Santa Fe finance officials lucked out.
A refinance on debt incurred for the purchase of the Midtown campus was approved at a time when interest rates on 10-year US Treasury bonds are at their lowest in 20 months, according to city Cash and Investment Officer Bradley Fluetsch.
"We couldn't have had a better opportunity to refinance," Fluetsch told city councilors during their Wednesday meeting.
According to Fluetsch, the rates the city is currently paying on the various debt instruments used to finance the 2009 purchase of the campus range between 5.32% and 6.7%. Given the state of the bond market, the new rate will be "well below 4%," Fluetsch said.
That means the city stands to save about $500,000 per year as it repays the debt on the land and buildings that were last home to the Santa Fe University of Art and Design, Fluetsch said. The money for those payments comes from gross receipts taxes, which are levied on purchases of goods and services within the city.
The new annual payment on the debt will be around $1.7 million, according to Finance Director Mary McCoy, down from the approximately $2.2 million annual payments up until this point. Officials also extended the maturity date of the debt by three years, and it should be paid off by 2039.
The purchase of the campus followed a tumultuous history for higher education on the site. The College of Santa Fe closed and then the city borrowed nearly $20 million from the New Mexico Finance Authority in 2009 to purchase the campus. Officials then leased the campus out to the for-profit Laureate International to run the new Santa Fe University of Art and Design. That school closed last year. Now, the campus sits mostly empty. Only a few occupants, like the Garson Studios and the Santa Fe Recovery Center, are using its film department building and cafeteria, respectively.
But a city effort to breathe new life into the 64-acre property is underway, and the refinance is expected to give officials more breathing room.
The planners of the project anticipate a new city center, in the spirit of the highly successful Railyard, that would serve as a gathering place for people across Santa Fe.
But one of the architects of the project, Matt Brown, who served as Santa Fe's economic development department director since 2017, has recently taken a job at the Texas nonprofit Centro in San Antonio. His last day was May 24.
The department recently issued a second request for proposals for the project—this one seeking a community engagement team. Bids on the first request for proposals, which was intended to find a firm that could provide urban planning services, were due on May 22. The next step is for city councilors to consider whether to approve the firm that staff ranks highest.
The bond refinance has been underway for months, so both councilors and finance staff at Wednesday's final City Council approval were pleasantly surprised that the market stars aligned just as the council was set to approve it.
"I think you planned that," Mayor Alan Webber said to Fluetsch about the stroke of luck.
"I wish," he answered.