CCSJ’s dorms were to be modeled on Ancilla College’s successful housing model.
Everything was sailing smoothly to break ground on Calumet College of St. Joseph’s first ever dormitories.
The administration hoped to break ground in fall 2016, but unfortunately for the school and students, an unforeseen issue has delayed the $8.2 million project indefinitely.
“The challenge was arranging the financing for the project,” said Calumet College President Dr. Dan Lowery.
The plan is for CCSJ to partner with the City of Hammond. The plans were set for the city to transfer land to the school’s ownership.
The dorms were to be built across from College Avenue, on the South Side of the main academic building.
As with any project of this size and magnitude, financing is needed for the project to become a reality.
One plan was to mortgage the main campus building of 2400 New York Avenue.
According to President Lowery, the college managed to secure financing from two local banks. That covered at least half the project.
A third bank was needed to cover the remaining $4 million. But a third bank has yet to step forward to provide financing.
“We had two banks who have said this is such an important thing for the community that they are going to participate in this,” President Lowery said. “Those two banks stepped up because they believe in the project, but we just haven’t found that third partner.”
Lowery said one of the issues the school faces in securing financing for the project is collateral.
“The collateral is the buildings and the property you have,” Lowery said.
In the case of CCSJ, that is the campus land and the building located at 2400 New York Avenue.
The building is highly valued by CCSJ’s stakeholders who participate in its mission to provide educational opportunities to the region.
However, banks have to loan money based on the market value of a property, and since the recession of 2008, banks have been stricter about ensuring that projects have sufficient collateral to cover their investment.
“CCSJ is a single-use facility,” explained Lowery. Unlike mixed-use properties that can be repurposed in many ways, single-use facilities are more difficult to sell or redevelop if for some reason CCSJ could not repay its loans.
But Dr. Lowery assures that “the college is financially sound. There are no issues with the finances of the college.” The issue was simply that, “Our collateral is not as high as we would like to think it is.”
Hence the need for a third partner.
“The two banks we were able to secure said they were willing to set money aside and take it out of circulation, but only as a three bank partnership.” Such a partnership reduces risk by distributing it across three financial institutions.
Housing is a potential project that has been on the drawing board at the school for the last three years.
It won’t happen before fall of 2017, but the idea is not dead.
“We are working as hard as we can to make this happen. It is a strategic priority to the college, so the project is not dead. It’s just going to take a little longer that we had hoped, but it still remains in an important part of the strategic plan for the college,” President Lowery said.
The next step is for the CCSJ Board of Directors to decide what to do to fill up that financing gap. The issue is expected to be discussed at future meetings of the board.
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