Motion for Writ in The New York City Department Of Education v. Betty A. Rosa in her official capacity as the Commissioner of Education of the State of New York, Hellenic Classical Charter School - Staten Island, also known as Hellenic Classical Charter Schools, Friends Of Hellenic Classical Charter Schools, Inc.| Trellis.Law

On March 01, 2024 a Exhibit,Appendix was filed involving a dispute between The New York City Department Of Education, and Betty A. Rosa In Her Official Capacity As The Commissioner Of Education Of The State Of New York, Friends Of Hellenic Classical Charter Schools, Inc., Hellenic Classical Charter School - Staten Island, Also Known As Hellenic Classical Charter Schools, for Special Proceedings - CPLR Article 78 in the District Court of Albany County.

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ARTICLE 78 PETITION,
EXHIBIT B
DOE’s NYSED Answer
(with Exhibits)
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STATE OF NEW YORK
EDUCATION DEPARTMENT
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In the Matter of the Appeal of the
VERIFIED ANSWER
HELLENIC CLASSICAL CHARTER SCHOOL –
STATEN ISLAND, Appeal No. 21,812

Petitioner,

- against -

THE NEW YORK CITY DEPARTMENT OF
EDUCATION,

Respondent,

from Respondent’s Denial of a Rental Reimbursement
Request pursuant to New York Education Law § 2853(3).

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TO THE COMMISSIONER OF EDUCATION:

The respondent, the New York City Department of Education (“DOE”), appearing

by its attorney, Hon. Sylvia O. Hinds-Radix, Corporation Counsel of the City of New York, as

and for its Answer to the petition dated and verified on October 18, 2022 (the “Petition”) of

Hellenic Classical Charter School - Staten Island (“Hellenic”) 1, responds as follows:

ALLEGATIONS CONCERNING “NATURE OF THIS PROCEEDING”

1. Denies the allegations in Paragraph 1 of the Petition, except admits that

Hellenic served the Petition.

2. Denies the allegations in Paragraph 2 of the Petition.

1
Upon information and belief, on or about May 1, 2020, the Board of Regents approved the merger, effective as of
July 1, 2020, of Hellenic Classical Charter School – Staten Island, the named petitioner in this case, with Hellenic
Classical Charter School, a pre-existing entity that operates a charter school in Brooklyn, resulting in a new entity
known as Hellenic Classical Charter Schools. See https://www.regents.nysed.gov/common/regents/files/520bra6.pdf
(last visited on December 1, 2022). As used in this Answer, “Hellenic” means “Hellenic Classical Charter School –
Staten Island” or “Hellenic Classical Charter Schools” as the context may require.
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3. Denies the allegations in Paragraph 3 of the Petition.

4. Denies the allegations in Paragraph 4 of the Petition, except admits that

Hellenic seeks an order from the Commissioner.

ALLEGATIONS CONCERNING “PARTIES”

5. Admits the allegations in Paragraph 5 of the Petition; and refers the

Commissioner to the charter referred to in Paragraph 5 of, and annexed as Exhibit A to, the

Petition for its contents and meaning.

6. Denies the allegations in Paragraph 6 of the Petition, and refers the

Commissioner to the relevant provisions of the New York Education Law (the “Educ. L.”) for

their contents and meaning.

ALLEGATIONS CONCERNING “STATEMENT OF FACTS”

7. Denies the allegations in Paragraph 7 of the Petition; and refers the

Commissioner to the letter referred to in Paragraph 7 of, and annexed as Exhibit B to, the

Petition for its contents and meaning.

8. Admits the allegations in Paragraph 8 of the Petition; and refers the

Commissioner to the letter referred to in Paragraph 8 of, and annexed as Exhibit C to, the

Petition for its contents and meaning.

9. Admits the allegations in Paragraph 9 of the Petition; and refers the

Commissioner to the Commissioner’s Decision referred to in Paragraph 9 of, and annexed as

Exhibit D to, the Petition for its contents and meaning.

10. Denies the allegations in Paragraph 10 of the Petition; and refers the

Commissioner to the document referred to in Paragraph 10 of, and annexed as Exhibit E to, the

Petition for its contents and meaning.

