Christian high school dream in jeapordy
Sadly, a long-held dream of many Yorba Lindans in this historically church-oriented city--a Christian high school--is in jeopardy, unless major hurdles that involve financing and lease terms can be overcome in time to meet a deadline less than two months away.
Friends Christian High School, with plans for a 1,200-student campus on a 32-arce parcel of city-owned land on Bastanchury Road, west of Eureka Avenue, is close to default after missing a quarterly $210,656 lease payment to the city due Jan. 1.
Unless terms in the lease signed in 2003 by the city and Yorba Linda Friends Church are changed, further funds to build the private high school are not likely to become available, according to statements by school officials at a recent City Council meeting.
The lease has been amended four times, once each year 2003-06, and a joint-use pact for the city to use the campus’s recreational and athletic facilities was signed in 2005.
Ideally, school officials want to purchase the land or set up a lease-purchase option, proposals denied by the council last year. Also rejected by city officials is a change in the lease that would subordinate the city’s interest to a lender.
Council granted the school a 90-day reprieve on the missed payment, but unless two payments are made by an April deadline, a default from lease terms will be declared.
Dan Duffy, the school’s managing director, is expected to return to council before the April 1 cut-off with proposed new lease terms after working with the school’s “lender base, legal counsel and donors,” he said at a Jan. 17 meeting.
In a Dec. 29 email to city officials, Duffy stated, “Basically, without the ability to build the school (under the current lease terms) and with no confirmed ability to ultimately generate revenue from a completed facility, FCHS cannot sustain the lease payments.”
If the rent remains unpaid or the city terminates the lease, the city could lose more than $800,000 in revenue in 2012, “which will result in a significant decrease in revenues to the city’s general fund,” City Attorney Todd Litfin noted in a report to council members.
“The city…could potentially attempt to recover certain amounts owed under the lease as a remedy for Friend’s Church breach of the lease” or “lease the property to a third party” or “to Friends under a new lease” to “establish a new rental stream of income,” he added.
In a September letter to the city, Duffy outlined several financial problems resulting from the lease terms, including the rising cost of lease payments that he stated could reach $6.2 million annually by the 99th year, in 2102, totaling more than $253 million in payments.
Significantly, Duffy noted, “Some lenders…avoid any financing on leased land, while others … take a worst-case scenario perspective and simply will not fund this project.” He added that financing has been turned down by more than 12 financial institutions.
More than $14 million has been invested in the project so far, according to Duffy, including more than $3 million in lease payments and more than $9 million for “entitlements and soft and hard costs for tenant improvements on the 32 acres.”
Friends Christian High School, with plans for a 1,200-student campus on a 32-arce parcel of city-owned land on Bastanchury Road, west of Eureka Avenue, is close to default after missing a quarterly $210,656 lease payment to the city due Jan. 1.
Unless terms in the lease signed in 2003 by the city and Yorba Linda Friends Church are changed, further funds to build the private high school are not likely to become available, according to statements by school officials at a recent City Council meeting.
The lease has been amended four times, once each year 2003-06, and a joint-use pact for the city to use the campus’s recreational and athletic facilities was signed in 2005.
Ideally, school officials want to purchase the land or set up a lease-purchase option, proposals denied by the council last year. Also rejected by city officials is a change in the lease that would subordinate the city’s interest to a lender.
Council granted the school a 90-day reprieve on the missed payment, but unless two payments are made by an April deadline, a default from lease terms will be declared.
Dan Duffy, the school’s managing director, is expected to return to council before the April 1 cut-off with proposed new lease terms after working with the school’s “lender base, legal counsel and donors,” he said at a Jan. 17 meeting.
In a Dec. 29 email to city officials, Duffy stated, “Basically, without the ability to build the school (under the current lease terms) and with no confirmed ability to ultimately generate revenue from a completed facility, FCHS cannot sustain the lease payments.”
If the rent remains unpaid or the city terminates the lease, the city could lose more than $800,000 in revenue in 2012, “which will result in a significant decrease in revenues to the city’s general fund,” City Attorney Todd Litfin noted in a report to council members.
“The city…could potentially attempt to recover certain amounts owed under the lease as a remedy for Friend’s Church breach of the lease” or “lease the property to a third party” or “to Friends under a new lease” to “establish a new rental stream of income,” he added.
In a September letter to the city, Duffy outlined several financial problems resulting from the lease terms, including the rising cost of lease payments that he stated could reach $6.2 million annually by the 99th year, in 2102, totaling more than $253 million in payments.
Significantly, Duffy noted, “Some lenders…avoid any financing on leased land, while others … take a worst-case scenario perspective and simply will not fund this project.” He added that financing has been turned down by more than 12 financial institutions.
More than $14 million has been invested in the project so far, according to Duffy, including more than $3 million in lease payments and more than $9 million for “entitlements and soft and hard costs for tenant improvements on the 32 acres.”
posted by Jim Drummond at 12:00 PM
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