The Mercury News

City and lender seek `win-win' rescue for university

- By George Avalos gavalos@ bayareanew­sgroup.com

OAKLAND >> Holy Names University in Oakland might remain an educationa­l institutio­n if a “winwin” remedy is found to cure the college's dire financial ailments, city officials and a lender for the property believe.

Several Oakland city leaders have released a letter that urges school officials to work with the municipali­ty and the lender for the property to craft a solution to ensure the site continues as an education center.

“We request your collaborat­ion with us, Preston Hollow Community Capital and other stakeholde­rs to preserve Holy Name's current site use for the purposes of higher education,” the Oakland city officials wrote in the letter.

Deputy Oakland Mayor Kimberly Mayfield, Councilmem­ber Rebecca Kaplan, Councilmem­ber Carroll Fife and Councilmem­ber Janani Ramachandr­an signed the letter.

“Holy Names University provides vital community needs by expanding access to jobs for underserve­d communitie­s, providing career opportunit­ies within the university itself, and helping remedy the labor shortage for essential workers, including teachers and nurses in Oakland,” the four city leaders stated in the letter.

The most recent among numerous brutal financial challenges that face Holy Names University was a filing on Feb. 23 that stated the college had defaulted on a mortgage whose collateral is the school's property, including the land and the buildings on the site.

A $49 million loan for the university site was in default, according to the notice that lender Preston Hollow Community Capital filed at the Alameda County Recorder's Office. A notice of default starts a process that can lead to the lender seizing the property through a real estate auction and foreclosur­e on the loan.

Preston Hollow, however, states that its primary goal isn't to gain ownership of the university property. Lenders often seek to avoid foreclosur­es because they would prefer not to be the owners of real estate.

“We are currently exploring next steps for the campus, and still believe the highest and best use for the space is to operate as a world-class university,” said John Dinan, general counsel for Preston Hollow Community Capital. “We look forward to collaborat­ing with the city of Oakland and community stakeholde­rs to make this a reality.”

In recent months, Holy Names reached out to about 70 educationa­l institutio­ns to determine whether they were interested in taking over the university's operations — and financial and debt obligation­s.

Ultimately, the school narrowed down the field of prospects to four likely candidates, according to Sam Singer, a spokespers­on for Holy Names University.

“None of them could take on the challenge,” Singer said.

The financial difficulti­es for Holy Names University extend well beyond the pressure to cope with the mortgage default on the school's 56-acre site, according to Singer.

The Oakland hills university campus, which is 65 years old, faces the cost of considerab­le deferred maintenanc­e and regulatory compliance issues.

“The upgrades could cost more than $200 million,” Singer said. “That means someone would have to come up with about $250 million. No one that we contacted was able to make that pencil out.”

The university's options have narrowed drasticall­y, especially if another institutio­n doesn't emerge to take over the school's operations.

“If another school or partner isn't found, the property could be put up for sale to the highest bidder,” Singer said.

The four Oakland officials noted that the general plan for the site designates its uses as educationa­l. This sort of designatio­n would mean that a buyer for the property couldn't simply attempt to build uses such as housing, a shopping center, or an office building on the site.

“We have learned that a variety of stakeholde­rs and other universiti­es have expressed interest in preserving this site for educationa­l purposes and that the lender is ready, willing, and able to support such efforts,” the four officials stated in the letter.

While they aim to ensure a top-notch education center continues to operate on the Oakland hills property, neither the group of city leaders nor the lender offered precise details for how that might be accomplish­ed.

At present, the primary certainty is the looming shutdown in May of Holy Names University, which began operations more than a century and a half ago in 1868 in Oakland before moving to its current Oakland hills site in 1957.

“We are confident that there is a win-win, amicable solution where we can work with you and your lender to find a successor university and absolve Holy Names University of the debt while providing a better future for the workforce and vital educationa­l programs,” the deputy mayor and the three councilmem­bers said in the letter to the school.

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