Three Fulton County charter schools – Fulton Science
Academy Middle School, Fulton Science Academy High School, and Fulton Sunshine
Academy elementary school – have received notice from their construction bond trustee
Wells Fargo Bank that they are in default on an $18.9 million construction loan
secured by Alpharetta Development Authority bonds. According to the default
notice, officials of the middle school had been notified by the Fulton County
School System that there were “significant reservations” about renewal of the
schools charter before the bonds were issued, but that information was not
disclosed to the bank in connection with issuance and sale of the bonds. Wells
Fargo contends that failure is a breach of the bond indenture.
The middle school has 507 students, and has
received over $30 million in taxpayer funds over the last ten years. Up to $3.7
million per year in public funds could have been available to cover $1.5
million in annual payments due on the bonds over the next ten years, but that
funding will end June 30 when the charter contract with Fulton County School System
expires. Both Fulton County Schools and the State of Georgia have refused to
renew the middle school charter, citing concerns with fiscal and management
practices at the facility, including no bid construction contracts entered with
companies having ties to school officials. Last week some of the bonds were
sold at 69% of face value by worried investors, and the bond rating has been
reduced to junk status. The notice of default is the first step in foreclosure
on the three schools’ under construction 44 acre campus, including a planned
90,000 square foot instructional building, and seizure of school operating revenues
by the bond trustee.
Construction work on the new campus, designed to
house all three charter schools, has stopped. When the 10 year charter renewal was rejected, the
schools were offered a compromise 3 year charter, but rejected the compromise
and determined instead to become a private school on July 1.
