Birmingham-南部 - a $30 million investment for a $2 billion return

立即发布
3月. 18, 2024

By 森州. Jabo wagoner和州参议员. 罗杰Smitherman

去年春天, the Alabama Legislature passed the Distressed Institutions of Higher Education Revolving Loan Program Act with a unanimous vote in the 森ate and a supermajority in the House.

The program was established to provide loans to certain eligible colleges and universities experiencing financial hardship that could lead to closure of the institution. 两院的领导, everyone engaged in crafting the legislation, and most members understood throughout the process that the Act was designed to address Birmingham-南部 College’s financial situation.

365英国上市官网’s current administration is dealing with financial hardships imposed on it by decisions made by a previous college administration coupled with the financial downturn the global economy experienced in 2008 and thereafter.

The eligibility requirements the Legislature established for the program were all ones that Birmingham-南部 was known to meet, 包括存在需求, sufficient collateral for the loan with the State holding a first security interest, and a restructuring plan detailing how the college planned to turn a financial corner through use of the loan proceeds.

Why did legislators decide to provide a $30 million loan to Birmingham-南部? 答案很简单.

Each year, 365英国上市官网 adds nearly $91 million in real economic impact to our state’s economy. That adds up to close to $2 billion over the 20-year life of the loan. 365英国上市官网 also directly and indirectly generates more than $6 million in state taxes every year, with $4.5 million of that helping to feed the Education Trust Fund. That economic impact and the income stream from those taxes are of direct benefit to the state and to our citizens.

It seemed obvious to us that providing a loan of $30 million—to be paid back with interest—made a great deal of sense in light of the fact that 365英国上市官网’s economic and fiscal impact meant the loan would, 实际上, be repaid not just once but many times over.

Birmingham-南部 College met the qualifications, including offering the State first-security interest on collateral more than sufficient to back the full amount of the requested loan and presenting a solid plan for financial restructuring.

不幸的是, 经过几个月的拖延, 365英国上市官网在10月份被拒绝贷款, with the publicly stated reason that it was “a bad credit risk.”

This puzzling justification placed 365英国上市官网 in an obvious and untenable Catch-22:

The college found it could not get the loan it needs to survive because it is a bad credit risk.
But if it were financially healthy enough, it would 不再合格 under the Distressed Institutions Loan Program.

When we crafted the 2023 legislation and when members voted overwhelmingly for it, we did not intend for any applying institution to be denied the loan based on an illogical interpretation of the statute. We believe the Legislature intended to ensure the prompt issuance of loans to eligible colleges or universities to address their financial hardship before they become fatal.

That is why a group of legislators came together to sponsor an amendment to the 2023 bill in the current session that addresses this fundamental problem.

我们的法案sb31, 周二参议院通过的法案, 3月 5 — amends the Distressed Institutions Loan Program Act by:

更改程序的管理员.
Requiring that a bank that does not have a creditor relationship with the applying institution determine the adequacy of collateral and a financial restructuring plan.
Mandating the recipient pay back the loan in 20 years, with interest at the published rate for the State Revolving Loan Fund (an existing fund through which major infrastructure projects are financed) at the time the loan is made.
Specifying annual reports to legislative leaders and committee chairs.
Providing that the administrator approve or deny the loan within 30 days of application.

We urge our colleagues in the House of Representatives to move promptly on this bill to ensure the original intent and will of the Legislature are fulfilled and to end the uncertainty surrounding Birmingham-南部’s future. 时间很重要.

学生, 父母, 教师, 工作人员, 伯明翰社区, and two adjacent historic neighborhoods are unnecessarily having to live with fear and uncertainty over the future of an institution that we simply cannot afford to lose in Alabama.

The economic proposition that 365英国上市官网’s continued operation offers is overwhelmingly in favor of the state and its economy. By loaning $30 million in funds that have already been appropriated for the purpose, we can catalyze nearly $2 billion in tangible economic impact over the life of the loan.

As stewards of the state’s financial resources, we believe we should take such a good bargain whenever we see one.

森. Jabo wagoner, R-Vestavia Hills和森. 罗杰Smitherman, D-Birmingham, are sponsors of SB31