READING — Albright College is exploring whether to use tax-exempt bonds approved by Berks County commissioners this week to refinance $42 million in debt, purchase dorms, and maintain facilities.
The Board of Commissioners unanimously gave the Berks County Municipal Authority the OK to issue up to $65 million in bonds on behalf of the school. The authority acts as a conduit for the issuance of bonds that benefit a nonprofit, but neither it nor the county assumes the debt or financial risk.
Peter Edelman, the private liberal arts college’s bond counsel, told commissioners the money would be used to help Albright reduce its debt over the next five years while providing funds to purchase Kraras (formerly Rockland) and Lion halls — which are currently leased — and perform other building maintenance.
Still, Albright Executive Vice President James Gaddy said the college’s board of trustees has yet to make any final decisions about how to proceed. “This is a process reevaluating our debt, and so you know we have not made any final decisions in that regard yet,” he told Spotlight PA.
Other institutions that have received bonds from the authority include Alvernia University, Tower Health, Reading Hospital, and local development projects. Because the bonds are tax-free, the entities save money. The authority’s bonds also have lower interest rates than those acquired privately, Edelman said.
University of Tennessee, Knoxville professor Robert Kelchen, an expert in higher education finance, accountability policies, and practices, said refinancing debt is a common strategy, and colleges prefer borrowing money over tapping their endowments.
He said Albright securing “this amount of capital from government bonds” is a “clear win.”
Albright has been digging itself out of a tricky financial situation since 2024. It began by seeking approval to borrow up to $25 million from its endowment — of which administrators say roughly $15 million has been drawn upon — and selling the college’s artwork and unused property.
But a material weakness in the college’s latest audited financials and an accreditation warning this year underscore the continued strain Albright endures. The audit also found the college’s touted $10 million surplus was less than half that.
The goal now for Albright is to refinance its existing debt, which is why administrators sought the authority’s bond approval. The school was approved in the past, but didn’t move forward.
In 2023, the county gave the municipal authority approval to issue up to $75 million in tax-exempt bonds on behalf of Albright. However, the college instead took out a $16.8 million loan carrying an 8.5% interest rate with Visions Federal Credit Union, Edelman told Spotlight PA in an email.
Refinancing debt
When Albright administrators took out the Visions bank loan in 2023, that carried an 8.5% variable interest rate.
The following year, in the college’s emergency petition to take out a $25 million loan from Albright’s endowment fund, officials wrote that the school couldn’t get reasonable interest rates for a bank loan because of existing debt — including the loan it had taken out the year before.
“The financing quotes Albright has received range from 10% to 25% interest, which would not allow Albright to recover financially, especially considering the existing $17 million loan with a variable interest rate,” college officials wrote in the December 2024 Berks County Orphans’ Court petition.
Albright administrators declined to comment on why these decisions were made at the time, noting they were made under the administration led by former President Jacquelyn Fetrow.
Edelman said he could not speak on prior administrations’ choices, but noted there are additional costs associated with public bonds, and Albright officials would have been guided by financial advisors on what was best.
Restructuring debt is a key part of Albright’s turnaround plan.
On top of the $16.8 million bank loan, Albright also wants to refinance two Berks County Municipal Authority notes and a Wernersville Municipal Authority note from 2017. The municipal bonds have 2.7% fixed interest rates until October 2027, then the rates are variable but capped at 5%. These bonds were not sold on the public market, but the latest bond package would be.
Edelman said Albright plans to sell its debt to whoever is willing to assist the college in its endeavor. A package will be prepared that includes the college’s audited financial statements, a description of current operations, and other pertinent information for bondholders, he said. He expects to place the bonds on the public market by mid-to-late August, and close in September.
“They're going to focus on that financial recovery plan that the college is working on and make a decision whether or not they feel comfortable assisting the college with that plan,” Edelman said.
Infrastructure investments
Administrators also want to purchase Kraras and Lion residential halls. Albright pays roughly $4.8 million on leases per year for the dorms, located at 1200 Rockland St. and 1700-1716 N. 12th St., respectively.
Because the buildings are privately owned, property taxes accrue and are factored into the lease payments. The college owning the buildings outright would take them off the tax rolls and reduce Albright’s financial obligations.
Gaddy said there is no guarantee Albright will purchase the dorms. That decision will be made by board trustees at a later date.
Meanwhile, administrators announced to incoming students in early July that Albright is closing Lion Hall for the upcoming semester.
Since the college doesn’t own Lion Hall and enrollment numbers don’t support the need for another dorm, Gaddy said administrators opted to close it for the fall. He added that the building experienced leaks after the roof was damaged during a spring storm.
Both Lion and Kraras halls were built with enrollment goals of roughly 2,000 students, Gaddy said. Right now, the college’s enrollment goals are between 1,400 and 1,600 students, he said. Lion Hall was also primarily for juniors and seniors, Gaddy added.
The closure comes amid other facility maintenance challenges on campus for the fall 2026 semester, concerns highlighted in an accreditation warning Albright received from the Middle States Commission on Higher Education in June. Administrators closed Masters Hall for the upcoming semester because of HVAC issues.
Still, the long-awaited library renovations, which incorporate the Joyce Family Foundation Learning Commons, are expected to wrap up this fall.
College officials originally anticipated the learning commons opening last year, but permitting, delivery schedules, and installation complexities extended the time to completion, President Debra Townsley said in an emailed response to Spotlight PA questions. Crews also recently replaced the compressor at North Hall, she said.
Gaddy would not say what he hopes the outcome of the bond process will be, but emphasized that the college is in the middle of a turnaround that takes three to five years.
“We're not finished, and not every move we make or every development is a straight line,” he said. “The real story is we're trying to do the hard work that's required to preserve Albright's legacy. We believe that Albright serves an incredible purpose of lifting up student lives, and it serves as an incredible anchor for Reading, and those things matter to us.”