NIC to make mill site payoff
COEUR d'ALENE - Increased revenue from the surge in enrollment at North Idaho College has made it possible for trustees to complete the purchase of the former DeArmond mill site property 22 months ahead of schedule.
At their regular meeting Wednesday, trustees agreed by vote to revise the college's budget for this year, and use a combination of "budgeted and un-budgeted" fund balances to pay the $4.1 million balance due on the college's lease agreement with the North Idaho College Foundation.
"Our revenues have been substantially higher because we've had higher tuition payments and more students, more revenues, even with the funding cuts from the state," said trustee Mic Armon.
If the economic climate was better, and the unemployment rate was low, paying off the loan early probably wouldn't be an option because enrollment would not have skyrocketed, because less people would be going to college, Armon said. The tuition revenue exceeded their projections during the budget-setting process.
Despite the burden of additional students on campus, Armon said they have managed to keep expenses down.
"I have to give credit to our administration and staff. The faculty has been very open to taking on larger loads. They've been extraordinary that way. That does save us some money," Armon said. "There are still fixed costs no matter how many students are there. You still have to turn the lights on."
Paying the lease off now will save NIC about $150,000 in rent on the roughly 17-acres situated between the NIC campus and the city's wastewater treatment plant along the Spokane River.
The foundation, a nonprofit that supports the college in its fundraising and endowment efforts, purchased the $10 million mill site property and secured financing for $6 million on behalf of the college in 2009.
NIC gave $4 million to the foundation at the initiation of the lease.
The college began making semi-annual lease payments of $1.1 million in February and would have continued making them until August 2012, with the college acquiring ownership of the land at the completion of the lease.
The revision to the budget will include a reallocation of $182,046 from NIC's undedicated fund balance and $2 million from dedicated funds for capital projects and physical plant improvements to make these funds available for the land purchase. The remaining $1.9 million needed to complete the purchase are in the current year budget for capital project development and improvements.
At the board's October meeting, Toni Hackwith of Magnuson & McHugh reported the college's unrestricted and undesignated fund balance for this fiscal year stood at $6.4 million which is within the recommended 5- to- 15 percent of annual operating revenues.
"This will draw us down to 7 or 8 percent, which is below where we want it to be," Armon said. "But the money will now go back to replenish those funds over the next 18 months."
Armon said the money sitting in reserve was not drawing any interest while the college was paying about 4.5 percent interest on the loan.
A lawsuit filed against NIC by three Kootenai County taxpayers a year ago questioning the constitutionality of the lease agreement will move forward, said their lawyer.
The suit alleges that the 2009 lease agreement between the college and the foundation violates the section of the Idaho Constitution that restricts the debt local taxing districts can assume without voter approval.
Coeur d'Alene attorney Starr Kelso, who is representing Larry Spencer, Tom Macy and Bill McCrory in the matter, said an appeal has been filed to the Idaho Supreme Court questioning District Court Judge John Mitchell's decision earlier this year that the lease is constitutional.
During their meeting Wednesday NIC trustees also selected board officers for the coming year. Armon will serve as chair, Judy Meyer will serve as vice chair, Christie Wood will serve as secretary and Ron Vieselmeyer will continue to serve as treasurer.