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11. Denies the allegations in Paragraph 11 of the Petition, except admits that

Hellenic submitted documents to DOE; and refers the Commissioner to the documents referred

to in Paragraph 11 of, and annexed as Exhibits E and F to, the Petition for their contents and

meaning.

12. Denies the allegations in Paragraph 12 of the Petition.

13. Denies the allegations in Paragraph 13 of the Petition.

14. Denies the allegations in Paragraph 14 of the Petition.

15. Denies the allegations in Paragraph 15 of the Petition, except admits that

Hellenic submitted a written request to DOE on September 12, 2022; and refers the

Commissioner to the letter referred to in Paragraph 15 of, and annexed as Exhibit G to, the

Petition for its contents and meaning.

16. Denies the allegations in Paragraph 16 of the Petition; and refers the

Commissioner to DOE’s letter dated September 20, 2022 referred to in Paragraph 16 of, and

annexed as Exhibit H to, the Petition for its contents and meaning.

17. Denies the allegations in Paragraph 17 of the Petition; and refers the

Commissioner to the e-mails referred to in Paragraph 17 of, and annexed as Exhibit I to, the

Petition for their contents and meaning.

18. Denies the allegations in Paragraph 18 of the Petition; and refers the

Commissioner to the statutory and regulatory provisions referred to in Paragraph 18 of the

Petition for their contents and meaning.

19. Denies the allegations in Paragraph 19 of the Petition; and refers the

Commissioner to the statutory and regulatory provisions referred to in Paragraph 19 of the

Petition for their contents and meaning.

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20. Denies the allegations in Paragraph 20 of the Petition; and refers the

Commissioner to the statutory and regulatory provisions referred to in Paragraph 20 of the

Petition for their contents and meaning.

ALLEGATIONS CONCERNING “ARGUMENT”

21. Paragraph 21 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 21 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE refers the Commissioner to the statutory

provisions referred to in Paragraph 21 of the Petition for their contents and meaning, and

reserves the right to respond in a Memorandum of Law to any legal argument contained in

Paragraph 21 of the Petition.

22. Paragraph 22 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 22 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE refers the Commissioner to the

regulatory provision and prior Commissioner’s Decisions referred to in Paragraph 22 of the

Petition for their contents and meaning, and reserves the right to respond in a Memorandum of

Law to any legal argument contained Paragraph 22 of in the Petition.

23. Paragraph 23 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 23 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE refers the Commissioner to the statutory

provision referred to in Paragraph 23 of the Petition for its contents and meaning, and reserves

the right to respond in a Memorandum of Law to any legal argument contained in Paragraph 23

of the Petition.

24. Neither of the two Paragraphs 24 of the Petition (consecutively appearing

on pages 6 and 7 of the Petition) contains any factual allegations capable of being admitted or

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denied, but to the extent that either Paragraph 24 of the Petition contains any such factual

allegations, DOE denies them; and, further, DOE refers the Commissioner to the statutory

provision referred to in the first Paragraph 24 of the Petition for its contents and meaning, and

reserves the right to respond in a Memorandum of Law to any legal argument contained in either

Paragraph 24 of the Petition.

25. Paragraph 25 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 25 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE reserves the right to respond in a

Memorandum of Law to any legal argument contained in Paragraph 25 of the Petition.

26. Paragraph 26 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 26 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE reserves the right to respond in a

Memorandum of Law to any legal argument contained in Paragraph 26 of the Petition.

27. Paragraph 27 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 27 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE reserves the right to respond in a

Memorandum of Law to any legal argument contained in Paragraph 27 of the Petition.

28. Paragraph 28 of the Petition contains no factual allegations capable of

being admitted or denied, but to the extent that Paragraph 28 of the Petition contains any such

factual allegations, DOE denies them; and, further, DOE refers the Commissioner to the statutory

provision referred to in Paragraph 28 of the Petition for its contents and meaning, and reserves

the right to respond in a Memorandum of Law to any legal argument contained in Paragraph 28

of the Petition.

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DOE’S STATEMENT OF MATERIAL FACTS

The Parties

29. Upon information and belief, Hellenic is a charter school operating pursuant

to Educ. L. Article 56 under a charter granted by the Board of Regents for and on behalf of the

New York State Department of Education (“NYSED”) on December 11, 2018, pursuant to a

charter agreement between Charles Capetanakis (“Mr. Capetanakis”) on behalf of Hellenic and

the Board of Regents, for a term of five years that will expire on June 30, 2024. See Petition,

Exhibit A.

