Bethune-Cookman University, a struggling historically black school on Florida’s Atlantic coast, will end up shelling out $306 million for a residence hall which opened on campus in 2016.
The private school will foot the $306 million cost for the 1,200-bed dormitory by paying monthly installments over 40 years to a real estate company called TG Quantum, reports The Daytona Beach News-Journal.
For perspective, the $306 million cost of the dorm is a few million more than the entire annual gross-domestic product of the island nation of Palau.
The monthly installments — which amount to a complex leasing arrangement — start at $470,000 per month and increase 1.5 percent each year. The yearly increase might not seem like much. However, at the time the agreement ends, Bethune-Cookman’s payments will have ballooned to $840,000 per month.
On the bright side, Bethune-Cookman will finally own its $300 million dorm 40 years from now.
The two-building dorm complex in “state of the art” and “filtered in sepia tones,” according to a glowing 2016 article on the News-Journal.
The Naming Ceremony and Dedication of the Thomas & Joyce Hanks Moorehead Residential Life Center pic.twitter.com/QkHPo0zEcy
— Dr. Willis Walter (@Walterw06) April 22, 2016
The initial cost projection for the residence hall had been projected to be $72.1 million.
A cloud of accounting mystery surrounds a February 2014 financing agreement between Bethune-Cookman and TG Quantum concerning the dorm. Then-president Edison Jackson, who resigned amid turmoil, has alleged that the signature on the agreement is not his.
School officials hired a forensic document examiner to decide if Jackson signed the document. The examiner concluded that the signature was, in fact, a forgery.
Despite the document examiner’s determination that the document was forged, officials at Bethune-Cookman decided to honor the agreement with TG Quantum.
Bethune-Cookman officials never publicly stated the exorbitant cost the school would pay for the dorm during negotiations.
Also, documents obtained by the News-Journal show that the school is already having trouble making the hefty payments for the dorm.
Bethune-Cookman — like many of America’s historically black colleges and universities — is in bad financial shape. Its debt is high and it ran an operating loss of $17.8 million last year, according to The Chronicle of Higher Education.
Tax documents indicate that the Bethune-Cookman endowment also took a recent hit — from $54.8 million to $47.8 million.
School officials have responded to the financial struggles by raising tuition by 3 percent for the 2018-19 academic year. Administrators have also slapped students with a 3-percent increase in housing costs.
To make sure students don’t respond to the increased housing cost by moving off campus, Bethune-Cookman officials have instituted a rule forcing all freshmen and sophomores to live in dorms.
Fitch Ratings, a credit-rating agency, has lowered Bethune-Cookman’s credit rating three times in recent years.
In May, Betsy Devos, the U.S. Secretary of Education, spoke at Bethune-Cookman’s commencement. Some newly-minted graduates booed her and turned their backs on her while she spoke. Various activists and leaders were quick to praise the boo-bird grads, calling them “protesters” who displayed courage. (RELATED: Activists Praise Students For Booing During DeVos Commencement Speech)
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