DEAL SUMMARY:
- City takes out a loan and buys the College of Santa Fe for $19.5 million. An additional $15 million will be used for improvements on the property. There is also funding allocated for reserves and other city costs. (Please see ‘Sources and Uses’ document.)
- As an economic development project, Laureate leases the bulk of the property from the City for $2.35 million/year on a 27 year lease.
- Lease payments from Laureate cover City loan payments and expenses.
- Laureate operates the college as part of an international educational network.
- College continues to offer undergraduate and graduate programs.
- Art and design will be flagship educational programs.
- State of NM plans to buy land along Siringo Road.
- The City’s purchase does not include the Shellaberger Tennis Center.
- The Santa Fe Art Institute will continue operations.
FREQUENTLY ASKED QUESTIONS:
- Ø Why is the City of Santa Fe working to buy the College of Santa Fe?
The College of Santa Fe (CSF) represents an important opportunity for economic development in Santa Fe. As a college focused on art and design programs, the revitalized college will bring creative young people to Santa Fe, provide local youth educational opportunities and form part of the foundation of a vibrant creative economy in Santa Fe.
- Ø What is Laureate Education, Inc?
Laureate Education is a global network of more than 37 accredited campus-based and online universities offering gradate and undergraduate degrees to approximately 500,000 students worldwide. Laureate’s network spans 20 countries and includes 45 accredited schools. The mission of Laureate is to expand access to education and help students reach their highest potential.
- Ø What does Laureate plan to do at the College of Santa Fe?
Laureate will run a college offering graduate and undergraduate degrees. Within three to five years Laureate plans to have 3000 students in Santa Fe. As part of Laureate’s global network, the College of Santa Fe would be a ‘center of excellence’ in art and design. That means it will be one of a very select few centers which are home to the highest caliber of faculty and innovative teaching techniques in order to attract students from around the world.
- Ø How much will buying the College cost?
Buying the College of Santa Fe will cost approximately $34.5 million dollars for the land and improvements on the property. The deal also includes approximately $3.5 million dollars in soft costs and reserves. Laureate will then lease the college from the City. The lease payment and land sales will cover the City’s loan payments and expenses. (see below)
- Ø How will it be paid for?
The primary source of funding to pay for the purchase of the college is a loan of $29.5 million dollars the City will get from the New Mexico Finance Authority (rates and terms are currently being worked out). Also, the parcels of land to be sold to the State of New Mexico will bring $6 million; the Governor has allocated $4 million and an economic development grant could bring an additional $2 million. (Please see ‘Sources and Uses’ document.)
Laureate will lease the bulk of the CSF property and will pay the City rent of $2.35 million dollars each year on a 27 year lease. That money, along with the money from the land sale to the State of New Mexico, will cover the City’s loan payments and expenses. Reserves are also being created to cover additional expenses and in case of any foreseen circumstances. These reserves provide a ‘just in case’ cushion and significantly reduce any financial risk for the city.
- Ø Will the City’s credit rating be affected?
No. The City of Santa Fe’s credit rating is not expected to be affected by the loan or any other part of the deal.
- Ø Why is this purchase and lease to Laureate moving ahead so quickly?
The main pressure for time is the college’s accreditation. Educational accreditation is attached to an institution, not a property. Laureate is in the process of requesting transfer of the College of Santa Fe’s accreditation. However, if the college stops operating (i.e. does not offer classes in the fall of 2009) it may lose its accreditation altogether.
- Ø What is the State of New Mexico’s role?
The plan is that the State will buy four tracts of land along Siringo Road. The money from that land sale will help pay for the City’s expenses.
- Ø Is the City of Santa Fe at risk if things go wrong?
Throughout the negotiations city staff has worked to limit any risk to the City. In keeping the college operating and by providing for upgrades of the college buildings and infrastructure, the City will gain economic development and eliminate the risk of the property falling into disrepair. Staff has done extensive work to see if Laureate can make lease payments and has determined Laureate will be able to pay regularly. Just in case, a reserve fund has been set up, which can cover rent payments for a full year.
- Ø Does Laureate have a business plan for operating the college?
Yes. The plan includes an active marketing campaign to bring students from all over the world to Santa Fe and investing in infrastructure and technology upgrades. As a result of these efforts Laureate plans to increase the number of students at the college so that within three to five years as many as 3000 students will attend the college.
- Ø What is the City’s return on investment?
The City of Santa Fe’s main return on investment is economic development. Santa Fe will have a vibrant arts and liberal arts college which will offer opportunities for creative people (young and old) to pursue degrees and find employment. A study done by the College of Santa Fe estimated that the college contributes $20 million each year in economic activity to the Santa Fe economy.
- Ø Will local students be able to attend the college?
Yes. Laureate will provide a 20% discount for local students qualified for admission to the school. There will also be two special, full-tuition scholarships offered to local students.
