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Mount Clemens tables $15 million TEFRA bond approval after Prevail Academy says it was not consulted
Summary
The city held a required public hearing on up to $15 million in tax-exempt bonds to finance acquisition of Prevail Academy by Campus Partners One, but commissioners voted to table adopting the approving resolution until Prevail Academy and National Heritage can respond to outstanding questions.
The Mount Clemens City Commission opened a public hearing Aug. 2 under section 147(f) of the Internal Revenue Code on a proposal to issue charter-lease revenue bonds of up to $15 million to finance acquisition and improvement of Prevail Academy at 353 Cass Avenue. City staff and bond counsel said the city would not be issuing or liable for the bonds but is required to hold the hearing because the facility lies within city limits.
Prevail Academy’s board of directors submitted a written statement read into the record saying it had not been informed of the transaction and had not been asked to consider a lease proposal upon which the bond financing depends. The statement said the board would not make a decision until it received full financial and contractual documentation.
Holly Horley, bond counsel for Campus Partners One, told commissioners the financing is part of a multi-state initiative and that an Arizona industrial development authority was selected as issuer because it can issue bonds for projects in multiple states. She described a structure in which Campus Partners One would acquire the real estate and lease facilities back to the charter schools; lease payments, she said, would be structured to cover debt service on the bonds.
Commissioners and members of the public pressed for clarity about Prevail Academy’s role, the school’s tax status, the timing of any closing and why local school-board members had not been consulted earlier. Horley said the schools are not bound by the hearing and that the deal would not include a school that refused to participate. She also said Campus Partners One had applied for 501(c)(3) recognition and expected a determination shortly.
After discussion, a commissioner offered and the commission supported an amendment to table adoption of the attached approval resolution until representatives of National Heritage (the current manager/owner affiliate referenced in discussion) and Prevail Academy could provide additional information. The commission voted to table the resolution.
Next steps: The commission will revisit the resolution after staff receives responses or appearances from Prevail Academy and related parties and after additional documents are provided to the school’s board for review.
