FAQ — Contract
There is much confusion about the Kinder/HSPVA Friends/HISD naming contract and how pervasive the change in the name will be. Various persons have intimated it will not really affect the school, offering reassurances such as “HSPVA is not changing,” asserting that the name will continue to be spelled HSPVA, the logo, the bumper stickers, are not changing.
The contract was not readily available for public review until after the school board voted to accept it on October 13, 2016. It was posted online by the Chronicle's education reporter late the afternoon of the vote. To read the full contract, see the contract page.
Are you saying you don't want the students to have the state of the art equipment the Kinders are buying? Isn't your appeal going to cause HSPVA to lose the money?
No, the Kinders are contractually bound to pay the money. Based on the payment schedule, Kinder has by now paid $3.5 million, over half the $5 million needed for the opening day of the school. The appeal simply asks the Kinders to be reasonable and take a theater name as their recognition rather than the name of the school.
But rich people give enormous sums for buildings named after themselves all the time! This is totally normal!
This is not normal. It's not the building. It's the identity of the school. This would be like asking Rice to rename itself Kinder University. Universities and museums don't sell their top level names. They sell the names of stadiums, theaters, park benches, etc. But not the top level name. Kinder has demanded something well outside the norm. And because this is the first time HISD has ever sold a name for money, Kinder is setting a precedent, a terrible one in our opinion.
This is not an enormous sum. This is 5% of the total construction budget. Taxpayers pay 95% but lose the public, community name of the school. The school will be named after two people and will unavoidably also reference the pipeline company Kinder Morgan, Inc.
I don't get it. Can I still vote on this?
No, there is nothing we can do with HISD. That ship has sailed. The trustees voted for it on October 13, 2016, 7 to 2. There was almost no reporting of how unusual the transaction was, or that the Kinders were forced to make it a take it or leave it, now or never deal. The disproportional size of the contribution and the demanding, heavy-handed tactics reflect poorly on the Kinder Foundation, which normally has a super reputation. We hope they will agree, and act to right the situation.
Was it a donation or a sale? Where did the number $7.5 million come from?
It’s not a gift when you give money in exchange for something of equal or greater value.
$7.5 million is the minimum allowed in the HISD naming policy for consideration of a name change. Many people have the impression that the HISD policy simply grants any facility name in exchange for $7.5 million. The policy is not that bad. It says “at least $7.5 million” and is subject to a board vote.
HSPVA did not need $7.5 million, only $5 million for equipment upgrades, not all basics to make the school function. See the contract Exhibit A near the end for the list of equipment. See the policy here.
The extra $2.6 million is a placeholder. It is as if Kinder were yelling DIBS! on the school name now before HISD understands how valuable naming rights are and in case the policy is strengthened.
If the school only needed $5 million, then what happens to the extra $2.6 million?
The contract doesn’t say. The school doesn’t need the extra money to open in 2018. All the contract says is that Friends has until 2029 to give it to HISD, and only with Kinder’s approval.
This is a buy now, pay later deal for Kinder. They do have to give the extra $2.6 million to Friends by 2018, but Friends cannot give it to HISD until Kinder OK’s it. They have until 2029 to approve any release of any part of those funds, and there is no penalty in the contract for any failure to release it.
Furthermore, the Kinder contract gives Kinder much control over the entire $7.5 million, establishing two bank accounts subject to their own special legal agreements and a requisition process in which HISD has to ask Kinder and Friends for it, one expenditure, or one group of expenditures, at a time. This is the same money Friends constantly refers to as a "gift" and a "donation."
Why would HISD agree to such a lopsided contract?
At least four of the board members (about half of the nine) were as surprised by the press release six days before the vote as the public was. At the Agenda Review meeting four days before the October 13, 2016 voting meeting, they expressed concern that the agenda item was added with the minimum 72 hours' notice and that the contract, brought forward by Trustee Mike Lunceford, had seemingly not been provided for review. They were very surprised to find out HISD had had no representation in the negotiation of the contract, and that Lunceford/Kinder/HSPVA Friends were presenting it as a fait accompli just a few days before the meeting. These board members suggested tabling the issue and "workshopping it"--the only sensible thing to do before taking such an unprecedented step. Workshops, conducted by knowledgeable consultants, are used by the board to get up to speed on new issues.
The board had never before awarded a name of even a facility for money, much less the name of a prominent high school with a long and storied history. The naming for funds policy was brand new. It had been adopted one year earlier amid a specific discussion that it was not intended for schools, but for parts of schools, and that even $20 M would not allow a person to "buy" a school name. (See the policy page, Note 1.)
But during the next few days, Board members were pressured by HSPVA Friends and others, who claimed that if the deal were not approved, no other philanthropists would consider helping the district. The President of HEB spoke in support, saying rejecting the deal would be "sending a message to other donors." A business associate of Richard Kinder wrote to one trustee, "This is not only critical for HSPVA, but for the future of the philanthropic community's willingness to provide extraordinary help to HISD."
