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A residence hall opened in the spring of 2016 will cost Bethune-Cookman University $306 million over 40 years, meaning it will be much more expensive than its initially quoted $72.1 million price tag, even as the university’s finances are under scrutiny.
The historically black university in Florida will pay escalating sums for the dorm under a development agreement, according to a report from The Daytona Beach News-Journal detailing several unusual facts about the building’s construction and Bethune-Cookman’s finances. Those payments start at $470,000 per month and rise 1.5 percent per year. They will reach a high of $840,000 per month and total more than $306 million by the time the agreement ends.
Bethune-Cookman’s chief operating officer said the escalating payments make the deal more affordable for the university and that they match expected inflation. But observers worry the setup has a high level of risk that could lead to higher charges on students.
The university deferred an initial minimum lease payment on the dorm. It raised tuition by 3 percent for the 2018-19 academic year and has also recently raised housing rates for new dorms. Officials started enforcing a policy at the beginning of last year requiring sophomores to live in dorms, instead of only requiring freshmen to live in dorms.
The new dorm in question, which has 1,200 beds, actually cost $85 million to build. That’s about $13 million more than initial projections, according to the newspaper. Officials could not explain the cost overruns. Another developer built the university’s last new dorm, a 270-bed facility, for $6.5 million in 2010.
The News-Journal described an extraordinary situation in which a forensic document examiner determined Bethune-Cookman President Edison Jackson’s signature was apparently forged on a contract with the company that was to finance the new dorm. The university still proceeded with the company and its financing. The newspaper also detailed lawsuits between partners in the development company formed to build the dorm, who expected to earn $45 million from its construction.
Bethune-Cookman has been under intense financial scrutiny after earlier reports focused on university executives’ salaries rising even as its losses mounted. The university’s endowment is falling in value as officials have approved large withdrawals from restricted funds. Bethune-Cookman also put off $1.6 million in payments to vendors and posted a negative cash flow of $7.8 million, according to financial documents the News-Journal cited from 2015 and 2016.
The university’s operations are scheduled to be discussed in a meeting of trustees Tuesday.