New College Seeks $47.5M Debt

New College of Florida has requested authority to borrow up to $47.5 million. The funds are necessary to complete the financial requirements for the takeover of the University of South Florida’s Sarasota-Manatee campus. The institution must secure this financing by December 31 to satisfy conditions set by state lawmakers.

Legislators approved the transfer in May, making the change official on July 1. The move placed USF Sarasota-Manatee land, buildings, and permanent facilities under New College’s ownership. USF retains the right to use academic buildings for its remaining students, an arrangement that may last up to four years. However, the legislation mandates that New College arrange financing for the campus’s outstanding facility debt before the end of the year.

Failure to meet this deadline would void the transfer. The primary debt burden resides in Atala Hall, a six-story residence hall and student center. USF completed the roughly 100,000-square-foot building in 2023. New College faces approximately $28.6 million in outstanding obligations tied to this specific structure. Atala Hall is the only property on the transferred campus identified in financing documents as carrying debt.

On October 30, the college’s Finance and Administration Committee reviewed a proposal involving BankUnited and a private accredited investor. BankUnited would provide approximately $40 million through two loans. The private investor would contribute up to $7.5 million under a subordinate financing arrangement. While the maximum borrowing is $47.5 million, the financial model anticipates actual new debt of approximately $44.3 million.

The $28.6 million for Atala Hall covers the student center on the first two floors and 200 residential beds on the upper levels. The remaining borrowing will refinance New College’s existing housing obligations from 2006. These older loans are currently held by Truist Bank. Repayment for the new debt relies primarily on student housing revenues.

New College projections indicate the system will fall short of ordinary State University System debt-service coverage requirements during several early repayment years. The financing includes interest-only periods and a subordinate claim on pledged revenue. To maintain minimum coverage covenants, the New College Foundation must provide additional financial support when necessary. This structure places greater demands on the institution's housing revenue stream.

The financial model proposes a 10% rise in existing residence hall rental rates in fiscal 2028. This would be followed by annual increases of 5% through fiscal 2031 and 3% beginning in fiscal 2032. These increases are incorporated into the repayment projections. However, committee materials do not confirm that trustees have approved the full rental schedule.