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Horizon Charter Schools safe in Auburn despite turmoil, admin says

Disputes rising to a head for charter school
By: Jon Schultz, Journal Staff Writer
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An ongoing battle is being waged between Horizon Charter Schools and the company it pays for sites in Auburn, Rocklin and Elk Grove.

Allegations of misrepresentations and unpaid fees appear headed for litigation, which begs the question: What effect can all this have on the 250 students that attend K-12 classes three days a week in Auburn?

The Auburn Learning Center on Blocker Drive is used by two of Horizon’s home-study programs, and it is part of the same master sublease agreement with Group Access that encompasses the Rocklin and Elk Grove locations.

One of those sites, 290 Technology Way in Rocklin, was shuttered in October.

“Of course it is all very concerning,” said Maria Blix, principal of Horizon’s Auburn programs.

However, operations are continuing as normal in Auburn, Blix said, despite all the turmoil following the December closure of a Horizon program based in Rocklin and Lincoln.

“I don’t think we’re going anywhere,” she said. “As far as I know, our enrollment is continuing to go up.”

At the charter’s governing board meeting Jan. 17, Horizon CEO Craig Heimbichner linked the end of the Rocklin and Lincoln Accelerated Learning Academy (ALA) program to problems with the permit obtained by Group Access, which he alleges misrepresented the use of the site.

In December, Group Access had posted eviction notices at Horizon’s Auburn, Elk Grove and vacated Rocklin sites, citing the school as being behind on payments. 

“We are paid two months in advance directly to the business park here, so I don’t see how there would be any cause to evict us,” Blix said. “I feel like it was done to harass us. It was done to cause our parents to question and to fret over nothing, and we did lose a couple kids because they were worried our school was next.”

A Group Access attorney has disputed Horizon’s claims.

 

Anger over program closure leads to review

In October, Horizon closed its site that housed 391 students in its high-school Rocklin Academy of Math, Science and Engineering program and third-through-eighth-grade ALA classes. Heimbichner attributed the closure to imminent traffic safety issues.

Then, citing financial concerns and declining enrollment, Horizon discontinued the ALA program on Dec. 21, encompassing the K-2 classes in Lincoln.

Since then, parents and teachers from the disbanded ALA program have moved on to a new home-study program started at Lincoln, and a new charter school is in the works in Roseville.

A group of parents determined to raise awareness about what they deem ethical violations and mismanagement of funds related to the ALA closure brought the situation to a head at Horizon’s last board meeting.

They say they want to expose the true story behind what happened at Rocklin and Lincoln so the same thing can be avoided at Auburn and Horizon’s other site in Elk Grove.

Heimbichner announced he hired outside fiscal adviser Terri Ryland to review Horizon’s finances, and he said any potential issues that arise based on her findings will be addressed. Her report will be presented at a future board meeting.

The governing board also said it has worked to improve review and oversight processes.

Western Placer Unified School District and the Placer County Office of Education both said they recommended Ryland to Horizon.

“It’s really up to Horizon and the board to investigate the issues as they described,” in Heimbichner’s statement, said Scott Leaman, superintendent of the Western Placer district that oversees Horizon’s charter. “I’m really heartened they’re taking that step. I think it’s really positive.”

Heimbichner said Group Access misrepresented the purpose of the Rocklin location and number of students that would use it when obtaining a business permit from Placer County.

Placer County Senior Planner Alex Fisch denied Heimbichner’s assertion made in his prepared statement that Horizon learned “directly from Placer County that Group Access misrepresented Horizon” to the county.

“While Horizon’s operation … in Rocklin clearly exceeded thresholds set by the County of no more than 75 students at any one time and no more than 200 students per day, I have no specific knowledge of what Group Access, the master lease holder on behalf of Horizon, communicated to Horizon about limitations on use of this facility,” Fisch said in an email to the Journal. 

Throughout discussions between Group Access and the county regarding the proposed use of the Rocklin site, county staff “was always under the impression” Group Access and Horizon negotiated as a single entity, he said.

“Thus, the County would have no reason to expect that either business partner would have a differing understanding of the limitations on use of the facility,” Fisch said.

Group Access attorney David Durrett said his client communicated the use of the Rocklin facility as signed off by Heimbichner.

In an Oct. 24, 2011 letter to Placer County, Heimbichner described the Rocklin site’s use.

“Students do not attend classes five days/week,” he wrote. “Students study in their homes or local communities one to three days/week, and two to three days/week at the 290 IT resource center.”

