New College of Florida unveiled a plan Friday to finance millions of dollars in debt from acquiring the USF Sarasota-Manatee campus, including loan payments that nearly double in two years when NCF president Richard Corcoran’s contract expires.
The proposal brings together two large debts into one lump sum of $47.5 million, and acknowledges that revenue from student housing may not be enough to cover it all.
New College would have $40 million financed by BankUnited and the rest by an “accredited” investor. It would also rely on backup from a separate entity known as the New College Foundation.
“Among alumni, the proposal for a ballooning payment schedule is driving speculation that New College President Richard Corcoran may depart New College soon,” said a statement from the Novo Collegian Alliance, a 501(3) made up of former faculty, staff and alumni and supporters of the school.
“The schedule clearly delays the true fiscal impacts of the financing until 2028, with another hurdle posed by mandatory refinancing in 2032,” it said, pointing a debt schedule that shows total payments go from $1.78 million a year in fiscal year 2026, to $3.78 million in 2028, to $4.16 million in 2030.
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The plan was approved by a New College Finance Committee on Friday. It goes before the NCF board of trustees on Tuesday, and the full state university board of governors will vote on it at its next meeting in mid-November.
The Florida Board of Governors has final say, because some of its terms go beyond what’s typically allowed in the state university system.
New College was taken over in 2023 by allies of Gov. Ron DeSantis, who vowed to remake the liberal arts school into a conservative institution.
The smallest college in terms of enrollment in the state university system, New College was highlighted as having the largest cost to produce a degree — $494,715 compared to the University of South Florida at $72,252 — according to a Florida DOGE report last year.
NCF has already moved into the 32-acre USF campus on North Tamiami Trail and is sharing space with remaining USF classes and faculty as part of a multi-year teach-out. The full campus transfer is contingent on NCF showing by Dec. 31 that it has secured the necessary financing.
Details on the debt
The debt proposal combines USF dormitory debt on Atala Hall of $28.5 million with close to $16 million that New College has owed for years on its older campus dorms.
It allows for interest-only payments for the first two years, a mandatory refinance of the entire package in 2032, and help from an investor who pledges to loan the college up to $7.5 million, at a tax-exempt rate of 6.1%.
New College did not respond to questions about the identity of the investor. Documents show the person would receive interest-only payments in the first several years of the loan, with the principal payments beginning in 2032 and due in full by 2036.
Trustees appeared pleased at the Friday meeting about details that showed the college could meet its debt obligations at a 1.1 debt service coverage ratio (DSCR), which means it has slightly more revenue than needed to cover the costs of borrowing.
According to Commercial Loan Direct, a 1.1 ratio is considered “thin coverage, higher risk,” and most conventional loans require a 1.2 ratio or higher.
During Friday’s meeting, Corcoran said the package would be renegotiated for better terms in 2032, but did not explain how.
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“Once we can go back out in 2032 and get tax free, hopefully, those numbers get you there,” Corcoran said.
“Oh, that's great, that tax free in six years,” said New College trustee Lance Karp. “And any other questions?”
“No questions. Just commend everybody for getting us to this point. This is really good work,” said trustee David Harvey.
More details are in an 88-page packet from NCF, which said that July 1, 2032 is “the date when the Atala Hall Debt becomes eligible for prepayment and the Senior Loan can be refinanced into tax-exempt debt, significantly lowering overall interest costs.”
In other words, the entire balance on the $28.5 million debt acquired from USF, plus financing costs, comes due in 2032.
It could be paid off in a lump sum or refinanced.
NCF’s older debt, known as the “senior loan” of about $16 million, could be refinanced at a tax-exempt rate in 2032. It would be paid off on a 30-year term, due in 2056, according to the documents.
As to how New College would pay for the debt, the package points to student activity fees, venue rental revenue and “annual support payments made by the New College Foundation.”
“While the Housing System is projected to operate above a ‘breakeven’ 1.0x debt service coverage ratio, it does not consistently generate debt service coverage of 1.20x or better,” said the 88-page document to be considered at the NCF Board of Trustees Nov. 3 meeting.
“To help mitigate risk,” it continued, the New College Foundation commits to “annually transfer funds necessary to sustain the housing system’s operations” and meet the lender’s requirements.
It pointed out that the NCF Foundation has $3.6 million in “unrestricted assets.”
