A Provo charter school and its landlord are at war over commercial tenants on campus

School says third-party leases were a surprise; developer says they were always in the plan.

(Trent Nelson | The Salt Lake Tribune) Treeside Charter School in Provo on Sunday, Jan. 3, 2021. The school is locked in battle with the developer and landlord over his lease of space on campus to commercial tenants, which has raised concerns about student safety and violation of the state charter.

A Provo charter school is battling with its landlord and developer over whether it must host commercial tenants at its campus — an arrangement the school claims could jeopardize its students and its charter with the state.

Treeside Charter School officially opened for the 2017 school year at 1724 S. State Street and teaches about 430 elementary-aged students. The school was built by American Charter Development and its CEO, Mike Morley, on land Morley owns under a limited liability company called Zions M-13 Development. The campus has two buildings, a main classroom building and an auxiliary gym building.

Immediately after the gym building became operational, non-school tenants with leases through Morley began moving in, including a dance studio, a chiropractor and athletic training businesses.

“He took the profits for himself instead of giving them to the school, and that’s when everything went haywire,” said April Clawson, Treeside’s board chair.

The school’s operators also claim the tenants allowed strangers to have unfettered access to areas their young students use, including bathrooms and hallways in the gym building.

“When you have children in a school, those who are around the children have to be background checked, fingerprinted and so on,” Clawson said. “Having third-party tenants there with open access … there’s no way for us to keep track of who’s coming and going.”

Months after the commercial tenants moved in, school directors attempted to push them out. They changed the locks, cut the power and tried to get the tenants to sign leases through Treeside instead of Morley.

Treeside now finds itself in a legal fight with its landowner over disputed leases.

Morley is a former state lawmaker who served as chair of the Higher Education Appropriations Committee. He declined to do an interview for this story and an attorney representing him declined to speak on the record. Morley did, however, provide a brief written statement.

“Zions M-13 Development, LLC, is in the middle of litigation with Treeside Charter School, and, as manager of Zions, Mr. Morley has been advised to be respectful of the judicial process and to refrain from trying a civil matter in the press.”

Agreements and disputes

In a complaint filed in 4th District Court, Morley claimed third-party tenants were always part of his agreement with Treeside, since the school’s operators at the time didn’t have enough in their budget to build out the gym building the way they wanted.

American Charter Development’s initial agreement with Treeside was to erect a school facility that cost $7 million. The school intended to rent the property from Morley through his company, Zions M-13, and eventually buy it from him as soon as this year.

That $7 million budget, however, was nearly maxed out after the initial classroom building was complete. In order to build out the $1.3 million gym to the school’s specifications, both parties agreed to allow third-party tenants to rent a separate portion of the gym, according to Morley’s legal complaint, to keep the school’s rent low.

Third-party tenants were always part of the deal, concurred Dena Lundgreen, the school’s founder and first executive director.

“In fact, I really loved it because they were giving me an opportunity to have that [gym] space even though the main budget for the main building wouldn’t allow it,” she said. “There was no inappropriateness about it. It was just a portion of the building. Schools share spaces with other organizations all the time.”

The school also worked with Morley to ensure other tenants didn’t have access to Treeside students, she said.

“That was foremost in our minds. We don’t want other tenants coming into our space, and we don’t want to go in other tenants’ space,” said Lundgreen, who left Treeside not long after it opened and before any other tenants moved in.

Treeside now argues, however, that the original $7 million was supposed to include both buildings. Its first lease with Morley depicts both buildings in more or less the same places and same footprints in its property description. The school claims Morley has since tried to pressure its board into signing numerous updated leases and addendums under threat of eviction. All those changes left the school’s administrators feeling bamboozled, Clawson said.

“He could make any excuse he wanted. He’s the builder plus the landowner,” she said.

State law requires that Treeside get approval from the Utah State Charter Board on any lease or contract involving school facilities. Treeside claims it only got the charter board’s approval for the initial lease and not for subsequent agreements.

What’s more, Clawson said, the school didn’t even know there would be third-party tenants until they saw those businesses announcing they’d be moving to the Treeside campus on social media.

