Appeal of HELLENIC CLASSICAL CHARTER SCHOOL – STATEN ISLAND from action of the New York City Department of Education regarding school utilization.

Decision No. 18,352

(November 7, 2023)

Whiteman Osterman & Hanna LLP, attorneys for petitioner, Kevin P. Quinn, William S. Nolan, and Joseph F. Zeitler, Esqs., of counsel

Hon. Sylvia Hinds-Radix, Corporation Counsel, attorney for respondent, Todd Krichmar, Esq., of counsel

ROSA., Commissioner.--Petitioner, Hellenic Classical Charter School – Staten Island (the “school”), challenges the New York City Department of Education’s (“DOE” or “respondent”) failure to pay appropriate rental assistance pursuant to a prior order in Appeal of Hellenic Classical Charter School – Staten Island, 58 Ed Dept Rep, Decision No. 17,625 (the “prior decision”).[1]  The appeal must be sustained.

Petitioner is authorized by the Board of Regents to serve students in kindergarten through grade five.  The prior decision ordered DOE to comply with the requirements of Education Law § 2853 (3) (e) (5) with respect to petitioner’s request for space relating to its kindergarten through grade five.  At the time of that decision, petitioner leased the classroom space at issue herein (“premises”) from the Greek Orthodox Community Holy Trinity Church of Staten Island (the “church”). 

Thereafter, the church leased the premises to an organization called the “Friends of Hellenic Classical Charter Schools, Inc.” (the “Friends of Hellenic”).  This organization then subleased the premises to petitioner.  The sublease agreement increased the amount of petitioner’s monthly rent (the “new rate”). 

Prior to the 2021-2022 school year, petitioner submitted a copy of the sublease containing the new rate to DOE.  It submitted an additional copy on May 17, 2022.  DOE reimbursed petitioner at the annual rental rate in place at the time of the prior decision, which was $585,391 less than the new rate requested by petitioner for fiscal year 2022. 

In a letter to DOE dated September 12, 2022, petitioner complained of DOE’s failure to reimburse it at the new rate reflected in the sublease.  Petitioner requested payment of over $1.1 million, which represented the outstanding balance as well as next year’s payment at the new rate.

By letter dated September 20, 2022, DOE refused to provide payment at the new rate.  DOE asserted that it could not pay for the increased cost because it was attributable to the construction of a new building and, according to DOE, “reimbursement is limited to [petitioner’s] costs for occupying a building that is currently in use by students.”  This appeal ensued.

Petitioner argues that DOE has unreasonably refused to pay its “actual rental cost” as required by law.  Petitioner seeks an order requiring the DOE to pay past and future rental assistance “based on a calculation using the [s]chool’s actual rental cost.”

DOE argues that the appeal must be dismissed as untimely.  It further argues that the “actual rental cost” contemplated by Education Law § 2853 (3) (e) (5) only pertains to space used for education and other charter school-related activities—not to, for example, improvements to property owned by the landlord or the financing of other construction projects.  DOE additionally contends that petitioner revised its lease agreement with the church to a sublease agreement with the Friends of Hellenic to exploit a loophole in the Education Law.  DOE argued that this loophole allowed petitioner, through the Friends of Hellenic, to artificially inflate its rental costs.

In its reply, petitioner argues that “actual rental cost” must be afforded its “usual and commonly understood meaning.”  Petitioner further argues that Education Law § 2853 (3) (e) (5) contains a built-in limitation on rental costs, as charter schools eligible for rental assistance are limited to the “lesser” of their actual rental costs or a statutory formula involving the school’s basic tuition and enrollment.[2]

First, I must address a procedural issue.  Respondent argues that the petition must be dismissed as untimely.  An appeal to the Commissioner must be commenced within 30 days from the decision or act complained of, unless any delay is excused by the Commissioner for good cause shown (8 NYCRR 275.16; Appeal of Saxena, 57 Ed Dept Rep, Decision No. 17,239; Appeal of Lippolt, 48 id. 457, Decision No. 15,914).  The Commissioner has previously held that an appeal is timely when commenced within 30 days of receiving notice of the determination or act (Appeal of G.H. and S.H., 57 Ed Dept Rep, Decision No. 17,269; Appeal of C.S., 48 id. 497, Decision No. 15,929).  When the record does not reveal when a petitioner received notice, the date of receipt is calculated as the date of the determination or act plus five days for mailing, excluding Sundays and holidays (Appeal of G.H. and S.H., 57 Ed Dept Rep, Decision No. 17,269; Appeal of K.W., 48 id. 451, Decision No. 15,912).

