Nona Richardson, a spokeswoman for the D.C. Public Charter School Board, said staff members believe that Chairman Thomas A. Nida voted against an enrollment increase for William E. Doar Jr. Public Charter School for the Performing Arts on Feb. 21, 2006. Mark Lerner, who is chairman of the Doar school's board and attended the 2006 meeting, said Nida voted against the increase. The board's official minutes of that meeting do not reflect that vote but instead show that Nida joined in a unanimous approval of the increase, as The Post reported in a Dec. 14 Page One article and an accompanying graphic. Richardson said a memo asserting that the minutes are incorrect would be added to the charter board's file. Nida did not respond to requests from The Post for comment on his vote.
|Page 5 of 5 <|
Public Role, Private Gain
McCracken said in an interview that when charter school operators approach Nida for a loan, Nida does not directly negotiate with them on United's behalf. "He refers them all to me," McCracken said.
Two of the first charter-related loans that Nida helped arrange at United Bank went in 2004 to developers planning a cluster of schools along a desolate block of Edgewood Terrace in Northeast.
The potential of Edgewood Terrace had caught the attention of Bethesda-based developer Fred Ezra and his associates after a pioneering charter school, D.C. Preparatory Academy, bought a rat-infested warehouse and began converting it into an educational showplace.
Ezra-related companies purchased two neighboring vacant warehouses and marketed them to charter schools. "We have a little charter school team here," president Fred Ezra told the Washington Business Journal in June 2004. "And we're going to be contacting all the charter schools."
United Bank struck loan commitments with the Ezra interests for up to $11.6 million to purchase and renovate the warehouses. Nida was the loan officer, records show, and he acknowledged that he toured the buildings with the buyers on behalf of the bank.
Although large direct loans to charter schools are supposed to be reviewed by the charter board, loans to their developers or landlords are not subject to that scrutiny. Nida repeatedly participated as a charter board official in discussions and decisions involving tenants or potential buyers of Ezra's two warehouses, records show. Meeting minutes do not indicate that Nida disclosed his private involvement.
One warehouse tenant, William E. Doar Jr. Public Charter School for the Performing Arts, leased 22,000 square feet on the top floor at 705 Edgewood. Doar's leaders wanted to expand to use all the available space in the warehouse, which would mean even more rent for its landlord.
To afford and make use of the larger space, Doar asked to enroll more students. In February 2006, Nida and the charter board agreed to let Doar grow eventually to almost 800 students and serve additional grades, even though the school had not yet "implemented a curriculum for the school's current grade levels," charter board records show.
Doar's rent was now so high -- $679,000 the first year and then escalating to more than $1 million, records show -- that the school could "probably purchase the facility for what is being paid monthly in lease payments," the charter credit enhancement committee noted in October 2006.
The school needed the charter board's permission to hire a contractor to do renovations. On behalf of the board, Nida reviewed and recommended approving the contract, records show. To fund the renovations, Doar made arrangements to borrow $1.6 million. Its lender? United Bank.
In October 2006, Ezra's company sold its other warehouse, at 707 Edgewood, to D.C. Prep, the charter middle school down the block that had touched off the street's renaissance two years earlier. Nida and the rest of the charter board had voted to allow D.C. Prep to open an elementary school on the new campus. Again, minutes do not indicate that Nida's financial ties to the seller came up. An Ezra associate declined to comment on behalf of the investors.
The real estate market had turned. The warehouse sold for $5 million -- more than twice what the United Bank-financed developer had paid in 2004. "They totally flipped it to us," said Emily Lawson, D.C. Prep's founder. "From that perspective, it was frustrating."
The Math Mentor
After one school complained to the public charter board about the onerous lease it had signed with its landlord, Nida later quietly became the landlord's banker.
