The charter school in this vignette has paid $9,500,000 for a five-acre campus and a couple of one-story buildings that the county’s assessors think is worth $3,315,300; and, for reasons noted later, I am confident that the assessors are right, within a margin of $300,000 or so each way.
Why did the school, or more precisely its landlord, pay three times as much as it should? Are the taxpayers involved? And what has this to do with immigration?
To answer the third question first: six alien investors (who may or may not get their money back) have put up a total of $3,000,000 to help finance this deal, and will, if all goes well for them, get six family-sized sets of green cards. This is being done through the immigrant investor, or EB-5 program, and is one of the EB-5/charter school relationships we have described from time to time.
Why the Multi-Million Dollar Markup? The charter in question, now named Lakeside Charter Academy (and earlier Thunderbird Preparatory Academy) is in Cornelius, NC, a suburb of Charlotte. It is located on the site formerly occupied, sequentially, by two churches, one or more of which may have failed (that part of the story is obscure); these were the To the Praise of His Glory Church, and the Greater Salem Church.
By 2014, the property was in the hands of the California-based Evangelical Christian Credit Union; on May 5, 2014, it sold the property for $1,300,000 to Provo Land Exchange LLC. Then things started to get interesting.
On November 18, 2014, Provo Land Exchange had a dollar-free transaction with ALA Anthem Enterprises, LLC, with the considerations not known. We do know, however, that Anthem is associated with a former member of the Utah State House of Representatives, Mike Morley, and that he is linked to American Charter Development, an active player in the charter school trade. The address of Anthem’s registered agent is 775 West 1200 North, Suite 100, Springville, Utah, 84663.
On June 18, 2015, Anthem sold the property for $7,650,000 – a neat profit of $6,350,000, or 588 percent, after the passage of 13 months from the time of the purchase from the Credit Union. Some remodeling may have occurred in this time period. The buyer this time was Vertex III, LLC, a Price, Utah, corporation.
Two years later, on June 30, 2017, Vertex sold it, for $9,225,000 to AEP Charter Thunderbird, an Oregon firm, making a comparatively modest profit of $1,575,000.
A year and a half later, on December 21, 2018, Thunderbird sold the property to Lakeside Charter Holdings, LLC, the current landlord, for $9,500,000. This time the profit narrowed to $275,000.
Interestingly, the address of Lakeside Charter Holdings is exactly the same as that of ALA Anthem, 775 West 1200 North, Suite 100, Springville, Utah, 84663.
Some perspectives on the $9,500,000 price. That figure seems high (and maybe exploitatively so) when compared to the website of Education Fund of America, the EB-5 middleman entity, which says of this school: “EB-5 Capital – $3,000,000, Total Investment – $5,100,000.”
It also seems even more excessive when compared to the county’s real estate assessment of $3,315,300.
It so happens that I spent ten years (part-time) as the chair of the Arlington County (VA) Board of Equalization of Real Estate Assessments, and thus have some knowledge of these systems. So I called up the Mecklenburg County Assessor’s Office and had an extensive conversation with the assessor for the pertinent part of the county, a really impressive civil servant who only gave his name as John. He agreed that the assessment/recent price ratio was unusual; he told me that this was a recent assessment (the county does it only once every several years), and that the assessment was based (as I would expect) on the basis of such variables as the size and the location of the site, the number of square feet in the two buildings, and their age, and the prices for similar properties nearby.
As to the property prices in the county’s books, which might be used in such an exercise, he said that none of them were “arms-length transactions,” and thus could not be used in the assessment process. “Sometimes individuals see something of greater value than the market would suggest,” he said.
These are gentle terms for what others might call “insider-trading.”
The Future? Controversy surrounds the school and it might be closed. If that were the case it would be disruptive to the teachers and the pupils, might be quite expensive to North Carolina taxpayers, and certainly would cause a loss of money to the six EB-5 investors. But the profits made during all those real estate purchases would probably be safe and sound.
The company it keeps. These may be wild coincidences, but are probably worth noting.
1) A member of the small board of directors of Lakeside Charter Academy is Andrew Yates. He is the head of the Red Dome Group, a political campaign firm that had employed Leslie McCrae Dowless, who in turn is a convicted felon, and who has just been indicted for the absentee ballot scandal in nearby Bladen County, which has led to a highly unusual re-running of the election in the 9th Congressional District in that state. Yates contends that he did not tell Dowless to do what he did.
2) Education Fund of America, the main EB-5/Charter School broker, shows photos of its EB-5 investments on its website. Following the entry for Lakeside Charter Academy is one for Lowcountry Montessori School in Port Royale, SC.
This is the school which had been chastised for financial improprieties and which said in reply that they simply were not going to spend the funds needed to correct those errors, as we reported earlier.
Birds of a feather?
All this is a just one more reminder that EB-5 investments in charter schools can produce excellent benefits for a select few, but not always for the more numerous groups, such as citizen taxpayers, kids, and teachers, nor for the aliens themselves.