AACRAO Board considers purchasing building or office floor for national office

February 18, 2016
  • AACRAO Leadership and Governance

After nearly 50 years of renting office space in the National Center for Higher Education at One Dupont Circle in Washington, DC, the AACRAO Board of Directors has begun to explore the possibility of purchasing a building or office floor to house the national office and staff. As we move into our second century of service we believe we are in a good position to further strengthen our financial stability by purchasing real estate.

In our examination of lease versus purchase scenarios we have determined that owning our own office space would net the association more than $20 million over the period of a mortgage, provided we qualify for real estate tax exemption in the District of Columbia. Without the tax exemption our annual operating expenses would increase by more than $250,000 annually and cost the association more than $7 million over the period of our mortgage. The increase in operating expenses would make the purchase of real estate a less tenable option for us.

In consultation with real estate attorneys who work with non-profit higher education associations in the District of Columbia we have discovered that having for-profit higher education institutions in our voting membership will likely compromise our ability to receive real estate tax exemption. Several associations with similar institutional memberships as AACRAO have been denied the exemption.

Given the goal of owning our own office space and importance of the real estate tax exemption in achieving that goal, the Board has made the decision to recommend to the AACRAO membership that we change our bylaws to allow for-profit institutions to be affiliate members but not voting members of the association. Members from for-profit institutions would still be able to participate in all activities of the association, including serving on or leading committees, but would not be able to vote on association business matters nor serve on the board of directors.

Our members from for-profit institutions have made significant contributions to AACRAO. Changing the status of a sector of our membership is a difficult decision but one that must take into consideration the long-term viability and financial strength of AACRAO. We believe this change would best position AACRAO to purchase our own national office space while still providing our members from for-profit institutions the ability to meaningfully engage with our association.

The proposal will be discussed at the Town Hall Meeting at the AACRAO Annual Meeting in Phoenix and presented at the Annual Business Meeting.

-Mike

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