By Polly Keary, Editor
A two-year dispute with the landlord of the building that the Monroe School District once leased to hold the Sky Valley Education Center has ended.
The district will pay the landlord $450,000 for the lease the district broke in 2011, and will also pay $450,000 that the district owes for improvements made to the building, for a total of $900,000.
But it gets the district out of about $1.5 million that remained on the lease.
In February of 2011, the school district went forward with a plan to consolidate some buildings. Three middle schools merged into two, and alternative school Sky Valley Education Center moved in to the leftover building.
Prior to that, since 2002, the district had been renting a building in the Fryelands for about $65,000 per month to hold the large education center.
The move would cost some money; the district had been making payments on improvements made to the Fryelands building, and would have to pay the $450,000 balance all at once, rather than making payments until 2018 as planned.
But the district would potentially save $1.5 million on rent.
In order to do that, though, the district had to break the lease, which was scheduled to end in August of 2013. The district thought it was within its rights to do so.
The lease read, “Tenant shall have the right to terminate the lease at any time, with six months’ prior written notice; if tenants’ use is no longer acceptable and the cause, such as a change in state law, rule, regulation and/or state funding to district is beyond the tenants’ control.”
Since a change in state funding had triggered the move, the district’s attorney believed the district was okay to back out. In February of 2011, the district gave the landlord six months’ notice, to end in August, at the start of the following school year.
The landlord, Fryelands Sixth Avenue LLC, sued.
Acting on legal advice, the district gave a second six months’ notice, ending in January of 2012. That added $275,000 to the cost of the move.
Attorney’s fees have added up to about $300,000 so far, bringing the cost of the move up to $575,000.
Monday, March 25, the district agreed to give the landlord $450,000 of the amount outstanding on the lease, bringing the total cost of the move to about $1,025,000.
By a back-of-the-envelope estimate, that means the district still saved about $575,000 by moving; although not all attorney’s fees have yet been tallied.
The district will also pay the $450,000 outstanding for the improvements made, an amount the district had always planned to pay.
Had the district not settled, the matter was scheduled for court in June.
“The district continues to believe it had a very strong case and that it would have prevailed had the case gone to trial, though no court case is ever a sure thing,” wrote school board member Jim Scott in a Facebook post on the matter.
“As far as the $900,000 settlement, that includes the $450,000 in tenant improvements the district has always known it continued to owe the landlord,” he enlarged. “The additional $450,000, coming from reserves set aside specifically for this purpose, is far less than the cost of paying for an empty building would have been had we let the lease run its course.”