CSUN Will Bring For-Profit School on Campus : Education: Dormitory will house a private firm. University might lose $1 million in FEMA aid.

Despite a warning that the deal could cost the university at least $1 million in federal earthquake repair funds, Cal State Northridge still plans to consummate an unusual contract to bring a for-profit school for foreign students onto campus.

University officials confirmed Friday they have been warned that the Federal Emergency Management Agency might not reimburse the campus for repairs to the campus dormitory that would house the private company, EF International Language Schools.

Ronald Kopita, CSUN’s vice president for student affairs, said campus officials have prepared a package of materials to argue the university’s case for getting the federal reimbursement.

But even if FEMA ultimately refuses, Kopita said CSUN still plans to enter into the EF contract.

“It made us step back and pause a bit,” Kopita said of the warning. “But at this point, the long-range benefits to the university and the dormitory project outweigh the short-term” risks. “In the long haul, it’s still more beneficial,” he said.

Campus officials, saddled with a costly and underused 15-building campus dormitory complex that has long lost several million dollars a year, hope the contract with the private school will generate $600,000 to $850,000 a year in revenues to offset those debts.

If FEMA declines to pay for repairs to the one dorm, CSUN would have to spend the initial several years of its expected profits to pay for the work. But under the terms of a proposed five-year contract with EF, the campus could still earn substantial sums in later years.

The funding issue adds a new wrinkle to a deal that had already drawn criticism from some academic officials at CSUN. Not only would the private school on campus arrangement be unusual in the Cal State system, but it also would directly compete with CSUN’s own foreign students program.

Under the proposal, EF, a subsidiary of a Swedish firm that already runs similar programs at eight other U.S. locations, would lease a portion of the campus dormitory and about a half dozen classrooms for English as a Second Language classes at CSUN, set to begin this fall.

Ann Metropulos, EF’s western regional vice president, said her company still plans to proceed, has already enrolled some students, and had marketing staff from its offices in Argentina, Brazil and Japan touring the CSUN campus this week. “It certainly doesn’t alter our position,” she said.

Campus officials said the contract is a potential concern to FEMA because it would involve the campus putting the dormitory to a different use and turning it over to a private company. Those factors could make the building ineligible for public repair funds targeted for public agencies.

Bruce Erickson, the university’s spokesman, said the warning about the repair reimbursement issue came from a state auditor who works in the university’s earthquake repair office and reviewed FEMA guidelines on such issues.

Jane Chatham, the special assistant in charge of CSUN’s earthquake recovery, did not return telephone calls Friday afternoon. It was not immediately clear whether FEMA officials were directly consulted on the issue.

There also was some question about the actual repair cost of the dorm.

Kopita said he understood the repair cost for the four-story dorm was between $2 million and $3 million. But the Encino architectural firm that oversaw the repairs tallied the total at only $1.1 million, said Martin Berman, partner in Berman & Bertolini Inc.