University of Arkansas to Tender $50 Million Offer for Fayetteville High School Property

MORRILTON, Ark. – The University of Arkansas will tender an offer of $50 million to the Fayetteville Board of Education to acquire the adjacent Fayetteville High School property, based upon a recommendation approved today by the university’s Board of Trustees.

The 40-acre high school campus, which is contiguous to university property, was offered to the university by the school district late the last week of May. The board’s action today authorizes the university administration to proceed with a bid and enter negotiations over related contingencies, such as lease costs after purchase, maintenance costs during a lease and capital renewal issues.

It is expected that if a deal is reached, the school district would lease the property from the university, at a rate equal to the university’s bond debt costs, until such time as a new high school is constructed and opened.

“We have taken the responsibility of this recommendation very seriously,” said Chancellor-elect G. David Gearhart in presenting the recommendation to the board on behalf of himself and Chancellor John A. White. “We have talked to many groups and interested persons on both sides of the equation in an attempt to air all sides before coming to you today. We fully understand that not everyone will agree with the recommendation, but we have tried to do what is ultimately in the best interests of the university – which is our first and foremost responsibility.”

“While we realize the burden this cost will place on the current student body, we strongly believe the purchase of the high school is in the long-term best interests of the university and future generations of students,” said B. Alan Sugg, president of the University of Arkansas System. “We think a price of $50 million is reasonable given the scope and age of the facilities.”

The school district has indicated a selling price of $59 million. However, given the age of the facilities and utilities, as well as the need for reconfiguration of the space for university use, it is anticipated that as much as $11 million will need to be invested by the university to upgrade the property. Upgrades include exterior closures, roofing, electrical, interior construction and finishes, plumbing, heating and air conditioning, and fire protection.

While most of the buildings are in reasonably good shape, Gearhart indicated that the spaces are not necessarily designed and configured optimally for immediate university use, nor do some of the facilities have the full expected lifetime remaining.

“We believe that the land is, in many ways, more valuable to the university than the numerous facilities that presently exist and must be maintained,” said Gearhart, citing an appraised land value of $5.8 million. “We know that we cannot utilize all of the space in the immediate future, and the acquisition must be viewed as a long-term decision. It is the purchase of the property, contiguous to campus, that may be more valuable to us in the long term. This value will depend to a large extent on our ability to grow our enrollment and expand our research and public service capacities. It is vital that we view this acquisition for a 10- or 20-year term before its benefit can be realized.”

To help offset the potential cost of the property, it was recommended that the board eventually approve a plan for a stepped increase of the student facility fee, which was initially approved in April. The fee, which will be implemented this fall at $2 per semester credit hour, was recommended to increase by an additional $2 per semester credit hour for each of the next four years, for a total phased-in fee of $10 per semester credit hour.

This plan will allow the university to amortize all of the long-term debt incurred with the acquisition of the high school, and avoid future tuition increases to subsidize the property purchase.

“We are very aware of the financial burden any acquisition of this magnitude will place on our students due to an increase in fees,” said Gearhart. “We have carefully weighed this issue and made every attempt to lessen the impact by phasing in any increase in fees to amortize the debt load.”

The university expects to tender its offer sometime prior to the July 1 deadline set by the school district.

Editor’s note: For the complete text of Dr. Gearhart’s presentation, please go to http://dailyheadlines.uark.edu/13025.htm.