It's been almost 20 months since College of Santa Fe officials announced publicly that their school was struggling financially and that they needed to do something drastic for it to survive.

They slashed budgets, cut programs, laid off workers and began partnership talks with at least two other institutions.

When none of that worked, they turned to state lawmakers and public universities for help. That also failed.

Now, with the college closed, local officials are trying to make a deal that would maintain an arts school on the campus and avoid years of legal battles.

If you care about any of this, tonight is your night. The City Council is scheduled to vote on whether to incur $30 million in debt so the city can purchase the campus and lease it to Laureate Education Inc. to run an arts school. The meeting is scheduled to start at 7 p.m. in the council chambers.

How we got here

In November 2007, college officials announced that the school had operated in the red for at least two years. The deficit varied from $2 million to $4 million, they said.

First, officials decided to cut programs and trim staff. The school could not continue to operate with costly student-teacher ratios of 7-1 in some programs, they said.

In an effort to recruit more students, they also decided to resurrect an athletic program, starting baseball, soccer and tennis teams.

By early 2008, officials had offered buyouts to about a dozen faculty members.

Meanwhile, President Stuart Kirk was in partnership talks, first with Savannah College of Art and Design, then with Laureate.

Gov. Bill Richardson, along with Santa Fe's legislative delegation, also expressed his willingness to help. College officials said thanks, but no thanks, hoping one of the private deals would work out.

The SCAD talks failed during the summer of 2008, but those with Laureate continued.

The hope was that Laureate would use its marketing and recruitment resources to solve the college's biggest problem, low enrollment.

In the fall of 2008, with the economy in a nosedive, Laureate pulled out of talks to buy the college, leaving officials with no choice but go hat in hand to Richardson and legislators.

New Mexico Highlands University President Jim Fries, himself a former CSF president, and Rep. Lucky Varela, D-Santa Fe, took the lead, proposing that Highlands, with funds from the state, buy the campus and start a new branch. It would be focused on the arts but would also include some of Highlands' other degree programs.

CSF staff, faculty and students lobbied hard for the agreement, but the state's budget crunch, combined with skepticism from some lawmakers, killed it. Sen. John Arthur Smith, D-Deming, would not even allow it to be heard in the Senate Finance Committee.

Just when it looked like all hope was lost, Richardson announced the formation of a task force that would try to find a way to save the school.

The most concrete proposal came from Santa Fe Mayor David Coss and Councilor Rebecca Wurzburger. They suggested the city buy the property.

The city deal

There are two main proposals on the table. The first is that the city issue $30 million in revenue bonds to buy the campus and make improvements to infrastructure. The debt would be paid back with rent from Laureate.

The second idea is effectively the same as the first, except that instead of selling bonds, the city would actually borrow the money from the New Mexico Finance Authority, which would issue the bonds. This plan could secure better interest rates and save the city some issuing fees.

The city would use $19.5 million to buy most of the campus — all except the Shellaberger Tennis Center — and use the rest of the $30 million to pay for infrastructure repairs and to hold in reserve.

The other item councilors are scheduled to vote on is the lease agreement with Laureate. Under the terms of the lease, Laureate would pay $2.35 million in rent per year. That amount would be enough for the city to make debt payments, officials say.

Until this week, councilors were concerned about how much the city would get if Laureate, sometime in the future, decided to buy the property. A purchase option is part of the lease agreement.

City Finance Director Dave Millican said the two parties have agreed on terms to determine the selling price. "We worked out a formula that starts with an appraised value and gives them credit for facilities they build and credit for economic development," Millican said.

Millican said that as measures of economic development, officials would look at factors such as job creation and gross receipts taxes.

Even with those credits, Millican said, "it's possible that we would be paid back more than we paid for it."

Another issue was whether the city could include in the lease a requirement that if Laureate decided to sell the property, the campus would continue to be used for educational purposes. Laureate has not agreed to such a condition.

Councilors Carmichael Dominguez and Ron Trujillo have both said they're concerned about how Laureate will make its school accessible to local students.

Dominguez said Tuesday that Laureate could form a partnership with the Santa Fe Public Schools or "require professors to go out into the community and not just isolate themselves on campus."

While Dominguez wouldn't say whether having those kinds of agreements in place by tonight's vote might sway his decision, he did say that he is "feeling better" about the financial risks the city is taking.

Even if the council approves the deal, Laureate still must gain approval from the Higher Learning Commission to transfer the college's accreditation.

A team from the Higher Learning Commission is monitoring the process, Millican said, and has sent a letter saying it's supportive. Still, Millican said, approval is contingent on the sale of the property and a final lease agreement.

Contact John Sena at 986-3079 or jsena@sfnewmexican.com.

Editors note: An earlier version of this story gave the wrong time for the public hearing.