30. DOE operates the City School District of the City of New York pursuant

to Educ. L. Article 52-A.

The Commissioner’s Rental Assistance Decision

31. In Commissioner’s Decision No. 17,265 dated April 23, 2019 (the “2019

Commissioner’s Decision”), the Commissioner directed DOE to pay to Hellenic, as of the 2019-

2020 school year, “rental assistance based on student enrollment in kindergarten through grade 5

– the grades for which the school has been approved to provide instruction – during its current

charter term and any subsequent renewal term, provided that, in any such renewal term, the

charter school serves the grades encompassed by the charter referenced herein.” See Petition,

Exhibit D (2019 Commissioner’s Decision at p. 2). 2

32. The 2019 Commissioner’s Decision notes that, although Hellenic applied

for co-located space for kindergarten through grade 8, its charter authorizes Hellenic to serve

students only through grade 5, which disqualifies Hellenic from receiving co-located space, or,

2
See also http://www.counsel.nysed.gov/Decisions/volume58/d17625 (last visited on December 1, 2022).

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therefore, rental assistance, for grades 6 through 8. Id. (2019 Commissioner’s Decision at

endnote 4).

33. The Commissioner directed Hellenic to “present DOE with evidence of

the actual rental cost of an alternative privately-owned site so that DOE can determine whether

such rental cost is less than” the amount resulting from application of the formula set forth at

Educ. L. § 2853(3)(e)(5)(B). Id. (2019 Commissioner’s Decision at p. 3).

The Initial Lease of the Building

34. Under a lease dated July 17, 2019, which includes a rider (the “Rider”)

and amendment (the “First Amendment”) both also dated July 17, 2019 (collectively, with the

pre-printed form that includes ¶¶ 1-39, the “Initial Lease”), Hellenic leased a building located at

1641 Richmond Avenue, Staten Island (the “Building”) from the Greek Orthodox Community

Holy Trinity Church of Staten Island (the “Landlord”), effective as of May 15, 2019. Annexed

as Exhibit 1 is a copy of the Initial Lease. 3

35. Hellenic may use and occupy the Building “for general, administrative and

executive offices associated with, and the operation of, an educational facility, and for no other

purpose.” Id. (Initial Lease at ¶ 2).

36. The Initial Lease provides for a term of May 15, 2019, deemed to be the

“Lease Effective Date,” through August 1, 2022, with an option to renew for an additional 23

months, through June 30, 2024, the expiration date of Hellenic’s charter, to be exercised by

February 1, 2022. Id. (Rider ¶¶ 41 [E] and [H][i, iii]).

37. The Initial Lease waives payment of base rent, defined as “Fixed Rent,”

for May 15, 2019 through July 31, 2019; and sets forth the following Fixed Rent:

3
The Initial Lease, attached here for ease of reference as DOE’s Exhibit 1, is extracted from the 89-page Exhibit B
to the Petition.

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Lease Period Annual Fixed Rent Monthly Fixed Rent
8/1/19 - 7/31/20 $200,292.00 $16,691.00
8/1/20 - 7/31/21 $613,410.00 $51,117.50
8/1/21 - 7/31/22 $696,210.00 $58,017.50
8/1/22 - 7/31/23 4 $563,040.00 $46,920.00
8/1/23 – 6/30/24 $526,442.40 (11 mos.) $47,858.40
Id. (First Amendment at ¶¶ 2-3).

38. These Fixed Rent amounts are offset by a rent concession of $3,055.55 per

month for 36 months ($110,000.00 total), from August 1, 2019 through July 31, 2022, resulting

in an effective, or actual, Fixed Rent of $48,061.95 for July 2021, and of $54,961.95 per

month for August 2021 through July 2022. Id. (Rider at ¶ 46).

The Initial Lease is Amended to Add Adjacent Unimproved Land

39. Upon information and belief, in September 2020, the Landlord and

Hellenic executed another lease amendment (the “Second Amendment”) under which Hellenic

rented “a portion of the land located to the north of the Building, consisting of approximately

13,000 square feet[,]” defined as the “Additional Premises” as distinct from the Building.