(Most of the non-school tenants appeared to be geared toward children and youth activities).

“We were like, wait a minute, that’s our building,” Clawson said. “[Morley] did not come to the board and ask. We did not know about it.”

Concerns for student safety and evictions

Treeside’s first board chair, Bill Brown, signed the school’s initial lease with Morley and said early discussions about the gym building portrayed it as an auxiliary structure that would be partly available to the school.

But when asked about adding commercial tenants to the Treeside campus, Brown said “it’s hard to me to grasp a scenario where that could work.”

“We’re talking about kids here, we’re not talking about a strip mall where you could have any number of things,” he said. “I know some charter schools are already in strip mall situations, but they tend to be higher grades ... [like] high school and college.”

Morley’s lawsuit claims the school’s administrators agreed to a completely separate lease for the gym building in 2018, which a different board chair signed. Months later, that board chair resigned and Treeside began making operations difficult for the other tenants, including changing the locks and ignoring text messages when the business tenants wanted access.

“They stay around and monitor us while we work. It feels creepy and inappropriate,” one tenant said in a sworn testimony.

The gym building finished construction in August 2018. But a letter from Morley’s attorney, demanding the school’s executives provide access in April 2019, shows the landlord initiated leases with commercial tenants as far back as November 2017.

In a counterclaim, Treeside’s attorneys claim that Morley “always intended to use the Gym Building as a for-profit money making venture” even before construction on the gym building began.

“What he wants to do is make it hard for us to function,” Clawson said. “It’s his word against our word.”

In September 2019, the Utah State Charter Board issued a notice of concern for student security at Treeside. The letter raised alarm that the school did not appear to have “exclusive control and supervision” of its facilities during school hours.

“As you are aware, Treeside Charter School is bound by Utah State Law and State Board of Education Rules designed to ensure the safety of Utah students,” the board wrote. “Treeside Charter School is required to ensure the safety of students.”

The board further took issue with the school’s revised lease payments with Morley, which it called “an abnormally large percentage” of its revenue, adding that “paying such a high rate on a lease may not be good use of taxpayer funds and take away what should be going to students in the classroom.”

The same month, Provo City issued a notice of violation to Morley, saying that the commercial tenants were not allowed under the property’s agricultural zoning (under state law, charter schools can operate under any zone) and ordering those businesses to “discontinue.”

The businesses have since left the school campus.

Latest developments

Morley is now trying to rezone the charter school property into a community shopping center zone. Although the Provo Planning Commission voted to deny the request, Morley has appealed to the City Council, according to Treeside’s attorney.

Morley is also working with a developer to turn the land he owns surrounding Treeside into a 204-unit residential site called “Remington Commons,” which would use the school’s current driveway as an access point off State Street. That has school administrators and parents further worried about student safety.

“I don’t mind having something there, it’s a good piece of land,” Clawson said. “[But] we have to have a dedicated way for the safety of the children and staff, as well as an emergency vehicles.”

The Provo City Council held a hearing on the development last month, where some community members raised concerns. One noted that the charter school doesn’t have a school bus program, so Treeside’s access point could mean a high volume of traffic during drop off and pick up times, mixed with the development’s residents driving to and from work.

(Story continues below image. Treeside’s campus is visible as a black and white outline.)

“This change would create a hostile environment that would be detrimental to the safety, security, and learning of the students, and would interrupt and impair their use and enjoyment of the school buildings and surrounding grounds,” wrote the parents of one Treeside student to the council.

The City Council asked the Remington Commons developer to contact Treeside and attempt to work out a compromise. The negotiations currently remain at a stalemate, according to an attorney for the school, and the developer has asked the council to postpone further discussions about the property several times.

Brown, the first board chair of Treeside, who left the board soon after it began operating, said in an interview that he never felt blindsided by Morley or his associates, but added that he’s “not a fan” of private developers building and “making more than they should” off of public charter schools.

“They’re out there for their money,” Brown said. “I understand they’re putting in all the cash and taking all the risk, but if you’re building a hotel it’s one thing. Building a school, I think we could do a better job of overseeing the process.”