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Ave Maria: Were tax-free bonds provided without proper accreditation?
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For Ave Maria University, nearly $60 million in tax-free financing for its new 750-acre campus in Collier County has depended on the oh-so-elusive definition of one word: Accredited.
The Collier County Educational Facilities Authority, a little-known government body that allows private colleges access to the municipal bond market, has approved three separate bond issues for the university.
The bonds, including a recently authorized $17 million series, are paying for university dorms and Ave Maria town housing for faculty members.
State law allows counties to help local private colleges pay for construction by substantially lowering the school’s cost to borrow money. Bonds issued through county authorities are tax-free, like other government bonds, but are debts of the college, not the county government.
The law restricts colleges eligible for these benefits to institutions that are “accredited.”
So is Ave Maria University accredited?
The Educational Facilities Authority says so. All three resolutions authorizing the bond issues state Ave Maria is, “an accredited nonprofit institution of higher education.”
“I think it was the correct decision,” said Donald Pickworth, attorney for the Collier Educational Facilities Authority, citing a state license indicating the school had been accredited.
But the history of Ave Maria’s accreditation, which is a significant benchmark for a university’s legitimacy, is long and complicated.
In the world of higher education, standard bearers for accreditation are six regional organizations.
For the Southeastern U.S., the Southern Association of Colleges and Schools (SACS) has jurisdiction and has accredited local schools, such as Florida Gulf Coast University, Hodges University and Edison College.
Ave Maria officials have said repeatedly that SACS accreditation is the school’s primary goal.
Ave Maria has submitted two accreditation applications to the agency, most recently in June 2007. The school pulled the previous application in 2004 because it wanted to add academic programs, something a school cannot do once SACS begins its evaluation, according to Ave Maria spokesman Branden Blackmur.
Ave Maria has yet to receive formal recognition from SACS.
Another accrediting agency has given the university its blessing.
In November 2004, the American Academy for Liberal Education (AALE), a small, national organization, gave Ave Maria “pre-accreditation” status, which allowed the school access to federal financial aid. Ave Maria was pre-accredited until this June when it earned the agency’s full accreditation.
The more recent AALE recognition came after the current educational facilities bond issue already was in the county’s pipeline.
In applications to the county authority in 2006 and 2007, the school said it had resubmitted an application to SACS.
However, though the school planned to resubmit to SACS in fall 2006, it never did, Blackmur said.
There’s no mention of accreditation in Ave Maria’s 2008 application to the county. Bond closing statements from 2006 and 2007 refer to the school as “provisionally accredited.”
Paul Roney, Ave Maria’s chief financial officer, said the university met the standard outlined in the law.
“I’m not legal counsel, but legal counsel opines on the transaction,” Roney said. “We have a license from the state of Florida, which the university was required to provide to bond counsel and they were aware of the accreditation status as well. I’m very confident that that met the criteria.”
Ave Maria officials haven’t always maintained that the school was “accredited.”
In October 2006, Ave Maria’s then-provost the Rev. Joseph Fessio called the school “small and unaccredited” in a fundraising letter.
In December 2007, University Chancellor Tom Monaghan addressed the school’s attractiveness to prospective students by saying, “Until we get accreditation, some of these people just won’t look at us.”
In April 2008, Ave Maria Director of Admissions Michael Williams said transparency about the school’s accreditation was vital.
“If a kid comes to this school and doesn’t know that we’re not accredited in the fall, that would be one of the worst things,” Williams said.
State law isn’t helpful in providing a clear interpretation of “accredited.”
There’s no definition in state law establishing county educational facility authorities.
A spokeswoman for Florida’s Office of the Attorney General said the office hasn’t issued an opinion on the word’s meaning. A review of state appellate court decisions didn’t reveal a definition, either.
Previously, the only other institution to receive Collier educational facilities financing was Hodges University, formerly known as International College.
Hodges received $19.24 million in financing after two bond issues, the first coming in 1999, said John White, Hodges’ executive vice president of finance. SACS accredited the school in 1998.
More recently, the state passed a new law establishing a state higher educational facilities authority. The state authority functions similar to county agencies, but allows those private colleges in counties without educational facilities authorities to have access to tax-free financing, according to Benjamin Donatelli, secretary-treasurer of the state agency.
In the law establishing the state authority, the word “accredited” is defined. It means accredited by SACS.
“With Ave Maria we might have said, ‘Nice try,’ but we couldn’t have helped them unless they got SACS accreditation,” Donatelli said.
Pickworth, the county agency’s attorney, said the difference between the two laws showed that legislators intended to give counties more leeway to determine eligibility.
Regarding Ave Maria’s AALE recognition, Pickworth said insisting on full accreditation would have harmed the authority’s ability to pay for construction vital to establishing a new school.
“A distinction between pre-accreditation and accreditation would basically say the (educational facilities authority) couldn’t fund an institution until it was a certain number of years old,” Pickworth said. “And that would seem contrary to the purpose.”







Comments
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Heretic, do you think the pyramids were financed with tax-free bonds?
What will happen if CCPS loses its accreditation due to our school board's malfeasance? Will our bonds be called?
#1 Posted by dwyerj1 on August 3, 2008 at 6:15 a.m. (Suggest removal)
excellent point PamelaA, i was thinking the same when i read the article. hopefully CCPS school board and their legal staff are as smart as you.
in the '07-'08 budget CCPS paid $48 Mil in loan fees and took out another loan of close to $100 mil. maybe that is a major part of the panic?
how much in debt are they? according to the State Auditor General most if not all of CCPS schools have been "morgaged". COPs-google it.