Annexed as Exhibit 2 is a copy of the Second Amendment. 5

40. The Initial Lease as modified by the Second Amendment (the “Lease”)

distinguishes between the Building, which (excluding a certain portion used by the Landlord for

church purposes) is defined as the “Initial Premises” as set forth in the Initial Lease, and the

4
The Rider, at ¶ 41(H), entitles Hellenic to “renew this Lease for twenty-three (23) additional months (the ‘Renewal
Term’)[,]” from August 1, 2022 through June 30, 2024, with the Fixed Rent increasing by 2% for the first twelve
months of the Renewal Term, and an additional 2% for the last eleven months. The First Amendment, at ¶ 3,
replaces Rider ¶ 41(H), but continues the duration of, and Fixed Rent schedule for, the Renewal Period, now
explicitly stating that “the Fixed Rent due hereunder for the first year of the Renewal Term shall be $46,920.00 per
month, with an [sic] 2% increase on month thirteen (13) of the Renewal Term.” Id. (Rider at ¶ 41[H] and First
Amendment at ¶ 3).

5
The Second Amendment, attached here for ease of reference as DOE’s Exhibit 2, is extracted from the 89-page
Exhibit B to the Petition. While the Second Amendment is dated only “September __, 2020,” it shows a date of
“9/16/2020” in the footer, suggesting that the Second Amendment was executed sometime in the second half of
September 2020.

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unimproved adjacent land constituting the Additional Premises upon which Hellenic would

undertake constructing a new four-story building of up to 48,000 square feet. See Exhibit 2

(Second Amendment at “Whereas” clauses, ¶¶ 1[E, G and H] and 2, and Exhibits A and B).

41. The Second Amendment specifies that the Initial Premises would retain a

Lease Effective Date of May 15, 2019, and a “Lease Commencement Date” of August 1, 2019,

when Hellenic became obligated to pay Fixed Rent; while the Additional Premises would have a

Lease Effective Date corresponding with the effective date of the Second Amendment, that is, in

or after September 2020, and a Lease Commencement Date of August 1, 2022. Id. (Second

Amendment at ¶ 1[I and K]).

42. The Second Amendment extends the lease term, for both the Initial

Premises and the Additional Premises, to July 31, 2067. Id. (Second Amendment at ¶ 3).

43. The Second Amendment provides, “[f]urther supplementing Section 41A

of the Lease [as amended by the First Amendment], Tenant shall pay Fixed Rent for the Initial

Premises and the Additional Premises” in accordance with a schedule that includes a Fixed Rent

for August 1, 2022 through July 31, 2027 of $822,000.00 per year, or $68,500.00 per month,

subject to a series of abatements, including one of $12,500.00 per month through July 31, 2024,

resulting in a combined abated Fixed Rent of $56,000.00 per month for August 1, 2022 through

July 31, 2024 for both the Initial Premises and the Additional Premises. Id. (Second Amendment

at ¶ 4).

44. Although the Second Amendment does not expressly allocate the

aggregate amount of the revised Fixed Rent payments between the Initial Premises and the

Additional Premises, a plain reading of the lease documents together confirms that the portion of

the aggregate monthly payment of Fixed Rent allocable to the Initial Premises effective as of

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August 1, 2022 cannot exceed the Fixed Rent set forth in the First Amendment, less a

proportional share of the abatement of $12,500.00 per month.

Hellenic Creates a New Entity, Friends of Hellenic, Which Incurs Debt in Order to
Construct a New Building on the Adjacent Unimproved Land

45. Upon information and belief, on or about July 2, 2020, Hellenic’s

leadership created Friends of Hellenic Classical Charter Schools, Inc. (“Friends of Hellenic”), a

New York not-for-profit corporation with an address for service of process in care of Mr.

Capetanakis, Hellenic’s board president. Annexed as Exhibit 3 is a print-out of the entity

information for Friends of Hellenic shown on the web site of the New York State Department of

State, Division of Corporations. 6 See also Exhibits 1 (Initial Lease at signature page) and 2

(Second Amendment at signature pages).

