JA working its way out of real estate troubles

June 19, 2010

Junior Achievement of Central Indiana is close to extracting itself from a difficult relationship with the not-for-profit foundation that owns its headquarters.

If a major debt refinancing goes as planned, JA soon will be nothing more than a tenant at the Gene B. Glick Junior Achievement Education Center.

That would mark a 180-degree turn in the organization’s strategy since 2004, when it moved from Virginia Avenue downtown to a former retail space at 7435 N. Keystone Ave.

To acquire and renovate the building, the Experiential Learning and Entrepreneurship Foundation—a separate not-for-profit related to JA—issued $5.2 million in revenue bonds. The bonds were backed by mortgage payments, assets of the foundation and JA, as well as Junior Achievement’s guarantee.

Jeff Miller, then the CEO of both JA and the foundation, hoped other enterprises inside the new headquarters would help support Junior Achievement’s educational mission. Two of those, a Noble Roman’s franchise and a catering company, failed.

Under Miller’s leadership, the foundation also launched a $4 million building expansion that was to house an Ivy Tech Community College culinary school.

That project—and JA’s relationship with the foundation—fell apart last fall amid questions from a major grant-maker about accounting. The Glick Fund, part of Central Indiana Community Foundation, had pledged $2 million for construction of the culinary school.

After releasing more than $700,000 of the grant, CICF in late November halted further payments and launched an audit of JA.

CICF President Brian Payne, who faces a defamation suit filed by Miller, said he couldn’t comment on results of the audit. But he said he was surprised to learn that Junior Achievement was transferring grant payments to the Experiential Learning and Entrepreneurship Foundation.

“From our perspective and our lawyer’s perspective, we never had any contractual agreement or verbal agreement with ELEF.”

Payne said the Glick Fund has since terminated its grant agreement—at JA’s request—because the organization doesn’t control the building.

Payne added that the Glick family, which also had pledged $1 million for state-of-the-art kitchen equipment, is still interested in helping Ivy Tech.

Miller, who retired as CEO of Junior Achievement at the end of 2008, continued working for the foundation through last year. He was overseeing the culinary school construction, which halted in January when contractors, who hadn’t been paid, walked off the job. Miller contends the Glick Fund had stopped payment on invoices.

Miller referred questions to his lawyer, Kevin Betz, who declined to comment.

Gary Aletto, chairman of the foundation, appears to be trying to keep the organization afloat. Though he did not return calls, one of the contractors on the job, Joe Trout of Pyramid Masonry in Brownsburg, said the foundation obtained a loan so that contractors could finish the exterior of the building.

Jennifer Burk mug Burk

Junior Achievement CEO Jennifer Burk said Aletto told her he was refinancing the foundation’s debt “and that JA will be released from its guarantees upon closing.”

It’s unclear how the foundation intends to repay debt on the North Keystone building, but Aletto has lined up at least one major tenant. The Indiana Math and Science Academy, a charter school, will occupy about 30,000 of the 56,000 square feet when classes begin Aug. 16.

The charter school’s build-out includes Junior Achievement’s former office space. JA’s staff recently moved into space normally reserved for FinancePark, one of two simulators visited by schoolchildren.

Burk said JA will decide at the end of the summer on a permanent location for its offices. BizTown, where fifth-graders pretend to run a city for a day, is open for summer camp and will remain at North Keystone Avenue.

“We are both pleased and proud of the significant progress JA has made over the last six months in improving its financial stability,” Burk said in an e-mailed statement.

Junior Achievement closed its last fiscal year, which ended June 30, 2009, with a deficit of nearly $349,000.

That followed an even larger gap, $369,000, for the prior year, according to the most recent federal income statement, filed in May.

Burk, who could not be reached by phone, said JA has hired a new fund-raising officer. The organization also stands to receive a challenge grant from a longtime supporter, if all of its board members make unspecified donations, she said.

The Ivy Tech-JA project might be the largest grant Central Indiana Community Foundation ever has halted, Payne said.

“We feel really good about the role we played in terms of oversight,” he said.

Asked whether the Glick Fund will support Junior Achievement in the future, Payne commended Burk and JA Chairman Mark Shaffer for their cooperation.

“We have a lot of respect for them,” he said.•


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