Scottsdale School board members question Tonalea lease agreement

0515Ns News Story (SUSD Budget)The Scottsdale Unified School District Governing Board held a work session Jan. 23 to seek answers to questions regarding the legality and procedure of a lease agreement between a former board member and the district’s chief financial officer.

Board members aren’t sure if the agreement violated any district policies, but they are concerned with the lack of transparency and the perception that things may have been done incorrectly.

“This is not an inquisition; I hope it’s a discussion,” said Governing Board President Bonnie Sneed at the start of Friday’s work session.

Scottsdale residents who live around the Tonalea Elementary School spoke out at the Jan. 13 Scottsdale Unified School District Governing Board meeting to oppose the apparent plan to convert the schoolhouse into a community resource center of sorts.

Residents called into question the need for the facility, the scope of the proposed operation, and a lease agreement signed in mid-January between a top SUSD administrator and a former board member.

Several members of the Governing Board said at the Jan. 13 meeting they were not aware of plans to convert Tonalea into a community resource center, despite a lease agreement already signed between Denny Brown, a former board member, and Daniel O’Brien, SUSD’s chief financial officer.

The lease agreement, which is now null and void, was from December 2014 to June 2015 and allowed Mr. Brown, who left the school board last month, to function as tenant of the media center building at 6801 E. Oak St., which is on the campus of Tonalea Elementary School.

The lease does not specify the planned operations. Mr. Brown says, however, the effort was a means to provide local children a visit with Santa Claus and a place to deliver emergency food boxes in late December of 2014.

According to Scottsdale Schools General Counsel Michelle Marshall, rentals and lease agreements of public school facilities requires, among other things, a certificate of insurance on file at the time of the lease signing clearing the owning entity of any liability of proposed operations.

The guidelines are within A.R.S. 15-1105(c), records show.

According to the SUSD Facility Rental Policy Manual & Fee Schedule, which is approved by the Governing Board annually, the use of district facilities is allowed under the Arizona state law and specific Governing Board policies.

The policy states:

“The Scottsdale Unified School District Governing Board, in accordance with the Arizona laws governing use of school property, shall permit the use, under its direction, and subject to rules and regulation it prescribes, of school property as civic and or recreation centers for the Scottsdale Unified School District No. 48, as long as the permitted use does not interfere with school activities and is conducted without cost to the Scottsdale Unified School District.”

In addition, the Governing Board has designated the chief financial officer as the district agent to sign contracts to ensure their compliance with Arizona law and Governing Board policy, the policy states.

The Tonalea lease agreement stated the tenant shall be charged a monthly rent payment of $1 while the district would pick up the monthly tab for electricity, gas and water utilities so the facility will be able to provide “community services and events,” the lease states.

Pam Kirby

Pam Kirby

Governing Board member Pam Kirby called into question the legality of the lease itself and if the district followed Governing Board rules regarding this specific lease agreement.

“Someone has to toe the line here,” she said asking if the Tonalea lease agreement should have been free of paying utility costs.

“Class 1 says these organizations are exempt from utility payments,” Superintendent Dr. David Peterson said of the SUSD facility rental guidelines in response to Ms. Kirby’s line of questioning.

“Are individuals considered class 1?” she asked. “I don’t see individuals mentioned in the Class 1 (designation). We are in the pursuit of truth here.”

The policy does not specifically address the leasing facilities to individuals.

“Lessons have been learned and changes will be made,” Superintendent Peterson said. “This one lease has caused a question of our motives.”

Ms. Marshall, upon policy review, says the district can lease to any person, but “15-1105 requires a certificate of insurance.”

When asked if SUSD had a certificate of insurance with the Tonalea lease agreement, Terry Worcester, director of facilities and operations, replied, “we did not have one in our possession.”

Apparently, there were two leases — one that originally was presented to Ms. Marshall, general counsel, that she declined to have the CFO, Mr. O’Brien, sign.

“I was provided a document that I didn’t really understand and I had questions and had not been satisfied so I did not have our CFO sign it,” she said when asked about the first of two leases involving the Tonalea Media Center.

Board member Kirby asked what those questions were.

“That would be a question I would be happy to answer in executive session,” said Ms. Marshall.

Governing Board member Barbara Perleberg said the entire issue is not only confusing, but the way the lease agreement was handled can give the wrong impression as to how things are handled at the district.

“Looking at puzzle pieces that I wasn’t aware of until today — this changes the discussion quite a bit,” she said. “Even up to this point I had very small pieces of the puzzle. We are talking integrity and community perceptions, and these two stories don’t add up.”

Barbara Perleberg

Barbara Perleberg

Ms. Perleberg called into question the poor timing of SUSD administration pursuing the idea a district-sponsored community resource center at the Tonalea Elementary School while allowing for an outreach effort at the media center at the same time.

“We need to look at a way to do this better in the future,” she said. “Trust has been shaken by this.”

Superintendent Peterson outlined the chain of events that eventually led to the Jan. 23 work session discussion.

He explained that since June of last year, top district officials have met with members of the United Food Bank, the Scottsdale Training and Rehabilitation Center and Arizona State University.

Those meetings were meant to help flush out the idea of creating a Tonalea Community Resource Center as needs were defined by a community survey commissioned by an ASU research team last year with just over 250 respondents.

The survey carried the logos of the ASU, United Food Bank and SUSD but district officials contend it was not a sponsored survey of the district.

Independent Newsmedia Arizona Managing Editor Terrance Thornton can be contacted at

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