NCF Makes $10.5 Million Counter Offer to State
Martinsville, Va. (Aug. 15, 2019) – The New College Foundation Board of Directors has made a $10.5 million counter offer to the Commonwealth of Virginia’s Department of General Services (“DGS”) in response to its unsolicited bid to purchase the property currently occupied by New College Institute (“NCI”). The law firm representing the Foundation communicated the offer to DGS.
DGS made an unsolicited offer of $7.76 million to purchase the property that houses NCI known as the Baldwin Building located on 5.09 acres of land in Uptown Martinsville, together with all furnishings and equipment.
“It is the board’s fiduciary responsibility to NCI and the community at large to ensure that we achieve the best outcome possible,” says Deborah Kaufman, executive director, New College Foundation.
To that end, the Foundation Board hired Newmark Knight Frank, a national commercial real estate advisory firm, to appraise the Baldwin Building property. The independent firm valued the property at $10.5 million.
Under the terms of the deed for the land from the City of Martinsville, “the City shall enjoy a right of first refusal in the premises,” and has expressed it’s support of negotiations with DGS by letter.
Local Money Helped Fund the Building
Approximately, $10 million in local funds helped with the construction, including an $8 million Harvest Foundation grant, money raised from local donors, and the City land grant. Additional funds came from a variety of state and federal sources.
“This was very much a local initiative to help our community economically and educationally,” says Kaufman.
Not a True Cash Offer – “Lessor” Clause Formula
Under the terms of the unsolicited offer from DGS, there is a “lessor” clause in the proposed sales agreement which states the purchase price shall be the lessor of $7.76 million or direct costs and expenses incurred in connection with the acquisition and construction of the property minus all state, federal, or local government funds received.
Under this formula, with $11 million contributed by governmental entities, the property could be sold to DGS at significantly less than its market value and less than the local contribution.“It is the board’s desire to protect the local investment so that funds are available to provide educational support to students in the future ,” says Kaufman.
The New College Foundation was established in 2006 as a 501 (c) (3) non-profit organization to support the efforts of the New College Institute to provide access to four-year college degrees.