The D.C. Public Charter School Board office on Jan. 22, 2019. (Bill O'Leary/The Washington Post)
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Building Hope is, according to its website, a national nonprofit organization based in Washington that “partners with investors and philanthropic and government organizations to provide comprehensive charter school services.” Those services include providing financing for charter schools facilities “at below-market rates,” helping developing charter facilities, serving as an incubator space for new and expanding schools, offering financial consulting, and more.

Its website also says that it has provided more than “$281 million in direct loans, credit enhancements, and equity investments to support over $1.7 billion in school construction” to help 273 charter school projects in 18 states and the District of Columbia, affecting more than 133,000 students. It is in the District that Building Hope says it has “enjoyed its biggest impact,” with its assistance resulting in 47 percent of public school students attending public charters.

All of that makes Building Hope a powerful organization. Its president is S. Joseph Bruno, who oversees and directs “all aspects” of Building Hope’s operations. His biography says he is “a certified public accountant with 35 years of accounting, finance, business and management experience; was a partner in two of the ‘Big 4’ international accounting firms; and was the CFO of a public company.”

His biography says he was the first hire of Building Hope — as a consultant in 2003, the year it was formed — “and has guided the organization ever since.”

This post is a look at Building Hope and some of the connections it has developed over the years. The author is Carol Burris, who is executive director of the advocacy group the Network for Public Education and a former award-winning principal in New York. She has written for the Answer Sheet for years on corporate-based school reform and the charter school movement, most recently in a piece titled “A report that detailed up to $1 billion in wasted federal funds on bad charter schools may have underestimated the problem."

Bruno declined to answer questions about this post.

Here’s Burris’s piece:

By Carol Burris

The original mission of the federal Charter Schools Program of the U.S. Department of Education was to help new charter schools get on their feet by providing start-up help. The program began small during the Clinton administration when Congress awarded it $6 million to give to states and a handful of schools that directly applied.

The program, known as CSP, is now a behemoth with a budget approaching a half billion. Congress, bending in part to pressure by the charter lobby, added additional programs and funding over the years. Special funding streams now exist for a variety of charter-related services including two different CSP funding streams (one federal, another state) to support the building and renovation of charter schools.

There are some who now argue that part of the charter movement, amply funded by the federal government, has become a web of interconnected vested interests for whom real estate is the central focus.

The story of one of its recent grantees, a nonprofit organization known as Building Hope, provides a case in point.

Building Hope

In 2017, the U.S. Department of Education’s Charter Schools Program, under the leadership of Education Secretary Betsy DeVos, awarded Building Hope an $8 million grant in order to “enhance its lending portfolio with a new tool, the Investment Note, to attract capital from high net worth individuals raising $25 million in funds.” And in 2018, Building Hope received yet another grant for a half-million dollars from yet a different Department of Education CSP funding stream.

Building Hope was founded in 2003, tax records show, and its first chairman was former accountant and entrepreneur S. Joseph Bruno. Bruno began as an accountant for Peat Marwick, working in the United States and Italy (Bruno was born in Sicily); he later became a partner in the firm. Bruno moved on, holding various executive level positions in both financial and health services. In addition to serving as president of Building Hope, he has been an independent director of GTT Communications since 2007.

When Building Hope began in 2003, Bruno did not receive a salary, federal tax forms show. However, the following year, when the nonprofit received a federal grant of nearly $2 million, Bruno received $110,000. The next year his salary jumped to over $308,000 with about $36,000 in benefits, the forms show. By 2016, Bruno’s annual salary climbed to $534,918 with a benefit package worth $58,650. He also draws a salary ($264,000 in 2018) from GTT Communications.

Building Hope accrues capital from grants, foundation and investor loans, the U.S. Department of Education, and Sallie Mae. According to its mission, it uses the funds to loan money to charter schools for facility financing and development. It also provides back office business and financial advisory services to charter schools for which it collects fees. Its 990 tax form for 2015 reported $4.4 million in income derived from fees and services.

Although some of the loans it receives from foundations charge no interest, according to its 2017 grant application, charter schools pay Building Hope a 1 percent loan origination fee plus 4 percent to 7 percent in interest. The foundation’s 2015 990 tax form, the last year its published 990 provides loan detail, shows loans that exceed 7 percent, including one for 12 percent.

Building Hope is connected to 10 limited liability real estate companies incorporated in Florida. Nine of the 10 list the same Washington address as Building Hope. Each has a distinct entity name — for example, Augustine Road Charter Property, LLC, Building Hope Colonial Drive, LLC and Building Hope Australian, Laudit

Building Hope Australian

Building Hope Australian filed as a nonprofit organization on May 28, 2015, with the Florida Department of State. Its principal officers were S. Joseph Bruno and Paul Leleck. It existed for less than three weeks, dissolving on June 16, 2015. Three weeks later, Building Hope Australian, LLC, was incorporated on July 5, 2015.

Why is this significant?

In 2015, the Palm Beach Post reported that on July 13 Redemptive Life Fellowship sold eight acres of lakefront property to Building Hope Australian for nearly $4 million. Note that date is after the switch from nonprofit to LLC status.

According to the Palm Beach Post, Building Hope Australian would lease the building to the nonprofit Building Hope, which in turn would lease the building to a charter school. The charter school tenant of Building Hope would be University Preparatory Academy, part of the for-profit Academica chain run by the Zulueta brothers who have built a real estate empire buying and leasing charter schools. The Redemptive Life Church would then lease the gym from University Prep in order to hold its services.

