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Saturday, June 27, 2009
Details Emerge on CSF Takeover
By Kiera Hay
Journal Staff Writer
The student body of a revamped College of Santa Fe would eventually number 4,000, and half of those would come from overseas, according to new details emerging out of the city of Santa Fe's negotiations to buy the 100-acre campus.
The city would also take ownership of the school's "valuable, historic and culturally significant" art and books, though Laureate Education Inc., the school's probable new operator, could borrow the material for educational purposes.
The information was discussed this week with Santa Fe city councilors in an executive session, as well as during a public presentation before the New Mexico Finance Authority.
Laureate has said in the recent past it expected to eventually enroll a couple thousand students in Santa Fe, but optimism about the campus' attraction has apparently increased the company's estimate. The company already has about 500,000 students spread over some 44 countries.
CSF had less than 600 full-time students before it graduated its final class in May.
City Finance Director David Millican told the city council that Laureate anticipates beginning the fall semester with about 100 students, a number expected to jump to 250 by spring.
The Santa Fe City Council has agreed to hold public hearings on two loan options involving the city's possible purchase of CSF.
Both options set a maximum debt of $30 million for the city, with one authorizing the sale of revenue bonds directly by the city. The other would approve an agreement — still not finalized — with the New Mexico Finance Authority, in which that agency would sell the bonds and then lend the money to the city.
Millican told the NMFA on Thursday the city favored working with that agency rather than issuing bonds directly. "We really would prefer that as the best tool," he said.
Millican said Friday that the NMFA told the city it could save as much as $400,000 if that agency issues the bonds. Other benefits to working with the NMFA include "a much more customized service," he said.
In turn, Millican and other city officials, including Mayor David Coss and city attorney Frank Katz, received a generally positive reception Thursday from members of the NMFA.
A tentative plan fleshed out between the city, the College of Santa Fe, the college's creditors, Laureate and the state of New Mexico calls for the following components:
• CSF settles a $2.6 million loan with Laureate by turning over "educational" assets including the CSF "brand," accreditation, curriculum, course outlines, desks and other equipment.
• CSF sells its 100-acre campus, excluding the 8.5-acre Shellaberger Tennis Center, to the city in exchange for the removal of its liens and a plan for an ongoing operation.
• CSF's debt with its major creditors, the Royal Bank of Canada and Radian Group, is reduced by $7.5 million.
• The city issues revenue bonds and transfers $19.5 million to pay CSF's debt.
• The state of New Mexico follows through on Gov. Bill Richardson's promise of an $11 million funding package, including a $5 million land sale of vacant acreage.
• Santa Fe Higher Education LLC, a subsidiary of Laureate's parent company, Wengen, leases part of the campus, which will, among other things, provide $15 million for deferred maintenance capital improvements at a rate of $2.3 million a year.
• Wengen guarantees $20 million to cover operating costs until the school can break even, which is expected to happen in three to four years.
The City Council is scheduled to vote July 29 on approval of a bond issuance, though a discussion could also take place July 8. The city's Finance Committee will also hold a public hearing Monday.
If approved, the city is on track to issue bonds in August, and "we're looking at a September start date," Millican said.
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