46. On or about February 26, 2021, Friends of Hellenic closed on a bond issue

in excess of $41 million (the “Bond Issue”) intended to: (1) refinance a loan secured by a

building in Brooklyn used by a charter school not covered by the 2019 Commissioner’s Decision

and operated by an entity related to Hellenic; (2) pay for improvements to the Brooklyn building;

and (3) finance the construction of a new building at the Additional Premises in Staten Island.

Annexed as Exhibit 4 are copies of excerpts from the Bond Issue (which, in full, exceeds one

thousand pages), shown on the web site of Build NYC Resource Corp., a subsidiary of the New

York City Development Corporation that assists not-for-profit entities in accessing low-cost debt

through tax-exempt bond financing. 7 See Exhibit 4 (Bond Issue at unnumbered pp. 1-5

preceding Table of Contents; and at Summary Information, p. S-2).

6
See also https://apps.dos.ny.gov/publicInquiry/EntityDisplay (last visited on December 1, 2022).

7
See also https://edc.nyc/sites/default/files/2021-09/Official%20Statement%20-%20Hellenic%20Classical_0.pdf
(last visited on December 1, 2022).

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47. The Bond Issue confirms that Friends of Hellenic was formed “for the sole

purpose of furthering the educational and charitable purposes” of Hellenic. Id. (Bond Issue at

Summary Information, p. S-1; and at Limited Offering Memorandum, p. 6).

48. According to the Bond Issue, “[t]he Friends of Hellenic Board members

work closely with the School’s Board and staff to steer its larger and long-term objectives and to

spread awareness and broaden the School’s resources.” Id. (Bond Issue at Appendix A, p. A-12).

49. The Bond Issue also confirms that Hellenic and Friends of Hellenic share

leadership, including Mr. Capetanakis, who is the board chair of both, and in whose care Friends

of Hellenic maintains an address for service of process. See Exhibits 3 and 4 (Bond Issue at

Limited Offering Memorandum, p. 7; and Appendix A [“Hellenic Classical Charter Schools”],

pp. A-11 to A-13).

50. The Bond Issue specifies that the construction to be financed “is designed

to accommodate 600 children in grades 2 to 8 in the New Building.” See Exhibit 4 (Bond Issue

at Appendix A, p. A-22 [“The Project”]; see also id. at pp. A-23 [“Project Purpose and Need”]

and A-32 to A-33 [“Projected Enrollment for HCCS Staten Island”]) (“The Existing Building

will house grades kindergarten and 1, and a pre-kindergarten program, while the [future] New

Building will house grades 2 through 8.”).

51. Hellenic’s plan to serve students beyond grade 5 as stated in the Bond

Issue exceeds the grant of authority from the Board of Regents, and, as a result, DOE’s

obligation to provide co-located space or rental assistance. See Petition at ¶ 7, and Exhibits A

(Charter) and D (2019 Commissioner’s Decision at p. 3 and endnote 4).

52. Friends of Hellenic agreed to sublease the Brooklyn and Staten Island

buildings to the schools in amounts sufficient to repay the loan installments under the Bond

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Issue. See Exhibit 4 (Bond Issue at unnumbered p. 7 preceding Table of Contents; at Summary

Information, p. S-3; at Limited Offering Memorandum, pp. 3-4 and 22; and at Appendix A, pp.

A-30 to A-31).

53. The Brooklyn building “is not eligible for rental reimbursement under the

[Charter Schools] Act.” Id. (Bond Issue at Appendix A, p. A.31).

54. The Bond Issue confirms that DOE “has not participated in the preparation

of this Limited Offering or any other disclosure documents relating to the” bonds, and assumes

no responsibility for the accuracy or completeness of the bond documents. Id. (Bond Issue at

unnumbered p. 7 preceding Table of Contents).

Hellenic Assigns its Lease to Friends of Hellenic, which in Turn Subleases
the Building Back to Hellenic For An Amount that Vastly Exceeds the Rent
for the Building Payable to the Landlord under the Master Lease

55. With the Landlord’s consent, Hellenic assigned the Lease to Friends of

Hellenic, which assumed Hellenic’s rights and obligations as tenant under an Assignment and

Assumption of Lease Agreement dated as of February 26, 2021 (the “Assignment”). See

Petition, Exhibit E (Assignment).

