A childcare centre that was ordered on Tuesday by the authorities to close next month, was yesterday told that it can remain open, on the condition that the amount it owes be paid by March 7.
Character Montessori in Punggol was served a lease termination notice after owing the Singapore Land Authority (SLA) two months of rental fees.
After factoring in interest for the late payment and GST, the outstanding sum is about $72,000.
About 90 children are enrolled at the centre. There are four other centres in the pre-school chain, but they are not affected, according to Chinese evening daily Lianhe Wanbao's report on Thursday.
The centre had been given "numerous e-mail reminders" and two "notices of demand" since Nov 10 last year, and was told its lease would be terminated on March 31.
Its founding principal Grace Yong told The Straits Times that after she e-mailed Minister for Social and Family Development Tan Chuan-Jin on Thursday to appeal for help, the centre was told yesterday morning that it could remain open, provided it pay the outstanding sum, as well as the February rent of about $32,000, by March 7.
Pre-school rental rates in the spotlight
Character Montessori's monthly rent in Punggol Road is an eye-watering $32,050 for a building with an indoor space of under 500 sq m.
That it was almost forced to close down after being in arrears in payments to its landlord, the Singapore Land Authority (SLA), has cast a spotlight on the rents that childcare centres face.
What Character Montessori paid is not unusual in the sector, based on checks of other recent open site tenders. Some centres in Housing Board void decks pay monthly rents of about $20,000 for sites with a floor area of about 500 sq m.
This is despite efforts by the authorities to curb rental costs. In 2013, the Early Childhood Development Agency and the SLA stopped the practice of awarding sites to the childcare firm that offers to pay the most. Such a practice often sparked bidding wars among operators and pushed up fees for parents.
In the new tender-evaluation process, the bid price makes up only half the score, with the rest - the "Q-score" for quality - made up by other criteria such as the fees the childcare centre charges as well as its track record.
In the case of the Punggol Road site, the last open tender took place in 2014.
There were 12 bidders. The highest bid was $32,555 and the lowest was $19,000.
Character Montessori - which had occupied the site since 2007 - bid $32,050, more than double the rental rate it had paid previously.
The top bidder, Kindle Preschool, did not get the site as it had a low Q-score of nine points out of 50. Character Montessori tied with Knowledge Universe at 89 points overall out of 100, with equal scores in the bid price and quality components. It was eventually selected through a random ballot.
Character Montessori's founding principal Grace Yong blamed the high rent as a reason it had delayed making payment. "The doubling of rent increased our costs significantly and impacted our cash flow more than expected," she wrote in appeal letters to MPs.
Queried over why the company had gone ahead to bid at a rate that it could barely afford, Ms Yong argued that the bid price "still plays a key role" in the awarding of sites. "If the bid price we offer is less than the average price among the bidders, we lose some points (in the score)," she told The Straits Times.
The average bid was about $25,710 for the Punggol Road site.
The proportion of operating costs that goes to rent varies across centres, as this partly depends on how many teachers the centre hires, and can range from 10 per cent to as much as 50 per cent. But cost pressures come mainly from rent and staff costs.
Responding to queries, an SLA spokesman said the centre had been “persistently late with rental payments” since February last year, and SLA issued 14 notices of demand,followed by four termination notices from May to November. However, these were withdrawn after the centre made late payment of its rental arrears.
Last December, SLA learnt that the centre was under receivership. After the centre did not pay rent that month and last month, SLA issued notices of demand.
SLA said the centre made a proposal to settle the outstanding amount, and "should (the centre) adhere to its proposal and settles all outstanding arrears, it can continue operating at the premises".
The centre told parents on Wednesday that two incidents had "drained our financial buffers significantly". An administrator allegedly embezzled more than $120,000 over two years till the middle of last year, when the deed was discovered during a financial audit. She was sacked and has been arrested.
The centre has also had to pay more than double its previous rental rate, after bidding for its site at 420, Punggol Road, in 2014. The site was up for tender then as the centre's lease was due to expire.
Ms Yong said she is "confident" of meeting the deadline to pay the amount owed. "We've taken cost-cutting measures since the last quarter of last year, such as reducing the headcount at our HQ."
Said housewife Q. Ren, 34: "I'm somewhat relieved that the centre won't close, as the teachers are really good. But I hope the management will keep to its promise (of resolving the issues). It'd be a pity if the teachers leave because of this."
•Additional reporting by Melody Zaccheus