another school.

Anthony J. Colón, one of the two charter board members who said they voted against revocation, said Sasha Bruce deserved another year to show improvement. The other opposing board member, Will Marshall, said he believed that voting to shut down the school for academic performance before it had started its fifth year was prohibited by the charter law.

Informed recently of Nida's varied connections in the matter, Colón said: "In general, when there's some perceived conflict of interest, we recuse ourselves from those conversations."

D.C. Council member Tommy Wells (D-Ward 6), who has criticized the charter board for lacking transparency, said the attorney general should investigate whether Nida violated conflict of interest laws. "Public officials in any close case need to err on the side of recusal," Wells said.

City officials and appointees who serve on nonprofit boards should treat any financial interest of the nonprofit as if it were their own, according to the D.C. attorney general's office. They "may not act on a government matter that would affect that organization," the office said in guidance on its Web site.

Harvey Schweitzer, who was the attorney for Sasha Bruce, said he considers Nida's previously undisclosed connections "cataclysmic."

The bad news for Sasha Bruce was good news for Options, which had long-standing ties to CSDC and had been invited into Kingsman by CSDC's founder, who also was an Options board member. The day after the Sasha Bruce vote, Charles Vincent, chief operating officer of Options, said he called CSDC to say his school wanted to move into Sasha Bruce's space and take steps toward buying the building. Vincent said the reaction from his landlord was, "I thought I'd hear from you."

At the time, Options was regulated by the D.C. Board of Education rather than the charter board. In 2007, Mayor Adrian M. Fenty's school reform plan shifted 18 charters, including Options, to Nida's board. Still, Nida said in an interview, he "didn't think it was necessary" to recuse himself from official action about Options, which was paying $75,000 a month in rent to CSDC at the time. He voted later that year in favor of a large expansion of the school's enrollment.

When the CSDC board voted in April 2008 to sell the building to Options, Nida recused himself, he said. Minutes released by CSDC do not mention a recusal, though they do note that Nida was absent.

As required by the charter board rules, Options submitted its $8.25 million Kingsman purchase contract for approval. But the board never voted on it. Instead, it was automatically accepted 10 days later under the board's "passive approval" policy. The sale was accomplished by emptying the school's savings to pay CSDC almost $1 million in cash -- essentially a down payment -- and then taking over CSDC's existing debt in D.C. revenue bonds.

As charter board chairman, Nida wrote a letter certifying that Options was "in good standing," which was submitted to the city bond office.

Two weeks after the sale closed April 30, the board reversed course, issuing Options a warning. It designated the school as "high risk" because of poor academic performance, having failed to meet No Child Left Behind status for more than five years. The board shelved the school's plan for a vocational center and imposed a moratorium on its high school expansion.

Nida said the board did not deliberately delay the "high risk" notice until after the building sale. It "was not a timing" issue "where I was connecting the finances or the interest of the CSDC to the school's performance," Nida said. "We were dealing with what the school was doing academically."

Last month, Nida voted "aye" on giving Options time to get its academic house in order. He said he saw no reason to recuse himself.

"If I believe it is appropriate for me to give my vote, I will," he said.

Staff writers David S. Fallis, Joe Stephens, April Witt and researcher Meg Smith contributed to this report.

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