The ongoing bid by the Virginia Department of General Services to buy the home of the New College Institute in uptown Martinsville took a rather public twist Thursday when the New College Foundation’s board of directors issued a press release to announce a counteroffer.
The foundation says it will take $10.5 million for the 5.09 acres at 191 Fayette Street and the 3- story, 53-527-square-foot Baldwin Building where NCI does its business.
DGS in 2017 had offered $7.76 million for the building and all furnishings and equipment in its latest effort to take ownership from the group that provided funding for its construction. DGS also had looked at buying new property to house NCI.
DGS included a “lessor” clause in the proposed sales agreement that states the purchase price shall be the lessor of $7.76 million or direct costs and expenses incurred in connection with the acquisition and construction of the property minus all state, federal or local government funds received, a press release from the foundation says.
Using that formula, with approximately $11 million contributed by governmental entities (including a city land grant), the property could be sold to DGS at significantly less than its market value and less than the local contribution, said Deborah Kaufman, executive director of New College Foundation.
“It is the board’s fiduciary responsibility to NCI and the community at large to ensure that we achieve the best outcome possible,” Kaufman said in the release.
To that end, the foundation board hired Newmark Knight Frank, a national commercial real estate advisory firm, which appraised the property at $10.5 million.
Martinsville Commissioner of Revenue Ruth Easley said the building and land are assessed at $14,046,900, but the foundation is tax-exempt.
NCI opened in 2006 to offer bachelor’s and master’s degree programs via partnerships with various state universities along with training and professional development programs. The foundation leases the building to the state for $383,000 a year in a lease that expires in June. The relationship between NCI’s board and the foundation has grown increasingly acrimonious.
Recently DGS had sought to deduct from its monthly rent because it said the foundation had not met the terms with its rental agreement and made necessary upgrades to the building’s technology.
Kaufman said the foundation was formed in 2006 of the purpose of establishing a mechanism to receive donations for New College Institute, and through that mechanism, the foundation received funds for the construction of the building.
Approximately $10 million in local funds helped with construction of the building in 2014, including an $8 million grant from The Harvest Foundation, roughly $1.3 million in other private local contributions, and a city land grant (valued at about $545,000). A variety of other federal agencies and programs also provided funds.
“This was very much a local initiative to help our community economically and educationally,” Kaufman said in the release. “It is the board’s desire to protect the local investment so that funds are available to provide educational support to students in the future.”
In email, Kaufman wrote that state and federal grants were received from the following agencies for constructing and equipping the Baldwin Building: Tobacco Indemnification and Community Revitalization Commission, Appalachian Regional Commission, U.S. Department of Agriculture Rural Utility Service, U.S. Department of Commerce Economic Development Administration, Virginia Department of Housing and Community Development, U.S. Community Adjustment (CAIP) and U.S. Department of Agriculture Rural Business Enterprise.
Kaufman said in an interview that $10.5 million is the foundation’s asking price. “I would assume the Department of General Services would consider our counter offer,” she said.
Dena Potter, director of communications for the DGS, wrote in an email, “I’m sorry, but we do not comment on negotiations.”
But in another wrinkle Martinsville City Attorney Eric Monday said that, under the terms of the deed for the land from the city of Martinsville, in the event of a proposed transfer of title by the foundation to any entity, the city has the right of first refusal.
“Regardless of who or what owns the property in the future — if NCI ceases to function, in its originally contemplated form, and in its current location, the city will seek to recover title,” Monday wrote in an email.
“I believe the original offer demonstrated the commitment by the Commonwealth of Virginia to enhancing its footprint in Southside and more importantly the vital role that NCI will play in both the educational and economic revitalization of our community and more importantly our region,” Richard Hall, vice chair of the NCI board, wrote in an email.
“Regarding the counteroffer, I am perplexed that the foundation’s leadership would attempt to negotiate via press release. However, I am hopeful that the leadership of the foundation will reach out to the representatives at DGS, who have been ready and willing to engage meaningful dialogue since October of 2018.”
Paul Collins is a reporter for the Martinsville Bulletin. Contact him at 276-638-8801, ext. 236.