Newark set to lose significant tax revenue as university prepares to acquire Courtyard Apartments early

University Courtyards
Randi Homola /THE REVIEW
The university intends to acquire the Courtyards apartment complex in July, 2019.

BY Senior Reporter

As the applications for student housing next year begin to stream into the university, many are hoping to secure a spot in the soon-to-be university-owned Courtyard Apartments. However, unanswered questions and concerns remain about the legal and economic timeframe which the university has produced.

In 1999, Ambling Companies Inc., the developer which sought to construct the University Courtyard Apartments (UCA) in Newark, entered into a contract with the city government regarding the construction and regulation of the new property. At around the same time, Ambling entered into a separate contract with the university and the Collegiate Housing Foundation (CHF) which stipulated that the former would acquire UCA after a period of 30 years. This period represented the time Ambling would take to pay back the Delaware Economic Authority Bonds, which were provided to fund the project.

However, the university is now set to acquire the Courtyards by July 1, 2019, ten years early. The university claims that the contract with CHF and Ambling allowed them to retain the right to acquire the property early, and thus that the decade-early acquisition is well within their right.

“Per the contract, the University has always retained the right to acquire the property sooner than 2029,” Andrea Boyle Tippett, the university’s director of external relations, said. “As the university’s infrastructure ages and student population grows, it made sense to accelerate the timeline.

The proof for this claim has not been substantiated. The contract between these parties has not been made available to the public but has been referenced by university officials regarding their right in the accelerated acquisition.

According to Newark City Councilman Jerry Clifton, it is hard to take the university’s word on such an issue. Once UCA is acquired by the university, he said, it will become “educational property” and will no longer provide taxable income to the city.

“What it means is a loss of revenue of $77,000 a year, over ten years that’s $770,000,” Clifton said. “Each year we would have to have over a 1.25 percent tax increase for each of our residents in order to compensate for this loss.”

The Review was unable to confirm the figures cited by Clifton.

The councilman also expressed concern over the university’s alleged failure to notify the city that the 30-year timeframe could be shortened. He said that when the contracts were formed, the city was unaware of the possibility that UCA could be acquired prior to 2029 , and that the university never informed any of the Newark officials.

According to Boyle Tippett, the City government had been notified of the early acquisition of UCA earlier this year.

“Despite the fact that there was no requirement to alert city officials, University officials did, in fact, make City leaders aware of the decision in April before publicly announcing the plans in September,” Tippet said. “A major reason for the early notification was to provide ample time before the City began its annual budget planning process.”

There is no documented mention of a provision for the university to acquire UCA prior to 2029 in the transcripts of City Council meetings or in the agreements the city signed with Ambling in 1999. All of the references by councilmen to the acquisition of UCA were after a period of 30 years, and none of the references indicated an understanding that it could be any time sooner.

It is likely then, that the only document which provides or makes mention of the university’s ability to acquire UCA earlier than 30 years is the contract between the university, CHF and Ambling. However, under Delaware’s Freedom of Information Act (FOIA), only university records that relate to the expenditure of public funds are records available to the public under the act. As defined in the FOIA, public funds are “those funds derived from the State or any political subdivision of the State.”

Therefore, the university is not required to provide the information, and has declined a FOIA request for the documents that would disclose the legality of an accelerated acquisition of the University Courtyards, which is still set for this upcoming summer.

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