The entire document, which I obtained weeks ago via a Freedom of Information Act request, is published below.
ONE-TIME PURCHASE OPTION: If you'd only read the Record-Eagle story, you would never know that, according to the terms of the 20-year lease, the lessee (the Grand Traverse Academy) may exercise an option to purchase the building, fixtures and premises from the lessor (MDN Development/Noss) only one time: on February 1, 2019 for a sum of Three Million Nine Hundred Thousand Dollars ($3,900,000).
That's right, as I reported on March 16, it's a one-time option. Somehow, the Record-Eagle article missed that key fact.
The monthly rent for the first year is $30,000, rising to $38,000. In addition, the rent escalates right along with any interest increases in the underlying mortgage.
If the school is unable to purchase the building from Noss in February 2019, and continues to lease the building through the 2036, total lease payments could exceed $8.5 million dollars.
The 20-year term of the contract, and the financial obligation it imposes on the Academy, appear excessive when considering that the use of the facility is to house a charter school whose budget is derived largely, if not entirely, from public funds.
In addition to the above-market monthly lease rate ($30,000 per month, then levitating like a séance table to $38,000 monthly by the contract's second year), the lease contains a Purchase Option clause, with a price tag that delivers quite a punch.
The “lessee (the Grand Traverse Academy) may exercise an option to purchase the building, fixtures and premises from the lessor on February 1, 2019 for a sum of Three Million Nine Hundred Thousand Dollars ($3,900,000).”
The approved lease contract also states that the two parties “agree that the 2019 purchase price represents an arm’s length transaction which reasonably balances the purchase price with the loan and associated risk to the lessor.”