CONWAY — The University of Central Arkansas plans to look at options for a retirement home it owns, including taking bids to sell the tax-exempt business, which has come under legislative criticism and has lost almost $700,000 since it opened in 2003.
UCA operates College Square Retirement Community, an independent-living complex of 100 apartments, at College Avenue and Farris Road.
Earlier this month, UCA trustees approved a resolution authorizing the administration to explore options for the property, including accepting bids for its sale. In 2006, UCA refinanced the original $8.1 million debt, leaving $7.3 million now outstanding.
“College Square has been the topic of critical interest from the state legislators on two recent occasions with additional follow-up from Legislative Review,” the board’s recent agenda item said.
“For this reason, the administration is asking the Board to consider exploring options for the future of College Square. This exploration could include a variety of options, from maintaining the current arrangement, up to and including, a competitive bid for its sale.”
The administration is to take its recommendations to the board.
State Sen. Sue Madison, D-Fayetteville, said her and other lawmakers’ concern when the topic came up last year was that a tax-exempt public entity was using public positions to compete with private businesses.
“It’s not a level playing field,” Madison said.
“I don’t think they’ve got any business being in this line of work at all. That’s not within the mission of the university,” Madison said.
But Neil Hattlestad, dean of UCA’s College of Health and Behavioral Sciences, said College Square offers “a whole range” of activities that benefit students and the residents.
By working with residents on such things as fitness training, nutrition counseling along with faculty members, physical therapy, nursing, kinesiology, dietetic and other areas, students “develop a whole new appreciation for how their professions can make a difference in the lives of older people,” Hattlestad said.
Some students do volunteer work; others help there as part of class activities, he said.
Of the 114 College Square residents earlier this month, 15 were UCA alumni, 11 of whom have made at least one gift to the UCA, said Shelley Mehl, vice president for UCA advancement. Of those 11, four have donated to UCA in the past five years, she said.
The center, which has 31 employees, is open to anyone who lives independently and is 55 or older, executive director Jami Richardson said.
College Square’s budget is $2.1 million, which includes $550,689 for debt service and $754,588 for salaries and benefits.
Revenue has ranged from a loss of $484,124 in 2003 to a first-time profit of $70,606.37 in 2007.
Profits rose to $107,251.09 in 2008 and to $108,761.55 in 2009 but fell to a projected $5,814 in 2010, according to a UCA chart. The cumulative revenue loss totals $691,891.99.
Still, UCA President Allen Meadors said, “This facility is financially sound.”
Richardson said by e-mail that the retirement center “is self-sufficient.”
“We receive little support from the university,” she said. “We do not receive any funds from the university. Everything is paid by what we bring in.”
State Sen. Percy Malone, D-Arkadelphia, said he, too, questioned a university’s owning a for-profit business.
“It just doesn’t fit the mission of the university to be in the housing business,” he said.
“No matter how you cut it, when the government gets in business, then it’s going to be competing with the private sector, and I’m not in favor of that.”
Malone said his criticism is of all public entities owning for-profit businesses, not specifically UCA. He said he and Madison also have questioned college-owned bookstores “that charge exorbitant fees,” especially when the colleges won’t let students use scholarships to buy textbooks elsewhere.
Asked whether legislators’ concerns were valid, Meadors wrote in an e-mail that “after they have been fully briefed on the facts and if they have reservation[s] ... I would hope at some time, the universities would have the opportunity to discuss auxiliary facilities with those who have concerns.
“Auxiliary facilities such as restaurants, hotels, general stores, golf courses (that allows the public access), bookstores, hospitals, dental clinics, bed and breakfasts, retirement facilities, and many other facilities are common,” Meadors continued.
He said he has full confidence “in the Legislature that they would want a discussion on these matters with adequate information before making any blanket statements about any of these entities.
“For now we are doing what responsible organizations do and reviewing this ten-year-old auxiliary facility,” Meadors said.
In 2002, the University of Arkansas at Fayetteville contracted with Carnall Inn Development Co., LLC to restore and renovate a historic campus building, “turning it into a hotel and restaurant that would also serve as a working classroom for students in the hospitality and restaurant management program,” university spokesman Steve Voorhies said.
The university’s board of trustees leases the building to the company. The Inn at Carnall Hall, with Ella’s Restaurant, opened in 2003.
Unlike College Square, the Fayetteville businesses are not tax exempt. However, they get a reduced property-tax rate because of the shared use of the facility with the hospitality and restaurant management program, university spokesman Gina King said Friday.
“The teaching program has offices and classroom space in the building, and the facility provides an operational lab experience for many of our students,” King added. The program “has grown dramatically” since the inn and restaurant opened.
In January, the University of Arkansas at Monticello agreed to enter into a land lease and an agreement with Grand Manor LLC to build and operate an on-campus independent-living retirement community, UA-Monticello spokesman Jay Jones said.
The Monticello school will not own this business, so it will be taxed.
The vendor will make an initial $100,000 payment for the land lease for a term of 50 years and then pay the greater of $10,000 or 1 percent of gross revenue to the school each year, Jones said.
The College Square construction was authorized during the administration of former UCA President Win Thompson, who left in December 2001. He did not return calls seeking comment.
A 1998 Arkansas Democrat-Gazette article quoted Thompson as saying the center would “accommodate the needs of alumni and current and retired employees who wish to remain connected or be reconnected to the university in order to take full advantage of UCA’s educational, cultural, health and other services.”
But Thompson also said that UCA would “not have ownership or an administration role in such a facility.”
Robert McCormack, another UCA administrator then, said at the time that UCA would form a nonprofit corporation to contract with The Covenant Group to build and manage the retirement home.
But UCA spokesman Jeff Pitchford said a nonprofit corporation was never formed.
“UCA has owned and has been financially responsible for the facility the entire time of [its] operation,” he said Thursday.
The Covenant Group ran the center at first, but UCA took over daily operations in September 2004, Pitchford said.
Depending on the apartment rented, College Square residents pay from $1,800 per month to $2,700 per month for one occupant. For $350 a month more, a second person may live in an apartment.
Rates include meals, housekeeping, transportation, utilities except for phones and some activities, Richardson said.
Residents can get free tickets to UCA football and basketball games, attend three free shows at the Reynolds Performance Hall and get special rates for other Reynolds events.
Arkansas, Pages 7 on 05/23/2011