ALBUQUERQUE, N.M. — When University of New Mexico regents use up to $10 million of the UNM Foundation’s money for a planned development project, it will be the first time in recent history that they do so in the form of a loan.
Regents last week unanimously approved a commitment to take out the loan for infrastructure costs for the development on UNM’s south campus – although an interest rate and other details aren’t final yet.
If they wanted, regents simply could have withdrawn the $10 million from the UNM Foundation.
But since the project will help increase the value of the land, therefore increasing the net profit UNM makes when it leases the property, regents want the foundation to also benefit, regent Jamie Koch said.
“It makes sense that we invest in our property, but we don’t take the principle. So the point is that I could very easily say we’re going to take $10 million and we’re going to plow in. But I say we’ll borrow it, and we’ll pay it back to the foundation,” Koch said.
The $10 million would be used to pay for roads, curbs, lighting and other infrastructure on three parcels of land off Avenida César Chávez and University SE, near the Pit. UNM wants the land developed – nearly 50 acres of it – and has chosen Fairmount Properties as the developer. In exchange, Fairmount will pay UNM a still-to-be determined amount in the form of a lease.
But that amount will be larger if UNM already has some infrastructure in place instead of Fairmount having to build it, Koch said. The cost of providing the infrastructure is between $9 million and $10 million, he said.
That’s money the foundation is more than happy to provide, spokeswoman Wendy Antonio said.
“Now they’ve got a way of improving the infrastructure to get a higher yield. That’s great,” Antonio said.
Antonio said the loan is a perfect example of the role foundations should play in helping further a university’s endeavours.
The foundation has about $336 million in assets, according its fundraising report.
Koch said he approached foundation president Henry Nemcik about the loan about three weeks ago.
But the information had not reached foundation trustees when regents approved it Tuesday, so the foundation on Wednesday sent an email clarifying that the kinks hadn’t been worked out just yet.
The foundation still must determine an interest rate. After that, regents have to come to an agreement with Fairmount on the value of the lease. They have a little less than 90 days to do that.
If all goes according to plan, South Campus will see a slew of restaurants and shops within the next five years. — This article appeared on page C2 of the Albuquerque Journal