The Redemptive Life Fellowship and Building Hope

In 2015, Building Hope loaned Redemptive Life Fellowship $297,387.50 at an interest rate of 5.5 percent. The church’s remaining property, after its lakefront sale to Building Hope Australian, served as collateral. In 2016, Building Hope made a program related investment of $2,613 in Redemptive Life which ballooned in 2017 to $326,172. Both loans were for “operations.”

Redemptive Life was cash-strapped after it became the subject of an investigation into the misspending of Housing and Urban Development moneys and a subsequent default in 2015 on at least one of its loans.

Redemptive Life Fellowship was not the only religious organization to which Building Hope has loaned, granted or contributed money. The organization’s 990s include ledgers of grants and donations to religious charitable organizations including St. John’s College High School (Joe Bruno’s alma mater), Catholic Charities, Our Lady of Victory School, the Ridgely Ministries of God, and Zion Church.

In 2011, Building Hope gave Center City Consortium an unsecured, 10-year loan for more than half a million dollars at 0 percent interest. Center City Consortium is an association of Catholic Schools in the Archdiocese of Washington, D.C. In 2014, the schools closed and reopened as charter schools.

In addition, the nonprofit made donations in various years to Teach For America, the Center for Education Reform and a variety of charities such as The Sons of Italy Foundation. Keep in mind these donations were not personal donations made by Bruno himself, but rather donations and grants from a nonprofit whose mission is to help secure charter school facilities for which it has received and still receives millions in federal funds.

Building Hope and For-Profit Chains and Corporations

An examination of the organization’s 990s from 2011 to 2017 also reveals an abundance of loans and donations going to schools that are part of for-profit chains, including Academica, Accelerated Learning Solutions and Charter Schools Associates.

At least one below market loan subsidized by taxpayers, was given to a for-profit real estate developer. MG3 Orlando, LLC was formed on March 14, 2014. Twelve days later, on March 26 Building Hope gave it a $3.3 million loan. MG3 develops charter school properties and then sells them to charter chains, notably the for-profit, Charter Schools USA.

Of all of the for-profit chains to which it has issued loans, Building Hope has its strongest relationship with Florida’s Academica. New Jersey education blogger Mark Weber first described the relationship between Joe Bruno and Academica here. In 2013, Bruno was appointed the board chair of Academica’s Somerset Preparatory Academy, which opened a school in Washington D.C. with a $700,000 grant from the U.S. Department of Education’s Charter Schools Program.

Somerset Preparatory Academy did not last long. In 2018 and 2019, the school’s administration was accused of tampering with student records and inflating grades. After the faculty produced evidence to the news media, Somerset Preparatory Academy announced it would close and the school would be taken over by KIPP.

Building Hope and the 2018 National Dissemination Grant from the Charter Schools Program

In 2018, the U.S. Department of Education’s CSP awarded, for the first time, grants to help spread “best practices” among charter schools through a new program called the National Dissemination Grant. In all cases but one, funding was granted to increase facility funding or to influence the authorizing process by which districts and other entities approve charter schools. Only one winner mentioned the improvement of curriculum.

Three of the recipients were the amply funded “big boys” of the charter establishment — the California Charter Schools Association, the National Association of Charter Schools Authorizers and the National Alliance of Public Charter Schools. The California Charter Schools Association and the National Association of Charter Schools Authorizers secured nearly $2.4 million each.

The National Alliance of Public Charter Schools, which has spent over $1.2 million on lobbying Congress and the White House since 2015, received a grant for $2.38 million to create its own charter school facility center. From 2016 to the present, nearly all of their lobbying efforts were directed at asking Congress or the White House for increases in funding for the CSP program, which awarded them the grant.

One of the smaller organizations that received a grant for “disseminating best practices” was Building Hope. It applied for a $550,025 grant to create a Charter Schools Facilities Support Unit. The application pitched expanding the unit it had already in Florida by extending its reach to New York, Texas, Washington D.C. and unspecified rural areas.

The reviewers of the application highlighted application strengths as well as weaknesses. For example, it was noted that Building Hope “did not include clearly defined responsibilities, timelines, or milestones for accomplishing the project activities.” It was also noted that while the project called for a full-time hotline operator, in Florida the hotline received only “2.35 calls a week.”

Nevertheless, the Charter Schools Program gave Building Hope a two-year grant for $550,026, one dollar more than it requested.

Nearly one year after the announcement of the award, it is reasonable to ask what taxpayers got for their over half-million dollar investment. The first item on the application’s list of projects is the “Development of CSU Website (estimated completion in Q1 of project).” Here is a link to that website. The only state links that work are Florida’s, which were already in place before the project began.

Conclusion

Joe Bruno is a well-connected fellow in the charter school world. He once chaired the audit committee for the National Alliance for Public Charter Schools[2]. Bruno also serves on the boards of the Florida Consortium of Public Charter Schools (along with Fernando Zulueta), the Idaho Charter School Network, and Friends of Choice in Urban Schools.

Bruno was the subject of a 2015 Washington Post story that detailed his home, titled, “Paradise in Potomac: Every inch of couple’s estate built for living lavishly.” The author, Michael Lerner, wrote that in the home’s large library, Bruno likes to think about the problems of charter schools when he is not thinking about his basketball game or his two Ferraris. He also reported how much Bruno has enjoyed throwing parties in the estate for his “charter school friends.”

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[1] On July 21, I contacted Robin Odland at Building Hope Real Estate via email in order to better understand and therefore more fully explain the relationship between the Florida Limited Liability Corporations and Building Hope. He has not responded to my inquiry.

[2] Fernando Zulueta served on the Board of Directors of the National Alliance for several years.

CORRECTION: An earlier version said Bruno chaired the audit committee for the National Alliance for Public Charter Schools. He used to chair it but no longer does.