SalemNews.com, Salem, MA

April 3, 2013

A unique partnership

College turns to private business to move programs

BY ETHAN FORMAN
STAFF WRITER

---- — DANVERS — For two years, North Shore Community College searched for a new home for its culinary arts and cosmetology programs, threatened with extinction because their space on the campus of Essex Aggie is scheduled to be torn down to make way for the new regional technical high school.

Now, the college has found space through a unique partnership with a private business, which will provide the space the college needs in a three-story office building in downtown Lynn and pay all the upfront costs, in exchange for a share of the program fees.

“I was going to lose these programs unless we found space,” college President Wayne Burton said during a visit to the new space at 270 Union St. in Lynn.

But finding new space was hard because of the need to equip and outfit the two specialty programs. Both include public learning labs, with the Scholars Den Restaurant and Cosmetology Salon open to the public several times a week during the school year. And a new location had to be ready by September to keep the programs going.

On top of it all, the college faced a $2.5 million expense to outfit the space — money the college did not have, Burton said. To do the project through a state appropriation would have taken about four years, he added.

That’s where Higher Education Partners stepped in. The 3-year-old company, which operates out of New Bedford, Mass., and Providence, R.I., specializes in equipping space for community colleges. The firm’s vice president is Bill Luster, a Salem resident and former Salem city planner who more recently was executive director of the North Shore Alliance for Economic Development.

Gerry Kavanagh, another former Salem city planner who went on to work in Sen. Ted Kennedy’s staff in the 1990s, is the firm’s president.

Come September, the college’s culinary arts and cosmetology programs will open in the former Eastern Bank building on Union Street. The hope is that these programs will also beef up Lynn’s central business district, with the culinary program taking advantage of a cluster of food companies that have set up shop in Lynn in recent years, Burton said.

This also could alleviate a space crunch at the community college’s Lynn campus, which is slated for a $28 million expansion. Burton envisions the college holding health courses and other classes in the new space, taking advantage of the proximity to the Lynn Community Health Center. The space in the building includes the basement and two floors, as well as a portion of 280 Union St.

When finished, there will be new teaching and baking kitchens, a food storage freezer and cooler, a 40-seat cosmetology salon, and teaching and reception areas. The building also will have classrooms, faculty offices and a student lounge.

About 200 students will eventually study at the new center, Burton said. Cosmetology programs are capped by state regulations at 40 students a year. The culinary program enrolls 101 students, college officials said.

Higher Education Partners works by leveraging private equity investments to help public community colleges expand. The company bears all the financial risk.

“We couldn’t have done it without HEP,” Burton said. “There is no way, because they are a unique company.”

Higher Education Partners will lease the space, pay for the renovations, and outfit and equip the programs. In return, the company will get 15 percent of the revenue from program fees for the next 20 years.

“The company we are collaborating with is putting the money up and sharing the revenue,” Burton said.

There will be no additional cost to students, who will continue to pay the same fees as other students at the college.

“I would fashion this as ‘America’s Test Kitchen’ comes to downtown Lynn,” Luster said, pointing out the storefront window on the corner of the building that will soon feature a restaurant and a test kitchen behind it. Luster credits the Lynn Economic Development and Industrial Corp. with persuading the college to settle in the central business district.

“Having all these students downtown is going to be an enormous economic impact for the businesses around us,” Luster said.

Burton said the arrangement leaves the building entirely on the city’s tax rolls. City records show the building is assessed at $1.58 million.

The project may also save taxpayers money, as the state is not picking up the tab to move the programs.

“It’s a very expensive project to move these programs,” said Jan Forsstrom, the community college’s vice president for administration and finance. Equipment alone costs $500,000, Forsstrom said, and total costs were estimated as high as $2.5 million.

Higher Education Partners has similar arrangements with Bristol Community College and Northern Essex Community College.

Because the arrangement is so unusual, the college did not have to put the project out to bid, Burton and college officials said. Forsstrom said it was based on the previous agreements worked out with Bristol and Northern Essex and was approved by the state Division of Capital Asset Management and legal counsel for the college and the Department of Higher Education.

“Think of it as a sole-source thing,” Burton said, “because this is the only company which would do this kind of thing.”

Staff writer Ethan Forman can be reached at 978-338-2673, by email at eforman@salemnews.com or on Twitter at @DanverSalemNews.