#2 Posted by mimibuck on August 3, 2008 at 12:39 p.m. (Suggest removal)
oh ya, this is a pice of the puzzle i have never figured out. CCPS loans come from Collier County Schools Inc. who is that? do they loan money to themselfs? is this another Gov. Authority? or a slick investment group?
#3 Posted by mimibuck on August 3, 2008 at 12:47 p.m. (Suggest removal)
http://www.myflorida.com/audgen/pages...
enjoy!
#4 Posted by mimibuck on August 3, 2008 at 1:16 p.m. (Suggest removal)
AM is not accredited by SACS, the State of Florida recognized accrediting agency. The bonds were authorized fraudulently. There is malfeasance lurking in every corner of this doomed community built on deception and misguided profiteering masquerading as a holier than thou religious law school. There are so many people hurt by this boondoggle.
#5 Posted by sailingby on August 3, 2008 at 1:44 p.m. (Suggest removal)
what will happen if Avea Margarita folds? will the taxpayers have to eat it? or swallow it?
#6 Posted by mimibuck on August 3, 2008 at 2:11 p.m. (Suggest removal)
Sailingby-
There is no fraud as the Collier County board clearly said that it was aware of Ave Maria's accreditation status and felt what it had was sufficient. (And, by the way, there is no story here either.) Oh, and if the community is "masquerading as a holier than thou religious law school" the masquerade is pretty good as there is no law school in Ave Maria. Try knowing some facts before you post.
#7 Posted by GatoMo on August 3, 2008 at 2:16 p.m. (Suggest removal)
When is the NDN going to let go of this crap from the brainwashed Catholics ? Enough !
The pizza guy from Michigan should be deported. He's a religious fanatic ........... in the same category as most Muslims.
It is my hope that the buildings are not hurricane worthy and that they fall into each other.
#8 Posted by Chartwell on August 3, 2008 at 3:06 p.m. (Suggest removal)
For a religeous organization, Ave Maria sure practices bad behavior. I guess since St. Tom the Pizza man will someday be canonized they can lie and sin all they want and all they have to do is go to confession and do a few Hail Marys and go back to lying on bond applications and press releases. The acredidation of this university was purchased in a box of Crackerjacks. But hey it's all good so long as the brainwashed flock goes out and scrapes their knees in front of planned parenthood for eternity.
#9 Posted by kneejerk on August 3, 2008 at 3:21 p.m. (Suggest removal)
such trash from the Catholic bashers.......and kneejerk has to make sure he posts his anti Catholic rhetoric on every thread there is...the latter part of his name fits him well
#10 Posted by Canuck on August 3, 2008 at 5:42 p.m. (Suggest removal)
GatoMo- You're right there is no law school there...yet. But it has always been the intention to build a Catholic law school there. You may not have been following this story long but here is a link for you:
"Ave Maria School of Law’s move to Southwest Florida continues to barrel forward, despite a major announcement Thursday regarding the school’s new location when it opens in summer 2009." more:
http://www.naplesnews.com/news/2008/a...
The State of FLorida requires accreditation from SACS. All schools in Florida are quided by this accreditation policy. AMU is not accredited with SACS. This is a slippery slope for them.
You were a little rude here. Not needed.
Let's just keep our eyes on the facts.
#11 Posted by sailingby on August 3, 2008 at 6:28 p.m. (Suggest removal)
such deals for religious schools are a clear violation of church and state...its especially offensive since this is a religious compound...come on IRS
#12 Posted by prometheus on August 3, 2008 at 9:30 p.m. (Suggest removal)
Facts:
*Municipal infrastructure; i.e. roads, sewer, water etc. that are for the benefit of the individuals within a designated community and paid for as a line item on their tax bill is perfectly legitimate. Funding via a CDD is the mechanism to access lower cost (tax free)capital. If there are no residents to pay the incremental fee on the tax bill then the deed holder (developer or builder or other) are obligated to pay. The general population of Collier County will not be responsible for payment of that CDD line item.
*501c3 (i.e. a university), subject to the opinion of bond counsel and interpretation of IRS tax code based on application of the project proceeds, intent, use and other qualifiers--also have qualified access to tax exempt markets through an issuing authority. More than likely the bond issues for the university are backed by a letter of credit issued by a rated commercial bank then marketed and remarketed in the marketplace as bonds backed by that bank (the holder of the bond is not relying on the credit worthiness of the university but rather buying the investment based on the credit worthiness of the letter of credit provider). If the university were to default, the bank backing the letters of credit would make the bond holders whole then would pursue default rights to the designated/agreed upon collateral/security. Again this is a perfectly legitimate form of financing where there is "public benefit". One may ultimately argue that a Catholic University should not be the beneficiary of access to a lower cost of capital vis a vis the ability to issue tax exempt bonds - the separation of Church and State. Yet, it is the responsibility of the bond counsel in accordance with the parameters of the IRS Tax Code to assure that the access is legitimate.
*I would question why accreditation is actually a criteria set forth by the IRS code allowing 501c3s to access tax exempt markets. But again, this is a matter for bond counsel to opine to.
*Ultimately in the long-term, the whole of our community will be the beneficiary of a self-sustained town in the eastern part of Collier with a university at its epicenter. Any attempt to undermine legitimate access to capital will be defeating to the community at large. No tax payer is on the hook other than the resident, deed holder, security holder that resides or comprises the legal entities. We should all wish for success for those things that make a community vibrant--people, jobs, education and access to those things that make life worth living.
#13 Posted by Thoughtforfood on August 5, 2008 at 7:26 p.m. (Suggest removal)
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