The Aldine Independent School District in North Houston approved in a 4-3 vote today what dissident board members called a hasty deal to grant the city a 30-year lease for an abandoned school at $1 per year, even though the building and the 7.8-acre property are valued at $2.7 million.
Two years ago, the Aldine board approved a 10-year lease, also at $1 per year, for the city to build the planned Bethune Empowerment Center business incubator and vocational school at the shuttered Bethune Academy elementary school in north Houston's impoverished, mostly black Acres Homes neighborhood. In an August 7, 2021, ceremony in Acres Homes to commemorate the start of construction, Mayor Sylvester Turner said the city had raised about $4.6 million for the planned first phase now scheduled to be completed by the end of the first quarter of 2022, including $4 million from a federal block grant and $500,000 from utility Reliant Energy.
But during a board meeting Monday to discuss the items the board planned to vote on today, city and other officials associated with the project asked for the 10-year lease to be converted to 30 years because they now envision an expanded $37 million project. The bigger facility would include a “Maker Center” manufacturing hub, similar to the city-supported, $38-million East End Maker Hub that opened in June 2021 that is designed to bring thousands of high-tech manufacturing jobs to the city's east end.
The planned Bethune project has raised about $10 million but potential contributors of the remaining $27 million want a lease longer than 10 years to attract tenants, Marlon Mitchell, CEO and President of Houston Business Development Inc., told the board. Houston Business Development, a non-profit created by the city in 1986 to stimulate the economies in the city's poorer areas, would build, operate and manage the Bethune center.
Two of the Aldine board members said Monday that today's vote should have been postponed until their questions and concerns were addressed.
“This is the first time we've seen this presentation,“ said Conception “Connie” Esparza. “I do think we're rushing into this; thirty years is a long time.”
Viola Garcia said the district's top priority is to serve its students and there is a possibility the district would need to reopen the Bethune school in about 10 years with a potential influx of young families into Acres Homes.
Garcia also said the Aldine board members were not notified about the August event held by Turner and attended by other dignitaries, including bombastic U.S. Representative Sheila Jackson Lee, whose district includes Acres Homes. Aldine's relationship with the city “feels like an imposition” rather than a “true partnership,” she said.
Garcia said she and other board members had questions about the progress of the project, costs that would be incurred by the district on insurance and utilities, and the potential for Aldine students to receive tutoring at the facility. She said there was no urgency to vote and asked for it to be delayed until all the questions were answered.
But board president Randy Bates said Monday that a majority of the seven-member board planned to approve the 30-year lease and “we vote it up or down” the following day.
Board member Rose Avalos asked the city officials “if the building is so valuable,” why doesn't city just buy it rather than leasing for $1 per year for 30 years?
Avalos, Garcia and Esparza, all voted against the lease extension. Several board members, including Garcia, Avalos and Bates, on Monday asked Mitchell if it would be possible to extend the lease by a shorter term. Mitchell said the project would need a lease of at least 27 years to be viable.
Shannon Buggs, director of the mayor's complete communities office, said Monday that the city did express interest in buying the property but the Aldine board instead wanted the 10-year lease. The maximum duration for a lease that the city can legally sign is 30 years. Turner in April 2017 launched his “Complete Communities Initiative” to provide “equity and opportunity” to 10 impoverished Houston neighborhoods that have mostly minority populations. Acres Homes is one of those communities and the Bethune project is being developed under the auspices of that program.
Board member Steve Mead said one reason the board preferred the 10-year lease two years ago was the potential that the district would need to reopen the Bethune school in the future. Avalos said if she had known two years ago the city would want to convert the 10-year lease to 30 years, she may have not voted to approve the original lease.
Mead, the only white Aldine board member, voted with the three black members to extend the lease.
Bates told Schoolgrader Monday after the meeting that the district would benefit from the lease because it is currently “bleeding” from paying for utilities on an unused building, but he did not know how high those utility bills are. During the meeting Bates said Aldine could help the grater community through leasing the empty school, adding that the planned vocational training would also help former Aldine students train for “respectable” paying jobs.
A few board members, including Bates and Avalos, asked Monday if the proposed center would award contracts to minority- and women-owned businesses. Mitchell assured that it was Houston Business Development's “core mission” to help minority-owned businesses, and “probably 85% of our portfolio is brown and black.”
Officials with the project said Monday there was some urgency in extending the lease to allow them to seek in a timely manner tax breaks under the New Market Tax Credit Program. According to the U.S. Treasury web site, the program “attracts private capital into low-income communities by permitting individual and corporate investors to receive a tax credit against their federal income tax in exchange for making equity investments in specialized financial intermediaries called Community Development Entities (CDEs). The credit totals 39% of the original investment amount and is claimed over a period of seven years.”
Under the original 10-year lease the district agreed to pay for the utilities until the proposed center receives its occupancy permit from the city or for 12 months, whichever period is shorter, with a maximum payment of $75,000. The district's attorney, M. Kaye DeWalt, told the Monday board that she did not know how much the district has spent so far on utilities so far under the contract. She also said the district is still paying for insurance on the building and will continue to do so until the project receives its occupancy permit.
When Schoolgrader asked DeWalt after the meeting Monday if it is legal for a Texas school district to lease property at a substantial discount for non-educational purposes, she asked Schoolgrader to submit questions to the district's public relations staff.
The Texas Education Code says that one of the duties of school boards in the state is to “seek to establish working relationships with other public entities to make effective use of community resources and to serve the needs of public school students in the community.”
The code also says a board may donate “surplus property” such as a closed campus “to a municipality, county, state agency, or nonprofit organization.” The prerequisites for such a donation are a properly noticed public hearing, the property having historical value and not being needed by the district at the time, and the intended use of the property for a public purpose by the receiving entity. Presumbably a 30-year lease with $1/year would not be classified as a donation under that section.
The code adds that schools for the blind or deaf may lease facilities at less than market rates to public entities as long as the board determines there would be “sufficient public benefit” from such an arrangement. The code does not specifically address how independent school district boards may lease properties.
According to the Harris County Appraisal District web site, the property has a market value of $2.7 million but the Aldine district pays no taxes on it.