HCPA’s new middle school and skyway bridge raise serious questions about financing

As students return to Hmong College Prep Academy (HPCA) in February, school officials may very well be highlighting the completion of its new middle school building, and the skyway bridge that connects it to the charter school’s main facility. They might even see it as an opportunity to divert attention from the recent resignations of HCPA’s founders, Dr. Christianna Hang, and her husband Pao Yang.
But whatever the school may say about the $33,000,000 project, it should be noted that it was only made possible because of the failure of Dr. Hang and HCPA to disclose an illegal $5 million investment while negotiating with the city of St Paul in 2020.

The Woodstock Hedge Fund Investment
On Oct. 20, 2021, Dr. Christianna Hang, submitted her letter of resignation to the HCPA Board of Directors. While citing health concerns from “stress due to the pace and breath of my work with HCPA,” the events of the past two years clearly show her resignation was due to negative attention from the school’s decision to make the Woodstock Investment.
Dr. Hang’s three-page resignation letter mentions the “Woodstock Investment” three times, but with no detail as to what it was, or why it is such a serious concern. Only that the investment was contributing to her “health issues” and causing negative attention for the school.
But the Woodstock investment was a seriously flawed, and illegal, $5 million hedge fund investment of the charter school’s operating assets. Such an investment “did not comply with Minnesota law regarding permissible investment of public funds.” Furthermore, it caused the publicly financed school to lose $4.3 million.
During the past year, the Woodstock investment has spawned numerous investigations regarding the actions of Dr. Hang, HCPA, and a national and international cast of characters from the suburbs of Milwaukee and Newark, to Sweden, Great Britain, and the Cayman Islands.
It remains to be seen what will result from those investigations. But enough has been revealed about the investment to have caused the school’s two longtime leaders, and the two highest compensated charter school executives in Minnesota, Dr Christianna Hang and Pao Yang, to resign.

HCPA’s $33 Million Municipal Bond Project
But a question about HCPA’s Woodstock illegal investment has not received enough attention. And that is, why did it not influence the ability of the charter school to receive $33 million in conduit revenue bonds from the city of St Paul in August 2020?
On Aug. 26, 2020, the St. Paul City Council voted 4-3 to approve $33 million in municipal bond financing for Hmong College Prep Academy. It was the fourth time since 2006 that HCPA had received conduit revenue bond financing through the city of St Paul’s Housing and Redevelopment Authority (HRA).
Municipal bond financing through the city of St. Paul has been a major reason for the rapid growth and expansion of HCPA since it moved to St Paul in 2006. At that time it was just a small, two-grade high school with 200 students.
Since then, HCPA has grown to become the largest single-site charter school in Minnesota, with a K-12 enrollment of over 2,300 students on its 14-acre campus southeast of the state fairgrounds. And $90 million of municipal bond financing through the city of St. Paul has been extremely instrumental in the charter school’s growth.
The Aug. 26, 2020 meeting to approve HCPA’s $33 million project was somewhat unprecedented. During the meeting, HCPA’s superintendent, Dr. Christianna Hang, was questioned for nearly an hour by city council members. There were some contentious questions about the skyway bridge, Dr. Hang’s salary, and why the charter school continued to come to the city for bond financing.
But those questions and concerns weren’t enough to stop HCPA from receiving city council approval for the $33 million project. And because HCPA officials had never disclosed the $5 million Woodstock investment to the city of St Paul, no council member could have been expected to raise questions regarding the investment decision the charter school made one year earlier.
While it is understandable that council members would not have known of the Woodstock investment, with some due diligence the city should have raised concerns about another puzzling aspect of the bond application.
HCPA was seeking bond approval not only from the city’s HRA, but also the St Paul Port Authority. While charter school bond financing has almost exclusively been through HRA, HCPA’s 2020 application also involved a unique $7 million, “bank-qualified” conduit revenue bond through the Port Authority.
HCPA’s $7 million “bank-qualified” bond was issued to Northeast Bank of Minneapolis. Coincidentally, an HCPA board member, Jason Helgemoe, was also the vice president of Northeast Bank. Greater due diligence by the city may have alerted them to that possible conflict of interest, a conflict of interest that very likely led to Mr. Helgemoe resigning his HCPA board position in June of 2021.
Surprisingly, while council members may talk about due diligence, they don’t seem to practice it. Instead, they seem to prefer assigning that responsibility to someone else.
Since 1999, the city of St Paul has approved conduit revenue bond financing 30 times for 16 different St. Paul charter schools. In that time, the city council has never refused to approve municipal bond financing for a charter school. Not once.
There is little incentive for the city to hold charter schools to a greater degree of accountability, even when there may be some legitimate concerns. And that’s because charter school conduit revenue bonds are a desirable, risk-free method of generating revenue for the city. And the city assumes no financial risk if a charter school defaults on the bonds.
One final thought. How should the city of St Paul address the fact that HCPA may have intentionally failed to disclose financial information from the city during its application for $33 million in municipal bond financing last year? That’s a question that the entire St. Paul City Council should be asking themselves.