This Friday, the Florida Board of Governors will take up the $47 million debt request from New College of Florida, which has many unresolved questions:
Who is the unnamed “accredited investor” who is receiving a tax-exempt interest rate of 7.00% (see Consolidated Debt Service Schedule)? For an investor in the top federal bracket, that equals a taxable return of about 11.8%. Because the investor pays no federal income tax on this interest, 7% tax-free is worth much more than it sounds: someone in the top federal tax bracket would need a regular, taxable investment paying about 11.8% to take home the same amount. Top-rated 10-year municipal bonds were yielding about 3.7% in mid-October, according to Franklin Templeton’s market data, and even the high-yield municipal bond index yielded about 6%, and this unnamed investor’s rate is better than those – so quite a good deal for this unnamed investor.
How can the Board of Governors ensure there is no conflict of interest without knowing who the unnamed investor is? This leads to serious questions of conflict of interest. The fact that this unnamed investor is getting such an unusually high interest rate, notably higher than BankUnited, makes it even more important to confirm this isn’t a family member or business associate of one of the decision makers at New College or the Board of Governors.
Has New College shared their actual enrollment numbers with the Board of Governors, or the lender BankUnited, or the unnamed investor? The question is raised because in the debt proposal, New College claims the Fall 2026 degree-seeking undergraduate student enrollment projections asf 978, but public records supplied by the college to the Novo Collegian Alliance show that enrollment is only at 902.
Will the Board of Governors address New College’s need for more housing, and how this risky debt deal makes it more difficult for them to build adequate housing moving forward? The documents submitted by New College indicate a severe need for additional student housing beyond what this debt covers, and notes that “demand for on-campus housing will rise to 986 beds by Fall 2028, assuming NCF meets its enrollment projection goals, which will exceed NCF’s current inventory (402 beds) by 584 beds” (source). But New College has not brought any action items to build new dorms. Instead, they recently issued a call for proposals for off-campus short-term housing “within 3-6 miles of the campus” for “up to 150 beds with a contract period of August 1, 2027, through May 26, 2028” (source).
Meeting materials for the Board of Governors meeting are available at https://www.flbog.edu/session/facilities-committee-lgrtht6a/
