SOUTH EUCLID, Ohio -- Days after South Euclid City Council announced it will arrange a public meeting so that the community can get answers about the closing of Notre Dame College and its plans for the campus once the school closes, NDC has released a statement affirming its intention to close.
South Euclid Council President Ruth Gray decided to schedule a public meeting at Tuesday’s (April 9) council meeting. She did so after Councilman Justin Tisdale, a Notre Dame College graduate, said that, while not accusing anyone, he wanted to know more about whether the college’s board of directors and leadership had fully looked into the possibility of a benefactor group helping pay off the college’s debt.
The college is slated to close at the end of the current spring semester.
Tisdale has been in communication with, among other alumni and interested NDC supporters, Peter Corrigan, a business professor at NDC, who said that the college owes just over $14 million, and that a benefactor group had collected a good portion of that amount from its donors.
Corrigan believes that if the NDC Board of Directors gives authorization for the benefactor group to act on the college’s behalf, there is a possibility that Bank of America may be willing to negotiate a deal to accept less than the $14 million.
In its release Thursday (April 11), NDC stated that the debt is actually $25 million, and that even if the full $25 million were to be paid, needed funding would not likely be available thereafter to keep the college from again falling into debt.
Also, alumni and others hoping to keep NDC from closing have wondered why the college’s board has not allowed the benefactor group to negotiate on the college’s behalf, as it wishes to do. The NDC release stated that the group has, indeed, met with Bank of America.
“We appreciate the tremendous outpouring of support for Notre Dame College and our students as we prepare to end academic instruction,” the NDC release states, “including the efforts of a dedicated group of stakeholders (the benefactor group) who have offered to raise significant amounts of money in an effort to keep the school open.
“The stakeholders met with Bank of America on February 28, and their verbal proposal was not accepted by the bank because it did not satisfy the debt, nor did it provide a sustainable financial plan for the college.”
“In reality,” the statement continued, “a minimum of $25 million is needed to pay outstanding debt with Bank of America, to pay other creditors and to meet general operating obligations.
“That sum of money, however, gets us past the current crisis and would not guarantee that the school would be able to remain open in the future.
“After years of efforts, no pathway remains for Notre Dame College to stay open after this school year. We remain focused on supporting our students through this time of transition.”
Corrigan, however, said that while the benefactor group met with Bank of America in February, the NDC Board had not given the benefactors authorization to negotiate a deal on the board’s behalf. The benefactor group is made of of people who have donated to NDC for 30 years.
Corrigan said Friday (April 12) that NDC owes perhaps as much as $14.7 million on a $20 million bond taken out in 2008. It is this remaining amount which the benefactor group would seek to retire, if given authorization to do so, he said.
“They’re (in NDC’s statement) going up to $25 million (in stated debt),” he said. ”That’s to meet other obligations, to meet accounts payable, deferred maintenance. They’re basically saying, ‘We need this money to run the college.’ It’s different from debt.
“If you’re running the college, you’re bringing in tuition and some other things. So they’re looking at this and saying, ‘We can’t do this.’ And that’s their opinion.
“But the benefactors have stepped up to try and take out the $14.5-million loan, which would include the scale-ups -- a prepayment penalty and some other things. Now, if (the benefactor group) were to negotiate with the bank and settle the note, it’s pretty unlikely we’d pay the prepayment penalty, which is a couple million dollars.
“The benefactor have hired a couple of negotiators and they met with the bank on the 28th (of February,” Corrigan said. “They’re (the college) right about that. But they did not have the authorization to represent the school for an offering compromise.
“The benefactors didn’t raise $14 million or $17 million, they raised something less. What they’re (benefactors are) saying is what they raised they want to use to retire the entire debt. The only way to do that is at a discount.”
Corrigan acknowledges that Bank of America could say no to a discount. “If they say no, that would be the end of it,” he said.
“(The benefactors) are trying to help the board,” Corrigan said.
Corrigan said he does not know why the board will not give the benefactors authorization to seek a deal, but said he believes the board is doing what it feels is necessary to solve the problem.
“We’re offering help and they’re handling it their way,” he said.
“There are financial issues, but if this note gets retired, those financial issues are small. If the note doesn’t get retired, then OK. We’re off and running and the place has to close.”
The NDC statement also notes, “The difficult and heartbreaking decision to implement a Teach-Out plan and end instruction at Notre Dame was made with our students’ best interests in mind. The demographic and economic headwinds facing Notre Dame, and many higher education institutions like ours, clearly point to harder, not easier, times ahead.
“As a mission-driven institution, we cannot allow students to remain committed to the institution when there is not a financial model available to us that will support the college in the Fall of 2024 and beyond.”
Notre Dame College was founded in Cleveland and moved to a 48-acre campus off South Green Road in South Euclid, where classes began in 1928.
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