On Northern New Mexico College’s website home page, a photo collage of smiling students appears, with large words superimposed reading, “Student Life @ Northern!”
When the photo is clicked, a screen appears with a headline, “Make Northern New Mexico College your home away from home Student Housing Coming Fall 2014!”
Below the headline, the features of the new housing development are written: brand new residence hall, safe place to live, easy access to campus resources, vibrant student life, athletics, clubs and organizations and outdoor recreation sites, public transportation to and from Santa Fe, Albuquerque and Taos.
However, in a unanimous vote by the Northern New Mexico College Board of Regents Dec. 19, the plan of a residence hall open for the 2014 fall semester became a phantom dream of the past. Northern will not enter a private-public partnership to build a residence hall. The consequence of using what Northern Vice President of Finance Domingo Sanchez calls “traditional financing” is the residence hall will open, at the earliest, in January 2015.
Sanchez presented to the Board four financing options: Northern seeking direct system revenue bonds, a foundation lease to Northern for system revenue bonds, foundation lease to Northern for a private bond issuance and using a private operator with private funding. He recommended the Board approve system revenue bonds either directly through the college, or through a foundation.
Both these options require New Mexico Finance Authority to issue system revenue bonds, approval from the state Higher Education Department and the state board of finance and pledging the college system revenues. Financing directly through Northern would not require the development of a non-profit entity, Sanchez said.
The second option would require establishing a non-profit entity, which would be the vehicle through which the college would obtain the finance and which would own the housing facility.
This option would also require the creation and signing of a land lease agreement between Northern and the non-profit foundation, as well as a rental agreement to allow Northern to have use of the housing facility.
The non-profit foundation would not be the Northern New Mexico College Foundation.
Both of the options, however, require Northern to seek approval from both the state board of finance and the Higher Education Department. Northern’s Financial Consultant, Paul Cassidy, with the firm RBC Capital Markets, said he and Northern representatives were scheduled to present the request to the Higher Education Department’s capital projects committee Jan. 8. Cassidy said the approval process could take anywhere from three to six months, but because his firm is very experienced with the format of this proposal, he anticipates it will be closer to three months. However, even if the Higher Education Department approved the housing project in three months, Northern would not be able to open the dorms until January 2015.
“Once we get approval from the Higher Education Department, the construction company can start work,” Cassidy said.
“What happens if we don’t get approved?” Regent Cecille Martinez-Wechsler asked.
“If we don’t get approved, we’ll just have to go back,” Cassidy said.
He said he did not expect to get “flat-out” turned down. “If we do get wholly turned down, we’ll have to come back with more options,” Cassidy said.
Peter Franklin, a bond lawyer from the Modrall Sperling firm working in conjunction with Cassidy, said system revenue bonds require Northern to pledge system revenue for the security of the bond. This pledged revenue would include all gross proceeds of student tuition and fees, proceeds of any grant or interest subsidy with respect to parity bonds, gross amounts received by the college from the income from the permanent fund and the income fund and all other revenues received by Northern from proprietary activities.
However, Cassidy said the payment source will be the student rates and fees for housing.
“How are we going to cover the cost of management, the cost of utilities?” Regent Chayo Garcia asked.
“The cost of facilities is such that you’re going to have to supplement operating cost from your current funds, so you need to work those funds into your budget,” Cassidy said.
Sanchez said the addition of dorms would create a need for more positions at Northern, including a director of student life, an additional groundskeeper, more staff in security and additional maintenance staff. In the area of finance, registration and rent collection, most of the work could be absorbed by current positions and some positions could be repurposed, Sanchez said.
“The issue of dorms and managing them isn’t new for Northern. We’ve got El Rito,” Sanchez said.
He said everything learned from El Rito could be applied to the dorms at the Española campus. He also said, the addition in tuition and fees by the increase in enrollment would cover some of these costs.
The Board approved the use of system revenue bonds for financing the dorms.