Trustees offer $50 million on high school
Posted on Saturday, June 7, 2008
PETIT JEAN MOUNTAIN — University of Arkansas trustees on Friday authorized their flagship campus to lob a $ 50 million counteroffer to obtain the neighboring Fayetteville High School property.
Officials with UA-Fayetteville also revealed Friday that they already had set in motion a plan to have students this fall begin paying a $ 2 per-credithour mandatory fee that would finance a 30-year bond issue for the acquisition.
The fee ultimately would rise to $ 10 per credit hour by 2012 and would be phased in over five steps, rising $ 2 a year.
The fee would be charged until the bonds are retired, campus officials told trustees, and might need inflation adjustments in later years.
“We’re not going to take tuition and commit it to this project,” G. David Gearhart, the Fayetteville campus’ chancellorelect, told the board.
“Now, some may say: What is the difference in tuition and fees ? It’s all a cost to the student,” he said. What it says, he continued, is that the fee is dedicated to the purchase and would end when the bond is paid.
On May 29, the Fayetteville School Board voted 6-1 to offer the 40-acre property to UA for $ 59 million and set a July 1 expiration.
During their regular meeting Friday on Petit Jean Mountain near Morrilton, trustees twice gave unanimous approval to the proposal, first in its buildings and grounds committee meeting then by the full 10-member board.
Trustees asked the university to attach a deadline to the counteroffer. The date it expires will be determined later.
Before voting, trustees discussed whether the property was needed, whether students should be burdened with its cost and whether the price was right.
“I never thought the $ 59 million appraisal was a good price in the first place,” said Trustee Jim von Gremp of Rogers, referring to an approximate midway point between two appraisals, one commissioned by the district that resulted in an appraisal of $ 61. 28 million, the other by the university with a result of $ 56. 4 million.
Nor did von Gremp think the lower university appraisal was a good price.
“We are not a K-12 system going in there,” he said, meaning UA cannot take the property and use it as is. Gremp suggested $ 45 million would be a fairer starting point for negotiations, considering the millions of dollars it would cost to retrofit the facilities for the university.
Gearhart put the renovations cost as high as $ 11 million. After the voting, he said, the estimated cost of the renovations influenced district’s counteroffer amount.
Before voting, Trustee John Ed Anthony of Hot Springs questioned whether “the negotiations going around this table” might jeopardize UA’s talks with the school district, and suggested, perhaps, trustees should simply give a go-ahead for the talks and let the university do the talking about money.
Back in Fayetteville, school district Superintendent Bobby New offered a similar sentiment.
“It’s really interesting the negotiations over millions of dollars of land is done in public, in the papers and over the Internet,” he said, adding it’s something both sides have found themselves doing.
“I find Dr. Gearhart and myself in the same corner,” New said. “We want to try our best to protect the organizations we represent.” New said that he will consult with the district’s finance chief to determine what the $ 50 million offer would mean for the district’s potential fall millage request to finance a new high school property. He plans to have a recommendation ready for his board’s June 26 meeting.
“I think, in a realistic sense, the $ 50 million offer is not one that, as an administrator, I can put the numbers together” on, New said. The school board has decided to enter talks to buy an 88-acre site on Huntsville Road in the southern part of the city to construct a new high school. A previous financial analysis shows the site will require a 3 mill to 5 mill increase to cover $ 110 million of construction and design costs, if the current high school site sells for $ 59 million and another parcel of districtowned property off of Deane Solomon Road sells for $ 6. 2 million.
“It’s going to be awfully challenging for us. We’re quite a ways apart,” New said. “It’s not a dead issue, but the most accurate and diplomatic word I could find would be challenging.” Fayetteville School Board President Steve Percival called the offer “a good starting point for negotiations.” Opponents to moving the high school said the UA’s offer was too low.
UA-Fayetteville professor Janine Parry, who helped organize BuildSmart, an organization that opposes the move, said the university’s offer made “a difficult decision even more difficult.” “From our perspective, $ 60 million wasn’t enough to offset the high cost of starting over somewhere else, and $ 50 million is even more inadequate,” she said.
Some trustees wanted to know why the university should buy a large properly it can’t immediately use fully.
The university’s finance chief, Don Pederson, said that while the campus is years away from a need to use all the space, some campus buildings are cramped now and could begin to make use of some of the space in the not too distant future.
Trustee Dr. Carl Johnson of Little Rock sought justification for asking students to take on the financial burden.
“How do we justify spending $ 50 million on the backs of the students ?” Johnson asked. He said afterward that the university had satisfied his concerns, adding that planning for growth is a difficult balancing act.
“You may expand too quickly and outpace your infrastructure,” he said. “Or, you may not expand enough,” leaving a need for a rapid boost to infrastructure and not enough students to fund it.
Johnson said he believes UA’s enrollment goals, if achieved or exceeded, would allow the university to efficiently handle the purchase.
Like Trustee Jane Rogers of Little Rock, Johnson said that he thought history would reflect favorably on a decision to buy now, before land prices go up.
Rogers said she could see how someone looking at the short-term might pause at buying the property, but said it was the board’s job to have vision.
“In eight or 10 years, I think we’re going to say we’re glad we did it,” she said.
Afterward, Chancellor John White, Gearhart and Pederson said the first piece of the financing for a possible FHS purchase was put in place March 28, when trustees approved a new, $ 2 per credit-hour mandatory student fee as part of the university’s tuition, fee and room-and-board increases for fiscal 2009.
It was listed only as a “facilities fee,” according to agenda documents.
White and Gearhart said that, should a deal to buy the FHS property fall through, that fee still could be used for expanding campus facilities and would be needed. If the deal goes through, the campus will have the beginnings of a funding source for the bonds.
Today’s students are enjoying campus facilities that their predecessors financed, and the quest for first-class facilities continues, Gearhart said.
“We have a responsibility to keep the university as strong and viable as we can, so that student degrees will have value.”
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