Schools get ok for charter revocation decision
August 19, 2003
By the time you read this, Prosser Creek’s charter may have been revoked.
A Placer County Superior Court judge ruled in favor of Tahoe Truckee Unified School District Tuesday afternoon to allow the school board to decide whether the charter school has cured its alleged education code violation Tuesday night, after the Sierra Sun deadline.
An update on the decision will be added to sierrasun.com today.
But financial stakeholders in the school’s solvency are continuing to fight, and have threatened litigation if the Prosser Creek’s charter is revoked.
In a meeting Monday, the school’s creditors – investors, underwriters and bondholders – said they could guarantee the charter school will be able to overcome the district’s allegations that the school has violated California education code.
A small group of school district officials, Prosser Creek representatives and the stakeholders in the charter school’s $3.4 million debt met to discuss Prosser Creek’s debt restructuring plan.
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“We presented all the information to address the district’s concerns noted in the notice to cure,” said Chris Handel, member of Prosser Creek’s advisory council.
The meeting was the same day the judge issued a preliminary ruling in favor of the school district. After oral argument from the charter school and district in court on Tuesday, the judge took the ruling into submission, putting off the decision until Tuesday evening.
In the Monday meeting with the lenders, Prosser Creek representatives asked if two school district trustees could attend the meeting, but they didn’t attend based on advice from their council, Handel said.
“We’re frustrated that the two board members couldn’t be there,” he added.
Initially, school district officials did not want to negotiate or meet with Prosser Creek’s lenders. Officials said they would meet with the lenders if they would present a solution to the school’s debt issues.
“We didn’t want to deal with the creditors until they’d come up with a plan,” said district Superintendent Dennis Williams.
The stakeholders presented a plan that they say will relieve Prosser Creek’s debt without compromising the essential elements added to the school’s charter. The plan includes the sale of the Union Mills Road campus, restructuring of the school’s debt, $75,000 of grant funding from the investors and reduced interest rates.
The sale of the Truckee site, Handel said, will lower the school’s debt to $1.5 million.
What do the financial stakeholders have to lose if Prosser Creek’s charter is revoked?
If the school board chooses revocation, the charter school will default on its loan, and the investors won’t see their money soon, if at all.
Charles Fish Investments, one of the major stakeholders in Prosser Creek’s future, has invested in municipal bonds with many organizations in the Tahoe area. For owner Charles “Skip” Fish, if Prosser Creek avoids revocation “it will keep the Tahoe basin from having a black eye with bond investors,” Handel said.
Fish was present in the Monday meeting with school district officials.
“What we need to avoid is animosity,” Fish said. “This he-said-she-said – we have to look beyond that. It’s no hardship on anyone to just relax.”
Wedbush Morgan Securities (WMS), an underwriter and bondholder of two Prosser Creek bond issues, is so interested in the school’s charter renewal that the company attorney threatened litigation if the charter is revoked.
“While TTUSD’s conduct to date may have exposed it to bondholder liability, charter revocation will surely expose it to such liability and WMS intends to vigorously pursue every available legal remedy to recover losses caused my such an action,” wrote WMS’s attorney.