New College Seeks $47.5 Million to Take Over USF Sarasota Debt

New College of Florida has proposed borrowing up to $47.5 million to satisfy the financial terms of its takeover of the University of South Florida's Sarasota-Manatee campus. The college presented the financing plan to its Finance and Administration Committee on Oct. 30. The goal is to secure the necessary funds before the end of the year to finalize the transfer that took effect in July.

The primary driver for the new debt is Atala Hall, a six-story building USF completed in 2023. The structure contains 200 residential beds on the upper floors and a student center on the first two levels. New College must address approximately $28.6 million in outstanding obligations tied to this specific building before Dec. 31. If the college fails to arrange financing by that date, the legislation governing the transfer becomes void.

The funding strategy involves two lenders. BankUnited would provide roughly $40 million through two separate loans. A private accredited investor would contribute another $4.3 million under a subordinate financing arrangement. While the authorization allows for a maximum of $47.5 million, the college's financial model anticipates issuing approximately $44.3 million in new debt. The remainder of the borrowing will refinance existing housing obligations from 2006 currently held by Truist Bank.

Florida lawmakers approved the campus transfer in May, moving land, buildings, and permanent facilities to New College on July 1. USF retains access to academic buildings until its remaining students finish their degrees. This shared-use arrangement can last up to four years, but the debt financing condition is the immediate hurdle for New College.

Repayment will rely on student housing revenues. However, projections indicate the system will not meet standard State University System debt-service coverage requirements in the early years. To manage this, the financing includes interest-only periods that raise annual payments. The New College Foundation will provide additional support when needed to maintain minimum coverage covenants.

The financial model also proposes a series of rent increases to boost revenue. Existing residence hall rates would rise by 10% in fiscal 2028. Subsequent annual increases of 5% are planned through fiscal 2031, with 3% increases beginning in fiscal 2032. These figures are included in the repayment projections, though committee materials do not confirm that trustees have yet approved the full rental schedule.