, Gloucester, MA

March 19, 2013

Charter grants to help pay creditors

By Marjorie Nesin
Staff Writer

---- — The Gloucester Community Arts Charter School is gearing up to repay some of the school’s lingering $89,266 in debts through a federal grant and an assets sale that the state approved this month, as trustees wrap up the closing procedures.

The state’s Department of Education is readying this month to release federal grant payments that can be used explicitly to pay back the creditors — mostly the school’s own trustees — who made loans to the school to pay teachers during the final weeks of its operation, according to electronic correspondence from the Department of Elementary and Secondary Education to school trustees.

“Because the federal grant funds are reimbursing GCACS for services already rendered and paid, no other use of these funds is permitted,” wrote Bill Bell, chief financial officer for the state’s education department.

The creditors Bell listed to be repaid through the grant include extending $15,000 to Cape Ann Medical, also listed as landlord Mick Lafata in a loan document, and another $12,000 payment to Allan Huntley, a member of the Essex County Community Foundation’s Board of Trustees. A promissory note lists Trustees Chairman James Caviston as the “lender” of the $12,000 chunk, but later lists the lender in that case as Allan and Marla Huntley.

Trustees including Jay Featherstone, Susan Hogue and Art Beane, will be paid back in full between $1,000 and $2,500 each, on their interest-free loans. The grant will also repay $3,000 to Gordon Baird, who resigned from the Board of Trustees at the close of the calendar year.

But, even after about $35,000 is dispersed to creditors, the school will remain about $54,266 in the hole. And those who trusted that a state-approved sale of the school’s assets would set the balance back at $0 will likely suffer disappointment, according to minutes from a March 11 charter board meeting, when trustees determined the sale money would not suffice. A March 5 invoice that estimated the school was in about $90,000 debt, on top of the money owed to creditors, did not include some lease payments due and bookkeeper expenses, according to meeting minutes

“The amounts owed significantly exceeded income expected from the sale of assets,” the minutes noted.

And those amounts are totaled to exclude a $45,734 bill from the law firm the school has used, Foley Hoag LLP., which is not seeking payment for the outstanding balance remaining as of March 5, according to the minutes.

The school’s former executive director and current trustee Tony Blackman noted at the March 11 meeting that he knew of school buyers interested in buying “large” quantities of items, including one that offered to pay over $30,000 “for a large portion of the assets,” according to meeting minutes.

The school proceeded with planning the sale of assets, some which had been donated to the school, though the plan met some resistance. Typically when a school closes, the state seizes leftover assets, but in the charter’s case, because the school closed in such dire financial straights, the state granted permission for the assets sale.

The sale, as approved by the state, will take place on two different days, with the preview already past in February, when some 45 parties turned out to view the assets.

The two-day sale — still not scheduled as of Monday — will include a first day of buy-now, fixed prices with priority going to the buyer interested in buying the highest quantity of an item. Sale day two sells the left over items for the highest price offer, which must be emailed in by 3 p.m., according to meeting minutes.

While the school’s landlord Mick Lafata, who the school owes over $1 million in a broken rent contract, has said he would like to keep the assets in his building, trustees decided to move forward with the sale.

Some Gloucester residents, including City Councilor Bruce Tobey, still believe the Gloucester Public Schools should receive the leftover assets.

Tobey, at a March 12 city council meeting, filed an order that called on Mayor Carolyn Kirk to intervene with the state’s decision to allow the sale.

“I just think it makes sense that the assets follow the kids,” Tobey said.

Marjorie Nesin can be reached at 978-283-7000, x3451, or at