The American College of the Building Arts is facing financial trouble that 'if unaddressed, could mean the end of the college,' according to Charleston Mayor Joe Riley, so the city plans to loan the college $734,500 for operating costs.
City Council will consider the loan this evening.
"The American College of the Building Arts, I believe, has the potential to be an institution of extraordinary value to our community," Riley said. "I have every confidence they will be a success, but they need financial assistance now."
The small college is beginning its fourth academic year and will graduate its first class of seven students this spring.
The college teaches Colonial-era building techniques such as plasterwork and ornamental ironwork, which were needed and in short supply after Charleston was hit by Hurricane Hugo in 1989.
Lt. Gen. Colby Broadwater became president of the college in April, and he agreed Monday with the mayor's assessment of the institution's finances.
Broadwater said the city routinely helps businesses and other educational institutions that want to move to Charleston or stay in Charleston, and he said this situation is similar.
"We are here, and we have an economic impact on the community," he said. "We feel this is appropriate."
Riley said directly loaning money to a college is an unusual step for the city, but he also defended the proposition, noting that the College of Charleston was a city-funded institution.
In 2004 the city lent financial support to the fledgling Charleston School of Law. The city purchased a property the college wanted for $1,170,500, then sold it to the college for $875,000, with most of that money not due for repayment for 10 years.
At the time, Riley said the Charleston School of Law might leave the peninsula if the land were not made available for college expansion. The law school found other space, however, and uses the property on the corner of Meeting and Woolfe streets as a parking lot.
Broadwater said he is confident the American College of the Building Arts' will be able to repay the proposed city loan.
He said that once the college achieves pre-accreditation status, possibly this fall, students will be able to obtain federal loans and other financial aid that have not been available.
That should increase the number of students and revenues from tuition, Broadwater said. And accreditation should help with fundraising efforts.
The loan comes with generous repayment terms, including no payments until late 2010 and an interest rate of 5 percent.
The assistance would come at a time when Charleston is facing one of its toughest budget years in memory, squeezed between declining tax revenue and rising fuel and insurance costs.
Riley said the money would not come at the expense of other services. It would come from the city's undesignated fund balance, an $18.4 million fund the city keeps in case of an emergency, such as a hurricane.
Pierre Manigault, chairman of the college's board of trustees, said the school's survival is not in question but the next six months will be a critical time for the institution. He said Broadwater has been doing a good job of trimming expenses.
"We're on track to have a balanced budget and be able to live within it," he said.
Manigault is also chairman of the board of Evening Post Publishing, parent company of Charleston.net and The Post and Courier.
The American College of the Building Arts is headquartered in the Noisette development on the former Navy base in North Charleston. It owns and holds classes at the Old City Jail in Charleston and McLeod Plantation on James Island. The college purchased the Old City Jail from the Charleston Housing Authority for $3, as part of an agreement to restore the historic building, and bought McLeod Plantation for $850,000.
Building arts college milestones
American College of the Building Arts timeline:
2008: The college continues to seek accreditation, but financial conditions are deteriorating and the college turns to the city for help. The city rejects the idea of an outright cash grant, but considers loaning the college $734,500, with no payments due until 2010. There are 24 full-time and part-time students in the college's incoming fall class, and the seven remaining members of the Class of 2009 are expected to be the college's first graduates in the spring.
2007: The state's Competitive Grants Committee awards $100,000 for the American College of the Building Arts for general operations.
2006: The school has 40 students. Financial reports to the Internal Revenue Service show that in fiscal 2006 the college had $1.75 million in expenses and $1.37 million in revenue, with most of the revenue coming from private donations and government grants. David R. AvRutick steps down as college president.
2005: Nine men and six women, the Class of 2009, are enrolled at the American College of the Building Arts. Tuition is $18,372.
2004: The school receives a $2.75 million grant from the U.S. Department of Labor, changes its name to "American College of the Building Arts."
The college completes its $850,000 purchase of historic McLeod Plantation on James Island from the Historic Charleston Foundation, despite a lawsuit filed by a group opposed to development of the site. The South Carolina Commission on Higher Education unanimously agrees to let the college recruit students for classes starting in the fall of 2005.
2002: Government money and private donations continue to roll in for the renovation of the historic Old City Jail, including a $750,000 grant from the federal government, $375,000 from individuals and corporations, $50,000 from the city of Charleston, $25,000 from the National Trust for Historic Preservation and $270,000 from the state of South Carolina.
2000: The Charleston Housing Authority sells the historic Old City Jail to the school for $3. The school plans to stabilize and restore the historic buildings, and use it as part of the school campus.
1998: School of the Building Arts is founded in Charleston.