July 14, 2010
By Mary Frances Schjonberg

General Theological Seminary has reached an agreement in principle with its bank for a $5.3 million short-term loan "that will provide working capital for the upcoming school year," according to a July 14 press release.

The Rev. Lang Lowrey, GTS interim president, said in a press release that "definitive agreements and final approval" by both the seminary and Manufacturers and Traders Trust Company are still needed on the terms of the loan. General would get a line of credit on which it can draw for operating expenses until the seminary proceeds as planned with the sale of four residential units in the building known as Chelsea 2, 3, 4, the release said.

The loan is to be repaid from the proceeds of the sales which, according to the release, could take up to a year. Lowrey said in a letter to trustees that any remaining proceeds from the sales would go toward further reducing the school's other debts.

Lowrey said in the letter that "the imminent financial crisis that GTS faced has been temporarily eased" and "we have bought some breathing room."

"Now we need to develop a plan for further financial restructuring, including reducing the seminary's significant debt," he added.

In a July 1 letter to GTS students, Lowrey called the need to raise capital for the upcoming school year "our single most important challenge."

He added that the school needed to restructure its debt. "General simply cannot afford to service its present level of indebtedness," he said.

Lowrey acknowledged in his letter to students what he called "the heightened level of anxiety felt in our community about our finances and about our future."

"I have no silver bullet for the challenges we face but I remain optimistic about the variety of options I see before us," he said.

At a special meeting in March 2010, the trustees learned that the school needed cash to service its debt and pay for the 2010-2011 school year.

The seminary earns income from its annual and capital fund raising, endowment, tuition, housing, food service and other fees and pre-school payments as well as from the Desmond Tutu Center, which recently opened on campus, according to school officials. Then-Dean and President Ward Ewing cited unexpected delays in opening the Tutu Center as a major factor in the changing forecast. General lost $1 million in anticipated revenue from the center last year because it did not open as predicted, he said. The school expects to make $400,000 from the center this year and to net $2.5 million annually within three to four years, Ewing said.

The board of trustees agreed in May to sell up to four apartments in Chelsea 2, 3, 4. Since the building was renovated six years ago, three of the four apartments to be sold have been leased to outside tenants.

Episcopal News Service
The Rev. Mary Frances Schjonberg is a national correspondent for the Episcopal News Service and Episcopal News Monthly editor.