According to Trustee Dávila, in an email to an alumnus, the board tried to get Kinder to accept the name of a theater, but the Kinder family would accept nothing less than the name of the school.
Even with this pressure, the president of the Board said he intended to take the item off the agenda the morning of the voting meeting. At that point a Kinder spokesperson told the board and the Houston Chronicle that the proposal would "expire" that day. In other words, it was a deal, not a gift, and the deal was all or nothing, now or never. Take it or we won't give the money. Tell the kids they can't have the top-drawer equipment. The item was placed back on the agenda for vote. Most board members still had not even had time to study the 18 page contract, which they spoke about receiving only one day before. Seven board members voted in favor, several commenting that they were doing it "for the kids." Two of them each had a child in school at HSPVA. Neither abstained, and both voted with the school principal, in favor. The two trustees who voted against, Jolanda Jones and Diana Dávila, cited school equity and the lack of transparency surrounding the contract.
I heard the school will not be very functional without the money from Kinder. The principal said one of the theaters would be an empty concrete box!
This is not entirely true. The extra money goes for upgrades to the sound and lights in the theaters, and to various other items. Not all are essential to opening day. HISD would provide standard sound and lights. Based on comparative costs they would not be nearly as nice as the Kinder audio-visual equipment, in particular (the largest item in the contract at $1.7 million.) HSPVA wants and needs more state-of-the-art gear because it's a specialty school. The empty theater is the 150-seat mini-theater, to be completed at a cost of $464,000, as detailed on Exhibit A. There are three theaters and a recital hall in the new school, as well as numerous other practice and performance spaces.
HSPVA’s new school is not inexpensive. The school’s per-student cost is by far the highest of any new school being built or scheduled to be built with “Round 2” bond funds. It will cost $117,794 per student, more than twice as expensive per-student as the next most expensive, DeBakey High School. The Gensler design is gorgeous, and the location, downtown three blocks from Discovery Green, served by light rail, is highly desirable. 790 Austin St., 77002
Isn’t Kinder supplying a major portion of the cost to get the name?
The total cost including land is $111 million, $116 M when Kinder’s $5M is added. Kinder’s $5M contribution is 4.3%. Taxpayers pay for 95% of construction costs and all ongoing costs.
What happens if the Kinder name becomes undesirable for some reason, like when Enron Field was changed to Minute Maid Park?
There is no protection for HISD in case of any decline in the public value of the name Kinder. The contract does not allow HISD a basic morals clause.
Where does the name change? Just on the building? What about transcripts, diplomas, etc?
EVERYTHING changes. Not just the building. The contract says all official records—that includes diplomas, transcripts, yearbooks, websites, progress reports—and all tickets, playbills, all media references, websites, promotional material, social media handles—they will say Kinder. The institution has been renamed Kinder High School for the Performing and Visual Arts. Kinder HSPVA is allowed also. "HSPVA" is not allowed on any HISD documentation.
When does the name change take effect?
The contract says the change is effective immediately (Article 7). Upon the effective date of the contract, October 13, 2016, also the date set for the vote. Exhibit B says the name will officially change when the new building opens, but “referencing the new name in print and on other materials” is to begin immediately, but this does not appear to have happened (as of March 2017).
Whenever it occurs, the name change is perpetual—forever, even if the building is replaced or the school is moved or rebuilt.
That effective date, the date of the upcoming voting meeting, was helpfully written in before the contract was delivered to HISD. It is the only legal basis we could find for Kinder's statement on the day of the vote that the deal was an offer that "expired" that day. Of course, Kinder had the option to allow HISD more time and simply revise the date on the contract, or just let it be retroactive. But they chose to say the deal had an expiration date that would keep the board and the community from seriously studying and debating the name change and getting up to speed on naming rights, which HISD had never sold before.
What is, or who is, the Kinder Foundation?
According to their website the Kinder Foundation was formed in 1997 by Richard and Nancy Kinder to "provide major gifts to public causes with the intention of helping people realize healthy and rewarding lives." It has had a wonderful impact on the Houston area, giving large amounts for the building of Discovery Green downtown (2 blocks from the new HSPVA building) and a pledge of $50 million for the Bayou Greenways 2020 project. The foundation pledged $50 million to the MFAH for the new Nancy and Rich Kinder building at the museum. It gave Rice University $15 million in 2010 to support its Institute for Urban Research, now named the Kinder Institute for Urban Research. In 2011, it gave $1 million to upgrade the auditorium in Richard Kinder's high school in Missouri; the auditorium (only) was renamed the Richard D. Kinder Performance Hall.
