Closed New York Catholic college turns focus to selling campus

The shuttered College of New Rochelle filed for Chapter 11 bankruptcy last week while it markets the Westchester County campus to potential buyers in an effort to pay off creditors.

The 115-year Catholic college, which closed its doors last month following a debt crunch, filed for bankruptcy last Friday in the Southern District of New York and has plans to sell the 15.6 acre campus in the next two months. Mercy College in nearby Dobbs Ferry, New York, is leasing some of the school’s buildings through 2020, and CNR board of trustees chairwoman Marlene Tutera said there is a desire to maintain the property as an educational institution.

“The board of trustees is grateful for the tremendous efforts made by so many individuals who worked tirelessly in the attempt to save the college, and who then focused on assuring that our students were provided clear pathways to continuing and completing their college educations with Mercy College and other fine institutions,” Tutera said in a statement. “We are particularly pleased that Mercy College students are utilizing the campus and are hopeful that the educational mission of the property can be continued long-term. “

As part of the bankruptcy process, CNR retained A&G Realty Partners and B6 Real Estate Advisors to market the campus. The firms announced last Friday that qualified bids would be due in early November, but did not reveal specifics about the auction process. They described the property as encompassing over 425,000 square feet of buildings and as being situated on the land of former 19th Century hotelier Simeon Leland, who built a castle there as his summer home.

“The campus offers a variety of development opportunities for a diverse set of end users,” Jeff Hubbard, executive managing director of B6 Real Estate Advisors, said in a statement. “We have continued to see strong interest in this rarely available property that is well-situated in a suburb that features convenient transportation to Manhattan and attractive lifestyle options that add to the value of this asset.”

Just after CNR announced it was closing in June, the college received default notices from Dormitory Authority of the State of New York on principal and interest payments due on bonds that the conduit issuer sold for the school in 2008. CNR issued $13 million of bonds through the New Rochelle Industrial Development Agency. It had also issued issued $31.7 million of variable-rate debt through the Dormitory Authority of the State of New York. The letter of credit provider, Citizens Bank, N.A., ordered a mandatory tender of the debt in July following an event of default, according to a trustee notice supplied by DASNY.

Major fiscal pressures facing CRC first came to the surface in 2014 when it discovered $31 million of unmet financial obligations in 2014, including $20 million in unpaid payroll taxes. Unsuccessful attempts to address the mounting debt included a December 2016 auction of five single-family homes adjacent to CNR’s flagship New Rochelle campus, staff reductions, cutting two administrators and refinancing $6 million of revolving line of credit obligations. CNR operates five total campuses in the New York City region.

CNR’s former comptroller, Keith Borge, pleaded guilty to Securities and Exchange Commission charges in March for defrauding municipal securities investors and concealing the school’s deteriorating finances. He also faced charges for failing to pay payroll taxes and was sentenced to three years in prison on Aug. 28.