Southeast Arkansas College administrators and board trustees are considering splitting up an ongoing $37 million to $39 million building project in response to increasing interest rates.
The college in December approved construction of a student center and residential hall in hopes of removing barriers that may stand between college students and their education, including lack of transportation and food insecurity. Contractors and college leaders hoped to break ground on the project by this month and complete it by June 2023.
Addressing the board during a retreat Friday at the DuBocage House in downtown Pine Bluff, college President Steven Bloomberg said dividing the student center and residential hall into two projects has its advantages.
"No. 1, it would allow us to close out on the student center in a more timely fashion," Bloomberg said. "The one thing we do know is that from a supply chain issue, from a cost of materials and goods sold issue, those things unfortunately with inflation tend to go up. By splitting this up, we have the bargaining power to close out the student center, so that means we can start construction sooner and continue to work the bond market on the housing. The nice thing about the housing going to the bond market by itself, it's a stronger position."
Under the current plan, development firm The P3 Group, selected to design and build the 30,000-square-foot student center and 70,000-square-foot residential hall, will sell the certificates of participation to finance the project. Firm CEO Dee Brown said in December that 100% of the net profits from the project would go to the college with part of the profits going into the operating budget and another part going toward scholarships.
SEARK College has $8 million ready to contribute to the project with the possibility of an additional $6 million, Bloomberg said, although he did not specify the potential additional source.
SEARK also received $3 million in American Recovery Plan funding from Jefferson County Judge Gerald Robinson.
The student center isn't the money generator that the residence hall would become, project consultant and Little Rock lawyer Heartsill Ragon III told the board.
"So, you take off the debt from the student center, you take off the housing from the bond market alone, it's a stronger position for investors," Bloomberg said. "That's the reason we're looking at this as part A and part B."
A local bank is involved in revenue bonds, Bloomberg added, meaning the bonds are paid, and the revenue that's produced from the buildings would pay for the cost of indebtedness.
"We're simply looking for other investors who would invest funds, so that means it gives us an opportunity to raise a little more capital, a little more equity," he said.
Ragon said the board would need to approve an authorizing resolution to split the project and send it to the Arkansas Department of Higher Education for approval by April 29. Board members could approve the document as early as next week.
"From a legal standpoint, the current authorizing resolution doesn't allow us to break this out into two parts," Bloomberg said. "Tomorrow, a firm could come in and say, we want to do the whole thing, so that wouldn't change anything we have in place."
Bloomberg and other campus officials are assessing SEARK's current tuition and fees, which he said have not increased in years, to determine if they will ask the board for a slight increase to the rates to cover higher operating costs and utility bills due to inflation. Of 22 listed two-year colleges in Arkansas, SEARK ranks 11th highest in annualized tuition and fees with $3,850, based on 15 credit hours per semester.
From left, Southeast Arkansas College board members Rob Cheatwood, Rebecca Pittillo and Ken Johnson; consultant Heartsill Ragon III, college President Steven Bloomberg, board member Lamont Davis and executive assistant Wanda Grimmett go over graphics during a retreat Friday at the DuBocage House. (Pine Bluff Commercial/I.C. Murrell)