The foundation's tax returns for 2013, 2014, and 2015 show that the private foundation has only two contributors and only two managers, Richard and Nancy Kinder. They are the Kinder Foundation. They gave it $69.8 million, $40 million, and $30 million, respectively, in 2013, 2014, and 2015.
The Kinder Foundation gave $50,000 to HSPVA Friends in both 2013 and 2014, but nothing in 2015 as reported. HSPVA Friends has said the Kinders or the foundation have been giving to Friends since 2008. If the gift has consistently been $50,000 annually, a cumulative total of $450K in contributions over eight years gave Kinder first dibs on the school name, when HSPVA Friends solicited the "lead gift" in its capital campaign from Kinder.
The Kinders are the richest couple in Houston in some years, according to Forbes Magazine, and always close to the top of the list in recent years. Their billions of wealth comes from the pipeline company founded by Richard Kinder, Kinder Morgan, Inc. Mr. Kinder is the Executive Chairman of Kinder Morgan.
What is, or who is, HSPVA Friends? Why would they sell the name of the school?
HSPVA Friends is a small non-profit organization with one employee (two now) and a volunteer board of ten. It is not part of HISD and has no legal right or ownership of the school name it offered to Kinder Foundation for sale. It's an enhanced PTO and alumni support organization for the school. Revenues for the last available tax year (ending July 2015) were $869,000.
HSPVA Friends is the middleman in the contract. They get the $7.5M from Kinder, and disburse it to HISD over time. They do not profit from it directly.
With this $7.5 million “gift,” Friends will be leveling up in its own world, many times over.
The single transaction covers the entire amount needed for the opening day of the new building, plus $2.6 million more. The Kinder contribution takes care of the school's opening day needs, which really was Friends' primary goal, with no further effort needed. It also presumably brings the principals in the Friends organization into a closer relationship with the Kinder Foundation, a huge accomplishment in Houston's non-profit world.
I heard the letters on the outside of the building would not change
The contract does specify that the big block letters on the Rusk side of the building will remain “as designed,” but it does not prohibit the word “Kinder” from being added in front of them.
But more importantly, there is another sign, around the corner on Austin St., considered the front of the building. In the Gensler illustration, that sign spells out the whole name in red illuminated letters above the canopy with the marquee. That one, or its equivalent, is required to say Kinder by the contract.
The gorgeous new building downtown and the name on the sign outside are extremely valuable. Lead tenancy in a downtown building would cost many millions annually and a continuing significant commitment. It would not be perpetual under any circumstances. And HSPVA is no office building. It’s an iconic cultural institution.
But wasn’t there time pressure to get the upgraded equipment into the construction schedule?
This is a legitimate concern and created a situation that worked in Kinder’s favor. But review of the contract reflects some things may be “wants,” not “needs,” and in any case, no partial solutions were considered, such as to build infrastructure for the equipment and get the equipment itself later, or to use equipment from the current school. HSPVA Friends and Kinder made the decision for everyone, that the only solution was to sell the name to Kinder. Certain key staff at the school were also persuaded to support the idea. The wider community had no chance at input until it was too late to stop it. Kinder forced the quick vote with a take-it-or-leave it offer that “expired” if the board did not vote at the meeting on October 13th.
But won’t the Kinder Foundation be a patron of the school now and isn’t that a positive thing going forward?
Kinder did not commit to provide any continuing funds to the school or to HISD. However, it insisted on perpetual naming rights. The new name sounds like an endowed private school. There is no endowment or commitment by Kinder beyond the $7.5 million in the contract.
I heard the bumper stickers would not change
The contract allows the old bumper stickers to continue to be sold as “legacy promotional items” along with an “updated” version that will say Kinder. After a few years, the parents may not be buying the old ones, as they will have no association with the school under the old name.
What about the logo? I heard it was not changing.
The logo is not protected and will change as soon as Gensler designs a new one and Kinder approves it. The contract allows the old round logo be used only in a historical context.
Where can I find more information?
Read the contract, especially page 9, “Naming of the Facility” and the two exhibits, A and B. Exhibit A is the list of equipment. Keep in mind that some things require infrastructure that must go into the construction plan as soon as possible. This has created a legitimate urgency regarding some of the upgrades, but not all.
There does not appear to have been any creativity applied to this problem; money seems to have been viewed as the only solution. For instance, the mini theater could use stackable banquet chairs like the current Recital Hall, as a temporary seating solution. And according to HISD, all of the current school’s equipment is available to the new school. Tacky? Is a sellout tacky?
Check out this short description of Dallas' Booker T. Washington High School for the Performing and Visual Arts, and scroll to the bottom to see where their capital campaign raised $42 million in 2008. A spokesperson at Booker T. Washington's Advisory Board said that they extensively sold the names of parts of the building---theaters, rooms, wings, etc. But the institution's name was never for sale. Many different donors gained a little ownership and a lasting relationship with the school. The extensive outreach did not result in a single, winner-take-all donor.