56. The Assignment specifies that Hellenic nevertheless “shall remain

primarily liable for the performance of all covenants and obligations contained in the Lease[,]”

and that the Landlord “shall be permitted to enforce the provisions of the Lease directly against”

Hellenic. Id. (Assignment at p. 2).

57. Upon information and belief, in his capacities as board chair of each

entity, Mr. Capetanakis executed the Assignment on behalf of both Hellenic and Friends of

Hellenic. Id. (Assignment at p. 4).

58. Upon information and belief, also on February 26, 2021, Friends of

Hellenic and Hellenic entered into a document entitled “Sublease Agreement” (the “Purported

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Sublease”), under which Friends of Hellenic, denominated as “Sublandlord,” purported to

sublease “those certain premises located at 1641 Richmond Avenue, Staten Island, NY 10314

[the ‘Premises’]” to Hellenic, denominated as “Subtenant.” Id. (Purported Sublease).

59. The Purported Sublease provides that “Subtenant [Hellenic] shall perform

all obligations of Sublandlord [Friends of Hellenic] under the Lease.” Id. (Purported Sublease at

¶ 15).

60. The Purported Sublease includes a guaranty, executed by Mr. Capetanakis

in his capacity as Hellenic’s board chair, under which Hellenic “absolutely, unconditionally and

irrevocably guarantees to Landlord the full and prompt payment” of each lease obligation being

assumed by Friends of Hellenic, which is identified as a “related entity” with an address in care

of Hellenic at the Building and of which Mr. Capetanakis also is board chair. Id. (Purported

Sublease at Exhibit B); see also Exhibit 4 (Bond Issue at Appendix A [“Hellenic Classical

Charter Schools”], pp. A-11 to A-13).

61. The Purported Sublease further provides that Hellenic must send any

notices to Friends of Hellenic required under the document to Friends of Hellenic, in care of

Hellenic -- that is, in care of the sender -- at the school address, to the attention of Hellenic’s

(again, the sender’s) own board chair; as Friends of Hellenic must do for any notices it is

required to send to Hellenic. See Petition, Exhibit E (Purported Sublease at ¶ 24).

62. Mr. Capetanakis executed the Purported Sublease on behalf of both

Hellenic and Friends of Hellenic in his capacity as board chair of each entity. Id. (Purported

Sublease at p. 8).

63. The Purported Sublease recites sub-rents for the 2021-2022 and 2022-

2023 School/Fiscal Years (July 1 through June 30) of, respectively, $2,281,083.40 and

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$2,299,401.95, which vastly exceed the Fixed Rent due for the comparable lease years (August 1

through July 31) of, respectively, $696,210.00 for 2021-2022 (less a concession of $3,055.55 per

month) for the Building only, and even of $822,000.00 for 2022-2023 (less an abatement of

$12,500.00 per month) for the Building and the unimproved land. See Exhibits 1 (Rider at ¶ 46;

and First Amendment at ¶ 2) and 2 (Second Amendment at ¶ 4); Petition, Exhibit E (Purported

Sublease at ¶ 3 and Schedule 1).

64. That is, in the Purported Sublease, Hellenic has obligated itself to pay to a

closely related entity a purported sub-rent that dwarfs the total rental obligation to the Landlord -

- and, even more to the point here, the portion applicable only to the Building rent -- allowing

Friends of Hellenic to pocket the difference.

65. Since Friends of Hellenic was formed “for the sole purpose of furthering

the educational and charitable purposes” of Hellenic, in effect, Hellenic is paying to itself the

considerable portion of the sub-rent that exceeds the Fixed Rent payable to the Landlord. See

Exhibit 4 (Bond Issue at Summary Information, p. S-1; and at Limited Offering Memorandum, p.

6).

66. Upon information and belief, Friends of Hellenic is using the amount of

sub-rents it receives from Hellenic in excess of the rental obligation to the Landlord in order to

service the debt on the Bond Issue, which consists solely of interest payments through calendar

year 2025, including $1,738,441.94 in 2021, $2,058,681.26 in 2022, and $2,058,681.26 in 2023.

Id. (Bond Issue at Limited Offering Memorandum, p. 9).

