PRESCOTT VALLEY, YAVAPAI COLLEGE AND NAU END JOINT LANDLORD/TENANT EXPERIMENT

TOWN TO RETURN $3.75 MILLION PLUS AN ESTIMATED $600,000 IN INTEREST

Ten years ago Yavapai Community College loaned the town of Prescott Valley $3.75 million. The loan was intended to help finance construction of a town library and space for a college facility. The idea behind the loan appears to have been to entice Northern Arizona University to create an experimental three-year program  located in Prescott Valley. NAU wasn’t prepared to invest in the project. The Community College would be the landlord of the educational facilities portion of the library—about 12,000 square feet plus a 120 car parking area adjacent the library. (The library consisted of a total of about 55,000 square feet.)

The construction project proceeded and by September 2008 Yavapai Community College said it was offering to lease the Community College facility to NAU. (The property is often referred to as a “condominium.”) NAU leased the facility and classes began in 2010. Documents suggest that Yavapai College would offer lower division programs and curricula leading to associate degrees (and when appropriate, selected certification programs); and Northern Arizona University would provide upper division and graduate programs and curricula leading to baccalaureate and graduate degrees.”  

As a part of the initial agreement, if the relationship fell through at some point in the future the College could demand that the town of Prescott Valley return the $3.75 million plus interest. By 2016 the experiment in terms of joint sharing teaching responsibilities appears to have collapsed. The College administrators decided to end the relationship and ask for their money back. However, negotiations for return of the money did not receive formal Governing Board approval until the May 9, 2017 meeting. 

The College hopes to close the deal with Prescott Valley by June 30, 2017.

Under the agreement executed with the town of Prescott Valley, the College had the option of receiving either the fair market value of the facility or the $3.75 million investment plus interest. Because the market value of the facility was placed at $2 million, the College at the May meeting indicated it would ask return of the original loan of $3.75 million plus interest. The interest is estimated at $600,000.

It should be noted that as a part of the agreement between the University and the Community College there was to be an annual report made to the Governing Board. However, the Blog has not been able find any such report. The Blog also has not been able to identify the amount of money, if any, NAU paid to Yavapai Community College as a part of the lease agreement. Finally, because a portion of the original loan came from the 2000 $69.5 million General Bond issue, the returned money must be used for construction projects.  Dr. Ewell said it could be used for the ongoing Prescott Valley construction or for other projects in the District.

It is anticipated that NAU will construct its own facility or find more space in the not too distant future in Prescott Valley.  Other relationships with the Community College appear to be continuing.

The brief six-minute discussion between Dr. Ewell and the Governing Board about the return of the money can be reviewed in the video below.