Here, by letter dated September 20, 2022, DOE notified petitioner of its determination regarding reimbursement at the requested rate.  The petition was served fewer than 30 days thereafter.  Although any challenge to petitioner’s underlying entitlement to rental assistance would be untimely, this appeal only concerns DOE’s refusal to reimburse petitioner at the new rate.  Therefore, the appeal is timely. 

In an appeal to the Commissioner, a petitioner has the burden of demonstrating a clear legal right to the relief requested and establishing the facts upon which he or she seeks relief (8 NYCRR 275.10; Appeal of P.C. and K.C., 57 Ed Dept Rep, Decision No. 17,337; Appeal of Aversa, 48 id. 523, Decision No. 15,936; Appeal of Hansen, 48 id. 354, Decision No. 15,884).

I agree that petitioner is entitled to relief under the plain language of Education Law § 2853 (3) (e) (5).  An undefined statutory term must be interpreted in accordance with its “usual and commonly understood meaning” (Appeal of T.V., 62 Ed Dept Rep, Decision No. 18,265, citing Hunters for Deer, Inc. v. Town of Smithtown, 37 NY3d 1214, 1215 [2022]).  Merriam-Webster defines “actual,” in relevant part, as “existing in fact or reality” (Merriam-Webster.com Dictionary, actual, [https://www.merriam-webster.com/dictionary/actual]).  The parties do not dispute that petitioner’s rent has, in fact, increased, or that the new rate is less than the statutory formula contained in Education Law § 2853 (3) (e) (5) (B).  As such, I find that petitioner has demonstrated a clear legal right to its requested relief.

“Actual” cannot mean “reasonable” because the Legislature used the word reasonable elsewhere in the Charter School Act.  For example, Education Law § 2853 (3) (e) (1) indicates that co-located space “must be reasonable, appropriate and comparable and in the community school district to be served by the charter school and otherwise in reasonable proximity” (emphasis added).  The Legislature’s explicit use of the word “reasonable” precludes attributing that meaning to the word “actual.”

The transaction described herein is certainly concerning.  But it is merely an exaggerated example of the goal of the rental assistance program:  the public financing of New York City charter schools.  This program came into existence in 2014, when the Legislature allowed New York City charter schools to rent private facilities at public expense so long as they requested, and were denied, co-location within a public-school building (Ch 56, L 2014, Part BB).  Because this provision was included in the State budget, there is no legislative history explaining why this benefit was made available only within the City of New York.

At present, the cost of rental assistance is borne by both the State and the City of New York—but primarily the State.  The City is responsible for the first $40 million of these costs but is eligible for State aid on any additional amount (Education Law § 3602 [6-g]).  This aid may be awarded to charter schools that appeal a co-location offer to the Commissioner of Education and receive “a determination in [their] favor.”  Once these conditions are satisfied, the State of New York pays 60 percent of the charter school’s rental costs.  The Commissioner has adjudicated hundreds of such appeals, which are overwhelmingly resolved in favor of the charter schools.[3]  The State portion of these costs has steadily grown from $31 million in the 2017-2018 school year to $96 million in 2021-2022.  The Legislature has appropriated funds each year to meet this need; it most recently appropriated $100 million for expenses incurred in the 2021-2022 school year.

According to the record, the rent increase at issue herein is attributable to the costs associated with, among other things, the construction of a new school campus.  Many would argue that it is inequitable for the public to bear the costs of that construction—or New York City charter school rent generally.  But that is the system the Legislature has created—and any change must come from that body (see Appeal of T.V. and J.V., 62 Ed Dept Rep, Decision No. 18,265).

In light of the above disposition, I need not address the parties’ remaining contentions.

THE APPEAL IS SUSTAINED.

IT IS ORDERED that respondent reimburse petitioner for its actual rental costs or the formula contained in Education Law § 2853 (3) (e) (5), whichever is less.

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