Imagine Update

From a recent presentation by the leadership of Entertainment Properties Trust, the REIT that owns 31 schooled operated by the Imagine Schools:

There are about 5000 charter schools in place now at about 4% of the total public school system in the United States and it's grown at about 400-500 units per year, which is about a $2 billion dollar annual investment opportunity set. So it's a very big and high growth category that is going to continue to represent opportunities for the company.

The executives also note the promising political climate.

This all makes me wonder: what exactly is Imagine's tax status? How does their official status impact the way they do business with someone like EPT? Time for a little Imagine update...

Over in Indiana, Don Willis is doing business out in the open these days - well, until today. Willis is now gone, as are two other members. Recall Willis' dealings with the still debated Imagine School in McKinney - and, yes, that's the same McKinney represented by Texas State Board of Education outgoing member Don McLeroy (back during the fiasco known as the Texas Standards Revisions Circus, I happened to catch a bit of a far less entertaining hearing where McLeroy expressed his clear frustration with the delay on the McKinney charter. I was later told a discussion about this was not on the agenda, so no public discussion was possible). Ball State has not agreed to any of the locations for the new Imagine-run school in Fort Wayne, and it seems almost certain the school will not open until 2011 (and possibly not at all?). The JG article also notes the potential site will be purchased the same with other deals have worked out: via SchoolHouse Finance, and then sold to an REIT (like EPT, which owns MASTer Academy), likely with a triple net lease - and here's why that's significant. A triple net lease means the tenant pays the taxes on the property. I don't know the answer to this question, but do nonprofits pay property taxes differently than a for-profit?

As the Entertainment Properties Trust guys make pretty clear in the presentation above, more students = more money. In talking about their relationship with Imagine, EPT guys also note they get paid before Imagine takes it's management cut. That's bad news for schools like Imagine Schools Land O'Lakes in Tampa, Florida, which was just denied its request to add an eight grade to their program (approx. 75 students). Remember: growth and expansion is one of Imagine's key tenants. Why, exactly, should charter schools be evaluated based on how they grow other schools? Once again - surprise, surprise - we're back to a sticking point with Imagine: are they really a non-profit? It does make a difference - particularly if they're lying. Their "New School Development" webpage, which outlines one of their six "Measures of Achievement," specifically claims Imagine is a nonprofit and that - as a nonprofit - they have no economic incentive to expand. Prove it, Imagine. There's clearly evidence you have a for-profit arm. Will you at least admit that?

Over in MD, Imagine is involved in a proposed development deal involving the construction of a thousand homes. Unlike most (all?) of Imagine's other schools, this one would be a contract school. Why a contract school? How is a contract school different than a charter school?