Washington Mathematics Science Technology Public Charter was on probation in 2003 for what the assistant principal called a "storm" of financial woes. School leaders complained to the charter board that part of the problem was their lease, escalating to more than $1.3 million a year, at a hulking former garage in Southeast known as the Blue Castle because of its faux turrets and garish paint job. Washington Math survived financially by subletting some of its space to another charter, Eagle Academy.
An independent reviewer for the charter board reported in 2002 that Washington Math's lease with the building's owners was "troubling" and risky. The next year, the reviewer said the terms of Eagle's sublease unduly favored the Blue Castle's owners. But Nida defended the sublet, pointing out the strong position of the landlord.
"I'm not sure that Eagle Academy had any real negotiating leverage with the landlord for this space, given the current shortage of affordable, adequate space for charter school facilities," Nida wrote in a fall 2003 memo. The charter board approved both leases.
By late 2004, records show, Nida sold a loan to the landlord with the strong position. United Bank lent $9.5 million to Bethesda-based 770 Limited Partnership to refinance and improve the Blue Castle, by then home to three charter schools. Nida signed one loan document and is listed on others as United Bank's representative. Despite Nida's business ties to the Blue Castle, he continued to vote on board matters involving its tenants.
"If I did a loan to a landlord and they just happen to lease to a charter school, I don't think that takes me out of the running of being able to review accountability plans and those types of things," Nida said.
By late 2005, Washington Math had become sound enough to be looking to move into its own place. To do that, it would have to get out of its lease, find a 50,000-square-foot building and secure financing. "We could not get a loan . . . if we were on the hook with a lease at the Blue Castle," said Shawn O'Reilly, then treasurer for Washington Math and now a member of the credit enhancement committee.
Nida helped. Privately, he said, he had advised school leaders on how to get out of their predicament. Then he took a series of official actions that effectively helped clear the way for the school to buy a building with a $6.6 million loan from United Bank, records show.
First, to get out of its lease, Washington Math needed Eagle Academy to take over its space. Eagle would need to enroll a lot more children to afford that. Nida and fellow members of the charter board took care of that Dec. 19, 2005, voting to almost double Eagle's enrollment ceiling to 260.
Next, Washington Math needed a big vacant building. One soon became available.
At a public charter board meeting Jan. 23, 2006, Nida proposed revoking the charter of the New School for Enterprise and Development, which was in a 50,000-square-foot renovated warehouse on Bladensburg Road. Like several other charters with troubles, New School had appeared before the board repeatedly and had been placed on probation. Revocation is the charter board's harshest punishment. At the time, it had meted out the sanction only once before, records show. In proposing to close New School, Nida decried its "lack of achievement and lack of results," minutes show. The motion carried.
Former New School board chairman Albert Hopkins Jr. said he disagreed with the decision to close New School. "I could never understand why they were in a hurry to have us sell the building," Hopkins said.
Washington Math's leaders were optimistic that they would benefit from New School's demise, records show. But then Eagle Academy announced that it planned to buy its own building rather than sublet the Blue Castle space.
Nida blocked Eagle's plan. At the charter board meeting Feb. 21, 2006, he lectured Eagle's leadership on problems with its proposed building purchase. "Mr. Nida concluded that the Board has decided not to take action on this request," board minutes note.
Eagle Academy soon struck a deal to sublet Washington Math's space, and in August 2006, Washington Math bought the defunct New School's building for $8.9 million -- funded with a $6.6 million loan from United Bank. Weeks later, Nida and the rest of the charter board approved Washington Math's move.
At board headquarters, a Post-It note attached to Washington Math's contract for the building purchase indicates that Nida personally approved that, too. Referring to the charter school by its initials, the note said, "Tom approved this agreement via e-mail w/appropriate parties from WMST."
Nida was not the loan officer for the United Bank loan to Washington Math and said in the interview he had nothing to do with the transaction. He said all his decisions about that school, Eagle Academy and New School were made in the interests of students and not to benefit United Bank or himself.
In some areas of the city, homeowners began pushing back against rapid expansion of charters in their neighborhoods. They were unaware that they sometimes were complaining to public officials with private ties to the projects they opposed.
