By Wayne Schutsky
More than a year after St. Xavier University vacated the $34 million, taxpayer-funded building it occupied in Gilbert, the town has found a new higher-education partner to fill a portion of the facility.
At its April 5 meeting, the Gilbert Town Council approved a three-year lease with Missouri-based Park University. The nonprofit institution opened in 1875 and operates 42 locations in 22 states, including two schools in Arizona at Luke and Davis-Monthan air force bases.
The university will lease 10,411 square feet of administrative and classroom space on the first floor of the four-story, 87,000-square-foot building.
Park University will pay $799,128 in rent over the course of the lease and will also be required to pay a $26,027.50 security deposit when the lease is signed. The lease includes two- and three-year lease extension options.
Those payments will not completely replace the money the town lost when St. Xavier officially vacated the site in January 2017. Gilbert was relying on the university’s rent payments to pay back the roughly $36 million in debt it owed on the design and construction of the building.
According to the original development agreement with St. Xavier, the university’s “lease payments shall be sufficient to cover the cost of the debt service.”
The situation changed only nine months after the campus opened when St. Xavier announced in May 2016 it was closing the campus by the beginning of 2017 due to concerns about funding at its main campus in Illinois.
St. Xavier signed a 15-year lease with the town.
The situation has been a black eye for the otherwise successful redevelopment of the downtown Heritage District the town has championed since at least 2014.
The original development agreement leveled a potential $250,000 penalty against St. Xavier if Gilbert terminated the contract for breach of agreement within the first five years.
However, the two sides came to an agreement in which the university would pay Gilbert $4 million, the equivalent of 18 months of rent. Those payments will cover the town’s debt service on the building through January 2019.
The agreement also called for St. Xavier to pay $250,000 in liquidated damages and more than $150,000 for future building maintenance and related expenses. Gilbert anticipated those payments would cover maintenance and operating costs through fiscal year 2017, and the town wrote the costs into the budget in fiscal year 2018, according to a council memo on the agreement.
Gilbert spent $121,362 in operating expenses on the building in fiscal year 2017 and budgeted $266,413 for operating expenses in fiscal year 2018.
According to the new lease agreement, Park University will enroll at least 300 students over the course of the initial lease.
The lease agreement between Gilbert and St. Xavier required the school to enroll 200 students within the first two years, though the school had only 25 students enrolled in Gilbert in June 2016 when it announced it would close.
Park University will offer business, communications, criminal justice, wellness and education. It also plans to create a varsity-level athletic program in its second year of operation using existing community athletic facilities.