Student-housing facility College Suites has filed bankruptcy after threats of foreclosure from banks and the City of Plattsburgh.
The property was to be sold at a public auction Jan. 29, but the Suites filed to reorganize under Chapter 11 bankruptcy on Jan. 16.
According to the United States Courts website, “a chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.”
“The filing invokes a hold on any proceedings to collect from the owner or to seize the property,” City Chamberlain Richard Marks said. “Until the bankruptcy proceeding is concluded.”
If the property were to have gone to auction, PSUC had no interest in purchasing the property.
“We’re not in the financial standing right now,” said Plattsburgh State Vice President of Student Affairs Bryan Hartman said. “Our priority is to maintain the facilities we have.”
However, the college would have been ready to assist students living in the College Suites to find other housing options.
“We are always concerned about our students,” Hartman said.
Student housing is run exclusively on room rent, which pays for personnel, utilities and debt because loans have been taken out by the college to pay for dormitory renovations.
Student housing also has strict rules and regulations, which must be followed by the students who reside there, and if the college were to buy College Suites, it would be no exception.
“A lot of students want to escape all the rules and policies, so most move off-campus,” Hartman said. “It just wouldn’t make sense for us to buy it.”
College Suites, according to legal notices, owes the bank roughly $17 million, plus interest and costs, the Press-Republican reported Jan. 9.
The property, developed by United Group, also owes Luck Builders of Plattsburgh around $1.8 million for construction of the building.
The property also owes nearly $1 million in back taxes from the last two years, $180,000 of which is owed to the city of Plattsburgh.
According to the city’s 2014 final assessment roll, the taxable value of College Suites is $845,000.
“The property and school taxes are tax liens on the property that cannot be dismissed as an outcome of a bankruptcy proceeding,” Marks said. “So after the bankruptcy is concluded, the property tax foreclosure can proceed.”
The company has also challenged the city’s assessment of the building from $12 million to $3 million, which could lower the amount of taxes they pay.
The higher a property is assessed, the more taxes the owner has to pay.
Tax rates in the city of Plattsburgh, including city and school taxes, are $37.86 per every $1,000 of a property’s assessed value.
With a $12 million assessment, College Suites pays around $450,000 of taxes per year. If the assessment were $3 million, taxes would be around $113,000.
College Suites, which opened in 2010, has 397 beds and though it isn’t full, it is close to capacity.
“In my opinion, it’s too big,” Hartman said. “And I don’t know if given the size of our institution and our students financial standing, it’s more expensive than other housing options.”
Rent at College Suites is currently $720 per month per person in a four-bedroom apartment.
“We certainly don’t want to see that property fail,” Hartman said. “That would be in no one’s interest.”
Email Tawnee Bradham at tawnee.bradham@cardinalpointsonline.com.
