The four Wilmington, Delaware traditional school districts are in the middle of a long lawsuit filed against them by the Charter Schools Development Corporation last January. But the lawsuit itself is absurd!
The issue involves tax refunds for property the Charter Schools Development Corporation (CSDC) owns at 920 French St. The current inhabitant of this property is First State Montessori Academy. The former tenant was The Delaware Met, the infamous charter school that managed to close less than five months after it opened. CSDC is claiming they were given an exemption from paying taxes to the Christina School District and New Castle County Vo-Tech. The amount they want back from Christina and the other three districts is $184,088.45 for taxes from November, 2014 until May, 2017.
CSDC was granted the exemption from New Castle County 28 months after they filed for the exemption. New Castle County denied the request in April, 2017 but CSDC appealed the decision and won in May, 2017. Last fall, attorneys representing CSDC came to an agreement with New Castle County for the exemption to occur between 2014 and 2021. They sent Christina Chief Financial Officer Robert Silber a letter asking for the refund. The Christina Board of Education unanimously voted no on the tax refund request at their December, 2017 board meeting.
The following information, presented to the Christina Board of Education from Silber, explains why all four of the Wilmington school districts are involved in this action.
Taxes associated with the requested refund include the Tuition, Debt Service, Match Taxes, and Operating Taxes. Operating taxes include those taxes raised through operating referendum and the tax rate established by the New Castle County School District (Tax Pool 46.8₵ per $100 of assessed value). This Tax Pool is charged against the assessed value of the Property, and is allocated to the Brandywine, Christina, Colonial and Red Clay Consolidated School Districts. In order for there to be a refund of school taxes of this tax component, all four of the Boards of Education for the above Districts would have to agree to the refund. The Tax Pool Portion is determined to be $38,818.31.
So what is the rationale behind the districts not giving the refund to CSDC? Silber said it is all contingent on one word- “may”. Yes, the old “may” vs “shall” argument. Which is the key to several legal cases across America!
Delaware Code 14 Del. C. § 1921 addresses the refund of school taxes. Section 1921 Refund of county taxes paid in error states “Local county school taxes paid through error or by mistake may be refunded by the school district to which the taxes were paid as follows:”
The use of the word may, in “may be refunded” gives the Board the discretion.
During the board’s discussion of the action item, Silber never mentioned the property is owned by CSDC and First State Montessori Academy is the tenant. It didn’t matter because the board said no to the refund. Silber said all four school districts would have to agree to the refund. Since Christina’s board voted no, that answered the question for the other three school districts.
In January of this year, CSDC filed suit against Christina, Brandywine, Colonial and Red Clay. According to information on the case, it will go to trial in June of 2019.
In looking at the other three school districts, very little information was found about this. Red Clay had no items about it on their Board Docs or board minutes. Colonial had something about “refund of property taxes” on the agenda for their February, 2018 meeting but no supporting documents. I did reach out to the Superintendents of each district for more information on this.
I did listen to the Colonial board meeting from February where their CFO, Emily Falcon, talked about it with the board. Falcon said the company involved was not a non-profit entity. She explained that all four districts were involved as a party of the New Castle County School Districts but since Christina’s board denied the request it was a moot point. As well, the property sits within Christina’s district in Wilmington. Falcon explained that since Christina and Colonial share the same legal counsel, they would let them handle this. When asked about the amount of the refund by a board member, Falcon did not have that information on hand. Their board President, Joseph Laws, asked who the owner of the building was. Once it came out that it was charter school related (even though they incorrectly guessed the address was the Community Education Building), Laws chuckled and said “No”. Further discussion ensued regarding CSDC and how they operate the buildings they own and the charter schools do the teaching. At one point, Laws said “that’s how they make so much money”, referencing the tax refund request. He told Falcon to “fight them”.
What is interesting is Christina had a similar tax request refund brought before their board two months later. This time it was from Christiana Care. Once again, it was a situation where they asked for an exemption (in 2016), but New Castle County didn’t approve it until May, 2017. The person who decided on these exemptions was Brian Maxwell. He was Governor Markell’s Director of the Office of Management and Budget when Ann Visali resigned in 2016. Prior to that, he was the Deputy Director of OMB. Maxwell left New Castle County in May of this year.
The civil trial is scheduled for June 3rd, 2019 at Superior Court in New Castle County. Charter Schools Development Corporation is a for profit corporation. Even though First State Montessori resides in the building and they are non-profit, the owner of the building is not. Montessori pays rent and CSDC earns income from that. Why Maxwell would approve them as a tax-exempt entity is beyond me.
To see more about the strange history of the property at 920 N. French St., before First State Montessori Academy became tenants, check out this very interesting article I did back in 2015. It seems like that property is cursed! Especially with what I’m hearing about Montessori these days, but that is a story for another time!