As the town works through its budget process, one large revenue item has been noticeably absent from all calculations: the $535,000 Our Lady of Mercy Preparatory Academy (OLMPA) owes the town for Island Avenue in the next academic year. Why? There’s no signed lease yet.

In October 2018, residents overwhelmingly approved the lease between the town and OLMPA for Island Avenue School. The terms stipulate that the lease will be for one year beginning in August 2019 (after Madison Public Schools has vacated the building) with no option for a renewal period or extension. The total rent payment is $535,000, payable five days before the building is delivered to OLMPA. OLMPA would be responsible for all maintenance and associated costs in what is known as a triple net lease. The lease document also goes into specific details of the building as well as insurance coverage and indemnification.

To calculate the lease cost, the town took into account the net present value of the property if it had been immediately sold as well as other hard costs like busing and nursing that the state requires municipality’s provide to private schools within a municipality’s borders.

The revenue to the town, net of the cost of a bus and a nurse, would be a little more than $400,000. However, since there is no signed lease yet, town officials all agree that any expenditure or revenue from the lease should not be counted yet.

“When we have a signed agreement, I will feel better; when we have a check, I will feel a lot better,” said First Selectman Tom Banisch.

The issue came up at a Board of Finance (BOF) budget workshop on March 14. BOF members expressed concern over the lack of a signed lease and some of the recent back and forth over the document.

“When we first generated the contract, we sent them a copy of that,” said Banisch. “We have been waiting. About two weeks ago, they called up and said, ‘When are you going to send us the contract?’ So we certified mailed it to them which has a received receipt, so we know that they have it.”

OLMPA’s John Picard told The Source in early March that the school had not yet received a copy of the lease. Earlier this week, Picard reported the school had received the hard copy of the lease and that once OLMPA’s attorneys review it, if there are no issues, he intends to sign.

The town is still operating under the assumption that OLMPA will sign, but BOF members expressed concern over what would happen if this doesn’t move forward. BOF Chair Jean Fitzgerald pointed out that even a closed building costs money, money not in the budget if Island has to be shuttered next year.

BOF members also expressed confusion over the delay because of how hard OLMPA worked to get the Island lease. Banisch said the people he has spoken with at the school are still enthusiastic.

“We negotiated this in good faith and they seem to be acting in good faith, so we are assuming it is going to happen,” he said. “They asked if they could have a daddy-daughter dance there in April and I said not without a signed lease. So we are pushing them a little bit, but they sound like they want to do this and they haven’t backed off at all.”

Some BOF members also expressed concern that the schools current enrollment might be an issue. OLMPA is currently occupying two buildings this school year, one in Guilford for grades 4 to 8 and a building in North Madison on Old Toll Road for grades pre-K to 3. Picard said when the lease was approved at town meeting in 2018, enrollment was in the 60s. As of this March, Picard said the enrollment is still in that range.

The History

Parents and families from OLMPA first came before the Board of Selectmen in April 2018 to discuss the potential of leasing Island Avenue School. Closing Island is part of the Board of Education (BOE) response to declining enrollment; as of now the plan is to close the school in June 2019.

Our Lady of Mercy School (OLM), located at 149 Neck Road, is the main Catholic K to 8 school serving Madison and Guilford since 1954. Early this year, the school announced that the school building would close at the end of this academic year and the school would be combined with St. Mary’s School in Branford.

Following the news of the imminent closure, some OLM families banded together to begin looking for ways to separate the school from the local parishes to form an independent school grounded in the Catholic faith, and find a permanent home, ideally still in Madison.

Selectmen and members of OLMPA reviewed financial statements and issues like liability and determined leasing Island was a viable option after the Madison Public School District formally turns the building over to the town in 2019.