Phoenix-Based Grand Canyon University Set To Grow

Grand Canyon University is looking to expand into the southeast Valley, a move that could set off a regional bidding battle as it seeks economic incentives from cities.

The Phoenix-based university, owned by a Nasdaq-traded company with more than $400 million in annual revenue, is seeking 75 to 150 acres for a new campus that may some day house 7,500 students and 2,000 employees.

The university also is inviting select cities outside Arizona to compete for a planned satellite campus.

Grand Canyon, which shifted from a non-profit to a for-profit model eight years ago, is calling on a few handpicked cities to make offers that may include a variety of economic incentives, ranging from land giveaways to tax rebates, according to the university’s request for proposals.

“We’re open,” Grand Canyon Chief Executive Brian Mueller said, “if there’s a city that wants to step up.”

Grand Canyon executives planned to issue a request for proposals to officials in Mesa, Chandler, Tempe, Gilbert and Queen Creek this morning.

Many metro Phoenix communities eagerly seek higher-learning institutions, and the opportunity to land another university could generate competition among local elected officials and city administrators.

Economic-development officials often preach that a well-educated workforce can help lure high-wage employers, who, in turn, boost municipal tax coffers.

But the request for proposals also are coming at a time when many municipalities are still financially strained and tax incentives remain controversial.

At stake with the Grand Canyon University expansion is a proposed $75 million to $100 million campus with four 80,000-square-foot buildings.

Campus amenities would include a student union, classrooms, laboratories, a recreational center, a bookstore and a library.

The university wants to open the first building in time for classes in fall 2014, Mueller said. The second building would likely open in 2016, followed by a third and fourth by 2020, he said.

Grand Canyon’s satellite campus would offer the same programs as the university’s main campus at 33rd Avenue and Camelback Road in Phoenix, but it would cater more to commuter students, Mueller said. The campus would not initially have dormitories, he said.

An initial notice of intent for interested cities is due Jan. 7, and full proposals are due Feb. 15. The company would look to make a decision by May 1.

The company will also open the competition to Las Vegas and Albuquerque, though Mueller said it may be possible to build campuses both in the southeast Valley and out of state.

“Phoenix, Albuquerque and Las Vegas are three cities in the Southwest that don’t have much in terms of private Christian higher education,” Mueller said. “There’s just not a rich history of that.”

Mueller said the university would like to find a site that is near freeways and amenities, such as a shopping mall.

The company’s request for proposals also asks cities to provide a detailed economic-development program that may include free or reduced-price land and parking facilities, tax rebates and abatements, infrastructure improvements, reduced utility rates and low-interest public financing.

Grand Canyon was founded as a private, Christian school in 1949 by the Southern Baptist Church. The school fell on hard times financially in the early 2000s and was bought by a private company that later went public and began trading shares on the stock exchange in 2008.

Since converting its business model, the university has seen explosive growth because of an aggressive expansion of online courses.

Enrollment jumped from about 4,500 students in 2004 to 52,253 this fall. Most students are in online classes, with 6,500 attending classes in person at the Phoenix campus. On-campus enrollment is expected to rise to about 15,000 students in three years, Mueller said.

In recent years, the university beefed up on-campus facilities, investing more than $200 million in a new recreation center, dorms and a 5,000-seat arena, according to Grand Canyon officials.

The university is best known for its nursing and education programs. Health sciences would be a focus of the southeast Valley campus, though other programs also would be offered, Mueller said.

About 80 percent of Grand Canyon University’s in-state student body hails from the West Valley, and the company will now look to expand its offerings in the East Valley, Mueller said.

“We have a growing population of students that come from the East Valley, but those are students who want to live on campus,” Mueller said. “Students looking for a commuter option, we’re not a really good option.”

Five liberal-arts colleges are opening campuses in Mesa after being courted by city leaders: Wilkes University of Wilkes-Barre, Pa.; Westminster College of Fulton, Mo.; Albright College of Reading, Pa.; Benedictine University of Lisle, Ill., and Upper Iowa University.

It’s not clear yet what sort of reception Grand Canyon’s proposal will get from southeast Valley cities.

Arizona State University approached several Valley cities in the past few years, looking for them to provide facilities to house small, lower-tuition colleges.

The concept has not resulted in any lower-tuition campuses in the Valley, although ASU opened a small campus with lower tuition in Lake Havasu City in August. Plans to locate a campus in Goodyear collapsed after financial fallout from the recession made it impossible for the city to come up with funding.

ASU had more success before the recession hit, getting Phoenix voters to approve bonds to fund ASU’s downtown campus.

Arizona is known for a variety of for-profit colleges but not as many four-year public choices.

University of Phoenix, one of the largest providers of higher education in the country, is headquartered in Arizona.

Critics of the for-profit model say the drive to make money can undermine quality. For-profit colleges generally have higher dropout rates, lower graduation rates and students have higher loan debts than public schools, they say.

Supporters say for-profits can be more efficient than public schools and more in tune with students’ needs, including providing more flexible scheduling. For-profit schools typically serve more non-traditional students, adults who often take longer to complete their degrees and who may stop and restart school because of personal commitments.

Grand Canyon University was recently ranked No. 2 on Forbes magazine’s list of America’s best small companies. The list included companies that have shown significant growth over the past five years.

“For-profit colleges have been under fire in recent years for high dropout rates and saddling students with significant debt, but (Grand Canyon has) held up better than most,” Forbes said. “Grand Canyon’s stock has doubled since its 2008 IPO (initial public offering) on the strength of annual earnings growth of 236 percent, which is the best rate among the companies on our list.”

The company hopes to achieve a 22 percent profit margin this year, according to regulatory filings.

Grand Canyon Education Inc. reported profits of $48.5 million for the first nine months of 2012, up nearly 38 percent over the same period last year.


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