In the fall of 2006, Elsie Whitlow Stokes Community Freedom Public Charter School was planning a move to a former seminary at the top of a dead-end street in the Brookland neighborhood.
Elsie Whitlow Stokes was still under the authority of the D.C. school board, which under the original congressional legislation had granted charters to more than a dozen schools and performed its own oversight. The public charter school board, however, was making plans to assume authority over Stokes and the other Board of Education charter schools.
Nida said that his public charter board was willing to regulate the additional schools. "There's no reason they should be cast adrift," he told The Post. The D.C. school board scheduled a Nov. 8 vote on exiting the charter business.
Two days before the vote, Nida wrote a letter to Elsie Whitlow Stokes officials. He offered a $6 million, 25-year loan from United Bank to help the school purchase and renovate the former seminary in Brookland.
"We look forward to building a mutually beneficial relationship with your school," Nida wrote on United Bank letterhead, noting that the deal included a $60,000 origination fee, with $10,000 due on acceptance. "Thanks for this opportunity to be of service."
Collateral for the loan would be all of the charter school's assets and all the taxpayer facilities funding, the letter said.
(United Bank eventually struck loan deals with three of the Board of Education schools newly coming under Nida's purview, records and interviews show.)
It would be another nine months before unwitting Brookland neighbors had the opportunity to stand before Nida and the public charter board in July 2007, asking them not to permit the school's move.
A month later, the charter board approved the Stokes relocation, with Nida recusing himself. By then, Nida had directed District officials to start sending taxpayer funds intended for the school directly to his bank to secure the loan. "Please make this change as soon as possible," Nida wrote on his bank letterhead.
"They shoved it in our face, and that was it," said Vicki Langford, a Brookland resident who only later realized that Nida had been involved in financing the move. "It feels like it is one big scam."
In 2006 on Capitol Hill, a zoning battle with homeowners prevented AppleTree Early Learning Public Charter School from operating a school on a residential block. So AppleTree asked the charter board in early 2007 for permission to increase its enrollment from 36 to 180 and open in two other locations.
Enrolling the extra preschoolers would bring the school's taxpayer funding to more than $3 million annually, records show. That would allow the school's operators to borrow more money, they told Nida and his colleagues. "Greater scale will provide us with greater opportunities for facilities financing," an AppleTree official said, according to a reporter's tape recording of the February 2007 meeting. The official explained that AppleTree needed $900,000 to ready the new space.
As the board prepared to vote, a commissioner from one of Capitol Hill's neighborhood advisory bodies tried to comment. "This is not a public hearing," Nida said, silencing the elected official. "This is a public meeting. And the agenda does not have public comment."
The charter board voted unanimously to approve AppleTree's enrollment request, although the school had failed to meet its current enrollment ceiling. And soon, Nida's employer, United Bank, lent AppleTree Institute $900,000 for its renovations, records show. Nida went on in his official capacity to recommend approval of AppleTree's lease, vote for its request to open new locations and vote months later to increase the school's enrollment yet again.
In the interview, Nida said he knew AppleTree officials needed a loan but did not consider recusing himself from the matter because he did not know they had decided to use his bank and had nothing to do with the transaction. "If I knew that they were dealing with United Bank specifically," Nida said, "I might have taken a different approach."
Nida said he was benefiting the community as both a charter school banker and a regulator. "I have done what I needed to to serve as best I could in this capacity," he said.
"If I have had any involvement with charter schools facilities of any kind, it is because there's been such an overarching need for charter schools to get access to any facilities anywhere, anyhow," Nida said. "In my connectedness with the charter community as lender originally and working with other lenders along the way, and as a person who is a resource, you know, at a national level for charter school facility financing, I am in the middle of this whether I like it or not."
Staff writers James V. Grimaldi, Theola Labbé-DeBose and Joe Stephens and researchers Rena Kirsch, Meg Smith and Julie Tate contributed to this report.