The Rev. Lang Lowrey, Interim President of the General Theological Seminary held a web conference today describing in more detail the plan restructuring plan announced a week ago.
The plan, called "The Plan to Choose Life" has four components, according to President Lowrey. The first task is eliminate debt, endowment must be rebuilt, and the budget must be balanced. This is all so that the environment will be right to renew and strengthen the ministry of the seminary, Lowrey said.
The seminary hopes that this plan will make the institution financially solvent, eliminate all or most debt, increase endowment and make it possible for a routine, annual balanced budget.
Lowrey made it very clear in the presentation that he was not faulting the previous administration or leadership for their choices. He characterized their work to create the Tutu Center, create Chelsea Enclave, a condominium property built on land leased from the seminary, and do the geo-thermal work as "genius" but which could only take them so far. "They have carried us halfway across the river, " Lowrey said. With this plan, we hope to get to the other side.
The situation of the seminary 100 days ago was grim. As with any institution of higher learning, the costs of operations cannot be met on tuition and fees alone. Endowment is critical is meet operating costs. At $13 million, it was impossible to offset operating costs and it also impossible to dip into endowment any more. The Seminary also carries a debt totaling $41 million, $5.3 million of which is in the form of a bridge loan to carry the operations of the current fiscal year. Outside of the Annual Fund, the seminary was losing $6.3 million per year and there were no funds on hand to operate in 2011-12.
The trustees looked at four solutions: sale or merger; shutting down and liquidating assets; create a plan that acknowledges the current situation and make choice to continue and thrive; or seek out philanthropic solutions...in other words, raise money to offset losses.
The Trustees knew that philanthropy alone will not do it, not until the debt is eliminated or at least significantly reduced. The size of the debt also ruled out sale or merger. All the stakeholders agreed that General Seminary has a mission worth preserving, enhancing and growing, so the only thing to do was look at the causes and make hard choices.
The plan envisions the sale of the apartment buildings across 20th Street from the seminary, known as "422", as well as the building called "2,3,4 Chelsea" and the oldest building on the close West Building, along with a part of some land immediately west of that building. The Chelsea Enclave, built along Ninth Avenue now sits on leased land. This building land under this building will be sold as well.
To make this work, Lowrey said, there are lots of moving parts. First, the remaining dormitories in the close that have not been renovated will have to be upgraded to dormitories, studio, and one, two and three bedroom apartments. The number of Seminary owned housing units will drop from 75 to 65.
Offices will need to move out of West Building into Seabury Hall and a new entrance to 21st Street will have to be constructed between the Moore Building and Seabury.
A new library will have to be built immediately west of the new completed (located on the ground floor of the Chelsea Enclave building), in effect acting as a buffer between the condominium complex and the close itself.
To rebuild the endowment The Desmond Tutu Center, a conference center with 60 guest rooms completed in 2007, will become an independent shared entity, with the seminary retaining one-third ownership as the operating partner. The hope is that an Episcopal partner can be found and that the operation will generate about $800 thousand annually in net income.
The sale of the other buildings and the renovation of the existing spaces will all be negotiated with one party, Dan Brodsky, who built Chelsea Enclave. If all the approvals are met, then this would take place in one single land deal. Brodsky, Lowrey said, is "known, trusted with a proven track record" in both real estate development and working with non-profits in New York City. Brodsky's firm would manage GTS construction projects. This approach, Lowrey believes, is more efficient that separate land, construction and management transactions.
The timetable assumes that Seminary will close on the Chelsea 2,3,4 buildings and the land under the Enclave by December, 2010. During the Winter and Spring, renovations on Dehon and Pintard and work on the new library will begin.
Next summer, renovation on Lorilard, White and Edson will start and the new library will be occupied. With Seabury Hall thus freed up, offices will move from West Building to Seabury. Also during the summer, students would begin to move out of 422 either into newly renovated spaces on the close or in nearby Brodsky-owned apartments. The timetable is still in development.
The goal is to maintain the historic "E", as Lowrey called it. This is the quadrangle plan for a residential seminary community first envisioned by Dean Hoffman at the end of the 19th century. The new plan would retain all the Hoffman buildings that front West 21st Street with the central Chapel, the Tutu Center and the new library forming the “E.” "Dean Hoffman would be pleased," Lowrey said.
The Seminary would retain buy-back options on all the property that will be sold.
Students who are displaced by the building by building renovation will be housed in Brodsky owned apartments near the seminary if necessary. Lowrey said these would be "about the same distance from Seminary as 422," but he did not specify where these apartments might be.
Lowrey said that interest has been shown by potential partners for the Tutu Center, if they can eliminate the debt, get their operations under control and if they can build up the endowment.
During certain hours public spaces, including the close, will be shared among the various occupants. The new owners would be part of the Chelsea Square Conservancy and have to live under tight rules to ensure that the Close "remain a sacred space" as Lowrey put it. When asked what this might mean, he said, that for example a tenant or an owner might be fined for not turning down loud music.
"One of the problems right now is when we rent out part of the close or the refectory for a wedding," Lowrey said. "We hope we won't have to do this in the future as this plan becomes a reality."
Among the moving parts that Lowrey described was the various approvals that need to be garnered along the way. The New York State Attorney general must approve major parts of the plan, as does the Diocese of Long Island and the bank that holds the seminary's loans. Construction in New York City means dealing with several agencies each with their own processes and backlogs.
In building up the mission of the seminary, Lowrey talked about filling vacancies in faculty positions, renewing the program centers and look at new programs to ensure that they contribute to the seminaries mission and are financially viable. He wants to make better use of adjunct faculty who are internationally recognized with first-class theological credentials. He also talked of leveraging technology to make the library a resource to the whole church.
He indicated that by restructuring expenses and eliminating most if not all the debt by December of next year, it will reduce the operating shortfall by about a million dollars and save another 2.5 million dollars in debt service per year. The sale of the buildings and shared ownership of the Tutu Center will help rebuild endowment to increase the annual draw up to 1.8 million dollars per year, after the annual fund. The goal is a balanced budget by 2013 with a manageable and sustainable draw from a rebuilt endowment.
The vision for the future of the Seminaries ministry is to continue to train the future leaders of the church in a close, residential environment centered on the chapel and the classroom.