THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, July 8, 1995 TAG: 9507080386
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY ALETA PAYNE, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Medium: 77 lines
School officials may be unable to break their $900,000-a-year lease on Celebration Station, the shopping-mall-turned-education-complex, which the city refused to buy for the school district earlier this year.
School Board members have been notified by the city attorney's office that they might have trouble terminating the contract, which does not expire for two more years. The board has hired an outside attorney to offer a second opinion on their options.
``We know there's a problem getting out of the lease,'' said board member Joseph Taylor. ``We're trying to work through it.''
``There is a concern in relation to Celebration Station,'' said interim superintendent James L. Pughsley.
Both Taylor and Pughsley declined additional comment. As a legal matter, the lease has been discussed by the board in sessions closed to the public.
Although school officials are proceeding with plans to move programs and offices out of Celebration Station, the board might elect to ``change direction'' and continue renting the building depending on the second legal opinion, said Anne Meek, assistant superintendent for organizational support services.
The earliest the board is likely to act is July 18, which is their next scheduled meeting.
The school district has budgeted rent through the end of August for Celebration Station and has money allocated to move programs. However, there is no rent money in the budget for the rest of the year, said Mordecai Smith, the schools' chief financial officer.
The lease agreement signed Aug. 5, 1992, establishes a five-year term of rental with options to renew for up to 10 additional years. The only option given for terminating the lease is if the programs housed at Celebration Station are no longer funded.
Former superintendent Sidney L. Faucette waged a fierce campaign to convince city officials to buy the 129,000-square-foot building on Virginia Beach Boulevard, which the school system has been leasing from a group of Pennsylvania investors. Faucette said the space was needed for a gifted and talented magnet school. A number of offices and programs were already being housed in the building, but less than half the space that the school district was paying for was being used.
City Council members balked at the $15 million price tag to buy and renovate the building, and school officials began making plans to shift the programs to other sites. Faucette told them, before leaving last month for a new job in Georgia, that the district would be able to get out of the agreement.
But that is not the case, according to Gerald Divaris, the local leasing agent for Celebration Station. He said school and city officials have been ``told from the beginning'' that they were committed to the lease through June 1997.
``It should be no surprise to anybody,'' he said. ``If (the school district wants) to terminate, the city has to sit down and negotiate terms.''
Divaris said Friday the city has not done so.
Board member Ulysses Van Spiva has written state superintendent William Bosher in an effort to enlist his help in breaking the lease. Spiva has argued that the agreement was entered in violation of school law. As of Friday, he had not gotten a response from Bosher's office.
City attorneys John Newhard and Leslie Lilley declined to comment on any aspect of the lease. Brad Stillman, the Norfolk attorney who has taken over as the board's legal representative on the matter, declined even to confirm or deny his role or to discuss the lease.
The news comes at a bad time for the district, which had to dig out from under more than $12 million in overspending during the fiscal year that ended June 30. Although optimistic, officials will not know until August if they were successful in that effort. Rent for Celebration Station has been paid from the operating budget - the same pocket that funds programs and salaries.
``We certainly cannot afford to continue paying it out of our operating budget,'' Spiva said.
KEYWORDS: VIRGINIA BEACH SCHOOL BOARD by CNB