DOE Pays Rental Assistance Based on the Actual Rental Cost of the Existing Building

67. DOE paid rental assistance for the 2019-2020 and 2020-2021 school years

in amounts that Hellenic accepted without objection.

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68. On June 21, 2021, in support of Hellenic’s claim for rental assistance for

the 2021-2022 school year based upon the significantly increased sub-rent set forth in the

Purported Sublease, Christina Portelos (“Ms. Portelos”), Hellenic’s Director of Finance and

Operations, confirmed to DOE:

The original lease was assigned to the Friends of
Hellenic Charter Schools and in return subleased to
the School, which is the sublease we submitted.
The main increase is due to the debt service that’s
included in the sublease.

******

The Friends of borrowed funds through a bond with
Build NYC to construct a new building on the
current property in Staten Island to house our 2nd –
8th grade student classrooms, offices and
auditorium. The school is paying the Friends of to
cover the financing cost of that project along with
the monthly rent.

******

It is for a brand new 4[-]story building. Separate
from the current building in use.

[See Petition, Exhibit I {E-mails dated June 21, 2021}].

69. DOE finally determined Hellenic’s claim for rental assistance for the

2021-2022 school year in an e-mail dated June 22, 2021 to Ms. Portelos and Joy Petrakos,

Hellenic’s Chief of Operations (see Exhibit 4 [Bond Issue, Appendix A, p. A-14]), advising that:

Unfortunately, the DOE is unable to accept the new
lease with the higher rental cost after learning that
the funds are to be used for this purpose [debt
service for construction of new building]. The
ONLY buildings that are eligible for lease
assistance reimbursement under the Charter Schools
Act are those that are currently in use by students.
We understand that the building will one day be
used to serve Hellenic Staten Island students, and

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the building will be eligible for lease assistance
payments at that time.

In the meantime, the DOE will continue to make
payments under the prior lease as long as it is in
effect, or until a revised lease without the debt
service included is presented. [See Petition, Exhibit
I {E-mail dated June 22, 2021}].

70. Hellenic emailed DOE back to argue the sub-rent amount “is the rental

cost that the landlord is charging us that was negotiated under the sublease.” Id. (Petition,

Exhibit I {E-mail dated June 29, 2021}].

71. However, despite its obligation under the 2019 Commissioner’s Decision

to “present DOE with evidence of the actual rental cost of an alternative privately-owned site”

(see Petition, Exhibit D [2019 Commissioner’s Decision at p. 3]), Hellenic provided no

documentation showing that Hellenic is required to pay the sub-rent amounts set forth in the

Purported Sublease to the Greek Orthodox Community Holy Trinity Church of Staten Island,

that is, to the Landlord under the Lease, with which Hellenic remains in privity even after having

assigned the Lease to Friends of Hellenic, an entity created by or on behalf of, and controlled by,

Hellenic’s leadership.

72. Nor did Hellenic file an appeal from DOE’s determination within thirty

days from receiving it, the time frame set forth at 8 N.Y.C.R.R. § 275.16.

73. DOE paid $652,643.00 to Hellenic in rental assistance for the 2021-2022

School/Fiscal Year ($48,061.95 for July 2021, plus $54,961.95 times 11 months for August 2021

through June 2022, rounded down to the nearest dollar), an amount subject to downward

adjustment depending upon adequate proof of actual payments to the Landlord for rental of the

Building under the Lease during that period, which Hellenic has not yet provided to DOE. See

also Petition at ¶ 13 (Hellenic acknowledging receipt of this amount for this period).

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74. Subject to adequate proof of actual payments to the Landlord for rental of

the Building under the Lease during the 2022-2023 School/Fiscal Year, and including the rent

abatement of $12,500.00 per month effective August 1, 2022, DOE has tentatively calculated the

rental assistance for this period to be $476,894.45 ($54,961.95 for July 2022, plus $38,357.50

times 11 months for August 2022 through June 2023).

FIRST DEFENSE AND OBJECTION IN POINT OF LAW

75. The Petition is wholly barred by one or more defenses founded upon

documentary evidence.

SECOND DEFENSE AND OBJECTION IN POINT OF LAW

76. The Petition fails to state a cause of action upon which relief can be

granted.

THIRD DEFENSE AND OBJECTION IN POINT OF LAW

77. Hellenic fails to demonstrate a clear right to the relief sought in the

Petition.

