Background Information

Background to Our Lease

MJBHA moved to the site for the former Peary High School in 1998. It leased the building from Montgomery County and has invested nearly $9 million to improve the building and maintain the property. In 2005, MJBHA began negotiating with the county to purchase the building to secure a stable future for the school in this beautiful location. County officials agreed that the sale would help to raise revenue and stabilize the Aspen Hill neighborhood. The proposed terms of the agreement between MJBHA and the county will come to a vote on November 30th.

A few facts about MJBHA and the former Peary High School site:

· The property of the former Peary High School (current home of MJBHA) was vacant from 1984-1996. It was terribly vandalized and became a hangout for gangs and drug use, and the neighboring civic associations were clamoring for its disposition.

· The Board of Education in 1994 determined that it had no need for the property as a school and deeded it to the County.

· In November 1994, the County Council approved a plan authorizing the County Executive to lease the property, including giving a potential tenant a right to buy the property or, failing that, to explore razing the building and turning it into a park, something that would have cost the County well over $1 million in 1996 dollars.

· The County Executive issued a Request For Proposals, seeking interest. The Academy was the only party interested in pursuing the property, but only on condition that it have a right to purchase.

· The lease, as negotiated, contains a contractual option to purchase the property. The purchase price was set in the original lease and is determined based on the average of three appraisals done at the time, adjusted by CPI.

· The building had zero value at the time of the lease. The Academy spent nearly $9 million in renovating the building.

Why the Council Should Approve The Purchase

· The Academy has been an anchor in helping to revitalize the Aspen Hill community.

· Neighborhood property values, which had been steadily decreasing, began to stabilize and increase when we moved in.

· As MJBHA, the former Peary High School property is available to the community for meetings, sports and other activities without cost to the County. These include Girl Scouts, Girls on the Run, Peary High School Alumni Association, and a number of local cultural groups.

· The Academy will remain required to maintain the property and the track, which is used regularly by neighborhood residents free of charge, in good condition and at no cost to the County.

· The Academy's exercise of its option has long had the support of the neighboring neighborhood civic association.

· The purchase price of more than $1.9 million will provide the County with much needed funds to support County programs.

· Although not required by the original lease, the Academy has agreed that the property will only be used as a school and has agreed to allow the County to repurchase the property at the same price plus CPI and depreciated value of improvements if it is ever abandoned. This will ensure that the Academy and any successor private school can never financially benefit from this transaction by redeveloping the property for a commercial or residential use.

What about the Arguments of Opponents?

Opponents make three basic arguments. None is well-founded.

· First, they claim that the property may be needed as a public school in the future. However, the Board of Education determined in 1994 that there was no such need and conveyed the property to the County as a result. Without the Academy, that property would now be a park, and there would be no facility there at all. Even now, the Board does not say there is or will be a need, only that it is possible.

· Some argue that, as a matter of policy, the County should not turn over public school facilities to private ownership. That is a legitimate question for consideration as a policy matter, but not one that can or should be used retroactively to abrogate a contractual agreement on which other parties have relied. The Peary situation was exceptional. The options facing the property were dire, and the County Council and Executive made a decision to authorize its disposition. We spent nearly $9 million in reliance on that agreement.

· Finally, some argue that the $1.9+ purchase price is too low and is far below the property’s state-assessed value. These arguments ignore the encumbrances on the property’s use. The Academy can use the property only as a private school. We cannot sell it to a developer for commercial or residential use. Moreover, as per the lease, the purchase price is based on the average of three different appraisals conducted by professional appraisers – appraisals that considered potential residential uses of the property as well, which, as noted, are prohibited to us under the terms of purchase. The price is fair, and it is based on what the contract required.

Bottom Line

The County induced a private school to commit $9 million of its own money to relieve the County of the burden of dealing with what was essentially a dilapidated eyesore with the inducement of an option to purchase. To now reject the valid exercise of that option once the private school has already spent the money would be wrong and unfair and would violate that agreement.