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Community college considers real estate development for capital funding

Yesterday, I wrote about a $450M ballot issue that Portland Community College will put before its voters in November. Today, Bunker Hill Community College is looking for $450M to rehab its original Charlestown campus. The catch is that BHCC doesn’t have the option of going to the voters to seek capital funding.

The Commonwealth of Massachusetts funds all 14 of its community colleges, so when it comes to cash, it decides when, where, and how much. BHCC’s Charlestown campus opened in the 1970’s. It sits on 42 acres, occupying what was at one time the Charlestown State Prison, and is about a mile away from the historical Bunker Hill battle site. It also happens to sit on prime real estate in the oldest neighborhood in Boston.

Lacking the cash or an alternative capital funding mechanism to update its facilities, the state’s Asset Management Board is now considering a public-private partnership that would sell the redevelopment rights to the campus to a private developer. In exchange, the developer will rebuild the Charlestown campus, and reserve a chunk of BHCC’s land for itself in a process that officials say could yield a 99-year lease.

That could be a pretty generous offer (to the developer), considering that the Charlestown campus is in need of a forklift replacement after just 50 years. There’s virtually no likelihood that a new campus will last twice as long. It’s also risky. According to the National Oceanographic and Atmospheric Administration, the BHCC property is categorized between a #1-#4 hazard zone for coastal flooding. Currently, the area has a 1% annual chance of flooding, but the good news is that in a coastal flooding event, the waves that hit the property are unlikely to exceed 3 feet.

Capital funding mechanism preserves educational mission

In this case, I’m not sure what’s more surprising: that there’s no mechanism to seek voter-backed capital funding; that the state is considering getting in bed with a developer for a minimum of 100 years; or that a 50 year old campus has already exceeded its useful life.

According to Bunker Hill Community College president Pam Eddinger, the campus needs at least $125M in capital improvements. If the state goes through with the private development option, virtually all other buildings on campus would be torn down, save for a new student center building that’s currently under construction. The casualties would include a fitness center the college opened in 2009. The redevelopment approach would pare down BHCC’s footprint by about 20%, in part to cede space to the developer.

If leasing college property for as much as a century to finance immediate renovations doesn’t sound like a good idea, Washtenaw County voters should know that a similar idea is in play at Washtenaw Community College. While WCC would not be doing it to raise capital funding, the current WCC administration (with the blessing of the Board of Trustees) has its eyes on building retail space in the WCC parking lots. This plan would generate an income stream for WCC. According to President Rose Bellanca, this scheme would reduce WCC’s need for students.

The other is Macomb Community College, and that president, the one I worked with, um, had – I mean – we own everything around – on Garfield. And all of that mixed use, you know, land brings in revenue to the College. And so, they don’t really have to worry too much about their enrollment, because they have other ways to bring in revenue to support their college.

Think about that.

WCC is here to educate students, not generate a profit

WCC is a community college built to educate students. The current administration devotes itself to figuring out how to replace revenue that at one time came from students. That shifts the purpose of the college from educating students to generating money.

Isn’t that just a private business? So, then why are the taxpayers of Washtenaw County funding a college that no longer needs students?

Bunker Hill Community College is considering this radical approach to capital funding because it lacks another mechanism. WCC, on the other hand, with substantial taxpayer support, is considering this approach because… ???

Photo Credit: CC Chapman , via Flickr