FOURTH DEFENSE AND OBJECTION IN POINT OF LAW

78. The Petition is time-barred under 8 N.Y.C.R.R. § 275.16.

FIFTH DEFENSE AND OBJECTION IN POINT OF LAW

79. DOE has complied with its obligations to Hellenic under Educ. L. § 2853.

SIXTH DEFENSE AND OBJECTION IN POINT OF LAW

80. DOE’s obligation under Educ. L. § 2853(3)(e)(5)(A) to provide rental

assistance to Hellenic based on the “actual rental cost” of the “privately owned site selected by”

Hellenic cannot exceed the amount of rent that is actually paid to the Landlord for that site.

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SEVENTH DEFENSE AND OBJECTION IN POINT OF LAW

81. DOE’s rental assistance obligation to Hellenic under Educ. L. §

2853(3)(e)(5)(A) is limited to the portion of the rent actually payable to the Landlord that is

attributable to the facilities that Hellenic has leased in order to provide educational services to

the students actually enrolled during the period for which Hellenic claims rental assistance; and

therefore does not include the cost of constructing a building for future Hellenic students.

EIGHTH DEFENSE AND OBJECTION IN POINT OF LAW

82. DOE’s rental assistance obligation to Hellenic under Educ. L. §

2853(3)(e)(5)(A) does not include payments by Hellenic to Friends of Hellenic, a closely related

entity that was created by or on behalf of Hellenic for the sole purpose of furthering Hellenic’s

educational and charitable purposes, that are not used to rent the facilities that Hellenic is

presently using to provide educational services to students covered by the 2019 Commissioner’s

Decision.

NINTH DEFENSE AND OBJECTION IN POINT OF LAW

83. Pursuant to the 2019 Commissioner’s Decision, DOE’s rental assistance

obligation to Hellenic under Educ. L. § 2853(3)(e)(5)(A) is limited to the amount of rent

attributable to the facilities that Hellenic has rented to provide educational services only to

students in kindergarten through grade 5.

TENTH DEFENSE AND OBJECTION IN POINT OF LAW

84. DOE’s rental assistance obligation to Hellenic under Educ. L. §

2853(3)(e)(5)(A) does not include payments for rent of unimproved land.

ELEVENTH DEFENSE AND OBJECTION IN POINT OF LAW

85. DOE’s rental assistance obligation to Hellenic under Educ. L. §

2853(3)(e)(5)(A) does not include payments to service the debt incurred by or on behalf of

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Hellenic in connection with making improvements to a school building in Brooklyn, or in

constructing a new building in Staten Island, neither of which is covered by the 2019

Commissioner’s Decision, or is “located in part of an existing public school building, in space

provided on a private work site, in a public building or in any other suitable location” under

Educ. L. § 2853(3)(a).

CONCLUSION

WHEREFORE, DOE respectfully requests that the Commissioner: (1) dismiss

the Petition in all respects; (2) determine that Hellenic’s rental assistance due under Educ. L. §

2853(3)(e)(5) must be calculated upon only payments to the landlord that are attributable to

Fixed Rent for the building that Hellenic rented pursuant to the 2019 Commissioner’s Decision,

without regard to any costs associated with unimproved land or to debt service on that land, or to

any payments to Friends of Hellenic; and (3) direct Hellenic to provide DOE with adequate proof

of any such payments to the Landlord as a condition precedent to any calculation or payment of

rental assistance to DOE pursuant to Educ. L. § 2853(3)(e)(5).

Dated: New York, New York
December 1, 2022
Respectfully submitted,

HON. SYLVIA O. HINDS-RADIX
Corporation Counsel of the City of New York
Attorney for Respondent
100 Church Street
New York, New York 10007
Tel. (212) 356-2537
E-mail: tkrichma@law.nyc.gov

By: Todd Krichmar
Todd Krichmar

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VERIFICATION

STATE OF NEW YORK )
s.s.:
COUNTY OF NEW YORK )

Erin Cochran, being duly sworn, deposes and says: I am employed by the New

York City Department of Education, the respondent in this proceeding, as the Interim Acting

Senior Executive Director of its Charter Schools Office, and, within the scope of my

employment, am authorized

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