Fisch wrote to Heimbichner on Sept. 28, 2012, saying that “it is apparent Horizon Charter Schools operates an elementary school at this location, which is not a permissible land use.”

Heimbichner said he inherited the problem of 290 Technology Way, which Group Access obtained the business license for in June 2011.

“Horizon did, in its past administration, agree to that location,” Heimbichner said. “I would never have agreed to that location.”

Wells Fargo posted a notice on the Rocklin site in January directed to Group Access and “any occupants of the property,” Horizon attorney Glenn Peterson said. Durrett confirmed a notice had been administered.

 

Dispute over financial obligations

The notice said Wells Fargo had not received one month’s base rent of $10,457, plus $3,000 of expenses that are common-area charges shared by everyone in the complex, Peterson said.

For the Rocklin site, Horizon pays Group Access $20,000 a month, and it had been requesting to see the master lease to learn how much of that actually goes to pay Wells Fargo, he said.

Upon receiving it in December, the base rent to Wells Fargo had been blacked out, and the first time Horizon learned the actual markup charged by Group Access was in the January notice, Peterson said.

The markup he’s referring to is the $10,457 base rent subtracted from the $20,000 Horizon pays to Group Access every month. To see that it had been marked up by 100 percent came as a shock, he said.

“I think some markup is appropriate because the sub-landlord, the sublessor, after all, is obligating themselves and taking the financial risk,” Peterson said, “but a 100 percent markup? That is just outlandish.”

The markup went unknown for so long because, “There was such trust and confidence reposed in Group Access,” he said.

Heimbichner said Horizon is current in all its contractual payments to Group Access, and it is disputing two additional fees that had never been agreed upon. He said the notice is a result of Group Access not paying Wells Fargo.

A message seeking comment from the Wells Fargo attorney who has been involved with the site was not returned.

Durrett said the notice was given because Horizon had not been paying Group Access in full. Those claims are unrelated to the Rocklin site and are predominately for IT services, both parties said. Asked what the current amount Group Access is claiming it is owed by Horizon, neither Durrett nor Peterson had a clear answer.

Regarding the markup, Durrett said on top of providing the facility, his client administers technology services, as well as telecommunications equipment, and has obtained everything from the plants to the permits.

“They should have known (about the markup) because they should have asked,” Durrett said. “But I think the way they approached it is they wanted a turn-key deal where my client took all the risk and they came in Day One, turned the key, and there was a school ready to go.”

The organizations’ legal representatives have been communicating, Heimbichner said, and Group Access’ role is “diminishing rapidly” and Horizon is “rapidly emerging in a strong position with our Auburn and Elk Grove facilities.”

“We are strong, we are healthy, and we have a lot of good things going on,” Heimbichner said.

Durrett said the disputed fees are likely to be the subject of a lawsuit.

Said Peterson: “We are on the precipice of litigation. Nothing has been filed yet, but if we are unable to resolve our differences through a mutual agreement, then we will very soon be in litigation, and the litigation will not be pretty.”

 

Auburn site expansion on hold?

Durrett said Horizon signed a contract to expand in Auburn, but Horizon won’t approve the plans even though the landlord is already charging for it. Heimbichner contested that, saying he signed off on the expansion in September and it is on track.

Enrollment doubled in the past year for Auburn’s K-6 Respect for Excellence and Creative Young Hearts and seventh-through-12th-grade School of Kreativity Innovation and Excellence that meet three days a week at the Blocker Drive office suite, Blix said.

 “We had hoped to add on two suites that would have given us four extra classrooms,” she said. “But, like I said, that’s been put on hold until they can figure out what they’re doing with Group Access.”

The property manager who leases the Auburn site to Group Access, which then subleases it to Horizon, assured Blix that the Auburn Learning Center was in compliance with its permit, and she now has a copy of it, she said.

A message left with Auburn attorney Paul Aronowitz, a licensed real estate broker who Durrett said owns the office space used by Horizon on Blocker Drive, was not returned. Peterson said Horizon cut a check directly to the Auburn landlord, bypassing Group Access, to pay its rent.

Durrett said that is a violation of their agreement.

Blix said although Horizon administrators have had to make some difficult decisions, she believes that, in the end, they did their best.

 “(ALA was) a phenomenal program as well, and it was sad to see what happened, but I honestly believe with all my heart that our administration did the best they could do with what they were dealt,” Blix said. “And I would like to give them the benefit of the doubt.”

 

Jon Schultz can be reached at jons@goldcountrymedia.com. Follow him on Twitter @Jon_AJNews