[B]urlington College has signed a deal with real estate developer Eric Farrell to sell some of the school’s lakefront property, according to a copy of the agreement obtained Wednesday by VTDigger.
A memorandum of understanding, signed Nov. 14 by a college board member and Farrell, calls for the developer to pay $7 million for 25 acres of the financially troubled college’s North Avenue property, and several smaller parcels nearby for $500,000.
Farrell plans to build a mix of market-rate, senior and affordable housing on the land. He is responsible for securing permits from the city. The agreement includes a 60-day window for any group to offer the school at least $7 million to place the land in conservation.
As part of the deal, Farrell agrees to assume the approximately $3.5 million in debt the college owes the Roman Catholic Diocese of Burlington, from which the school’s former leaders purchased the 32-acre campus for $10 million in 2010.
Farrell is in negotiations with the diocese for full satisfaction and release of the college’s loans to the diocese, according to the memo. The college bought the property with loans from the diocese and People’s United Bank.
At the closing, Farrell, operating under the name EF Farrell, LLC, will assume the diocese debt and receive a $4 million credit against the purchase price and pay a net of $3.5 million to the college, according to the memo.
The offer calls for the purchase and sale agreement to be signed within 15 days of the MOU and for closing to be held within 67 days after that, the memo says.
The 200-student liberal arts college is selling most of the lakefront property because it is in deep debt. Since the 2010 campus purchase, the school has failed to meet its fundraising and enrollment growth goals.
Burlington College is on academic probation from the regional accrediting agency. Amid criticism for her financial leadership, former president Christine Plunkett resigned in August.
Interim President Michael Smith, who is leading the school through Dec. 12, has said the college cannot pay its bills, much less pay back its debts, unless it sells the land to Farrell.
“I think we got an (agreement) right now that seems to be fair, that has a lot of certainty,” Smith said. Farrell did not immediately return a request for comment.
A financial audit of the school is underway. The school submits regular reports to the accrediting agency, New England Association of Schools and Colleges, as part of its two-year probation. Smith is set to be replaced by a new interim president for a one-year term, as a permanent president has not yet been chosen.
This is the second development plan involving Farrell. The first, negotiated under Plunkett, was rejected by Smith. Under this plan, the college keeps seven acres including the main building, about two-thirds of which is uninhabitable because it does not meet safety codes.
Tom Torti, secretary of the college board, signed the agreement on behalf of the school because Smith was on vacation, Smith said.
The agreement documents contain a map of how the lot lines will be redrawn. It says the plan can be amended from time to time due to “market conditions and conditions imposed by the city of Burlington and/or the state of Vermont in connection with the permits and approvals for the projects.”
The agreement also involves several smaller properties the school owns on Lakeview Terrace, as well as a parking lot at the previous site of the school at 85 North Avenue.
Farrell intends to create a different LLC, Lake House, LLC, to purchase the Lakeview Drive and parking lot properties, and another, BC Campus Housing, LLC, to purchase the development parcel, according to the agreement.
If a purchase and sale agreement is not executed within 15 days of the execution date, the memorandum terminates, the memo says.
Farrell has five days from the expiration of the conservation period to pay the school a deposit of $100,000.