Lincoln University Curators approve bookstore negotiations, bonds refinancing

This August 2017 photo shows Scruggs University Center on the Lincoln University campus in Jefferson City.
This August 2017 photo shows Scruggs University Center on the Lincoln University campus in Jefferson City.

For the first time in several years, Lincoln University students next fall could be able to buy books and other merchandise from an on-campus bookstore.

Two companies submitted proposals in early March, after 11 potential companies were contacted in mid-February with a request for proposals, Marcus Chanay, LU's vice president for Student Affairs and Enrollment Management, told LU Curators during a telephone conference call Wednesday.

Curators voted 7-0 to complete contract negotiations with Follett, the company which was operating the bookstore in the Scruggs University Center when Lincoln administrators decided to use only an online service.

Sandy Koetting, LU's vice president for finance, reminded the board: "The university made an intentional decision a couple years ago to move to an online bookstore, so it wasn't necessarily that our vendor was doing so poorly."

And the decision to reopen an on-campus bookstore "doesn't mean that our current online vendor is doing poorly, either," she added. "It's just a different methodology in how we provide the resources to our students - and to be able to provide the apparel and the sundries, all of those pieces together in one package."

Chanay said the store would sell snacks, and provide some "sitting areas for students to be able to sit and lounge."

The store also will sell clothing and other apparel with LU logos and maybe fraternity and sorority logos as well, he said.

Follett will spend up to $225,000 to do a full renovation of the existing, bookstore space on the second and third floors of the student union.

"They will provide all new store furniture, fixtures and equipment," Chanay said, "and (will) design and construct a new main entrance to the store on the lower level."

Follett proposes to make the bookstore's top level, which is opposite the entrances to the Scruggs Center Ballroom, "an actual place where faculty will be able to actually do research," Chanay said.

The final contract with Follett still must be negotiated, but it will include a commission to the university based on the volume of books sold, as well as a donation and some book scholarships.

The new on-campus bookstore is expected to be operating by Aug. 1.

Bond refinancing

Curators also voted 7-0 to approve a resolution to authorize refinancing of about $16 million in bonds that originally were issued in 2007.

"The goal is to refinance the bonds that are maturing in the years 2020, through their final maturity in 2037," explained Reagan Holliday, a St. Louis-based managing director for Hilltop Securities. "Those bonds are currently carrying interest rates that range from 4.6 percent to 5.125 percent."

The goal for refinancing would be to lower the interest rates Lincoln would have to pay to people who buy the bonds.

"The most ideal scenario would be for the bonds to be insured by Assured Guaranty," the company that insured the current bonds, Holliday said. "That would allow us to achieve more savings," which she predicted would be in the 10-13 percent range, saving the university about $1.8 million in overall costs.

But, since the recession happened in 2008, she said, "The bond insurance market tanked," and fewer companies are willing to insure bonds than did so 12 years ago.

Holliday said she and other consultants working on the LU project still are waiting to hear from Assured about its willingness to insure a new bonds sale.

If no one wants to insure Lincoln's re-financed bonds, she said, the savings would be only 5-7 percent - or about $750,000 in savings from LU's current costs.

Holliday and Koetting assured the board those savings would be after all the expenses involved with refinancing the current bonds package.

And, curators were told, the sales would be blocked if Lincoln wouldn't have enough savings to make the project worthwhile.

LU also faces no costs if the sale doesn't happen.

"We only get paid if a bond sale takes place," Holliday explained.

If everything lines up for a sale, she said, it likely would occur later this month or in early June.