Dive Brief:
- New College of Florida’s board will seek approval from the State University System of Florida next week for $47.5 million in new debt financing, primarily to aid the institution’s acquisition of University of South Florida’s Sarasota-Manatee campus.
- State legislators wrote the acquisition into a state budget bill enacted last year. The transfer had the backing of Gov. Ron DeSantis, who has sought to transform New College into a model of conservative higher education and expand its reach.
- Some $27.6 million of the new financing would be used to pay off USF debt associated with a dorm and student center, which New College took on as part of the legislation. Another $15.6 million would go toward refinancing New College’s existing debt.
Dive Insight:
Of the new financing, $40 million would come from BankUnited, a regional financial institution, while another $7.5 million would come from an unnamed “accredited investor,” according to a project summary included in the board’s Tuesday meeting agenda.
Both loans would be secured with liens on New College revenue tied to the student center and other facilities as well as backing from the institution’s foundation, which has unrestricted assets of $3.6 million.
The financing package contains several exceptions to the State University System of Florida’s debt policies, requiring further approval from its board of governors. Following a New College board resolution unanimously passed on Tuesday, the institution will formally seek the governors’ approval of the financing at a meeting next week.
The loans represent private deals as opposed to a public bond offering, which SUSF typically requires its institutions to pursue. The project summary pointed to the short timeline for acquiring financing and the current bond market. “A private placement of the Debt was not only necessary but is expected to yield the best results in terms of cost and accommodative structure,” the document stated.
The smaller loan from the unnamed source also contains a subordinate lien on revenue, something only permitted by the system when necessary. The project summary said that the secondary lien was needed because of a dollar cap on the larger loan that necessitated a second loan.
The financing is also projected to fall below the system’s required thresholds for debt coverage — a measure of an institution’s ability to generate the cash needed to make debt service payments — until 2037.
The measure mandating New College’s acquisition of the USF campus required the former to lock down financing by this coming December. The primary cost of acquisition is tied to New College absorbing USF Sarasota-Manatee’s debt. And that debt is tied to Atala Hall, a six-story, 100,000-square-foot residence hall and activity center built in 2023.
That building, located less than a mile from New College’s campus, will be a prize for the smaller institution. Its first two floors function as a student union while the upper floors hold 200 beds of student housing.
“Acquiring Atala Hall will allow NCF to eventually move more students out of hotels and apartments and create a more permanent solution to help address increasing demand for on-campus housing,” according to the project summary.
That presentation noted a 38% increase in fall headcount, to 865 students, between 2021 and 2025.
USF Sarasota-Manatee still has priority over the campus facilities while it is teaching out students accepted prior to July. New College must also honor the original dorm rental agreements for USF students through next August, according to a USF timeline of the campus transfer.
DeSantis has made New College a priority in his efforts to transform higher education in the state. In recent years, the Republican governor has revamped the institution’s board and installed a political ally as president, making him one of the state’s highest paid college leaders. The college then set about dismantling its diversity, equity and inclusion initiatives as well as its gender studies department, and made other changes favored by conservatives.
