THE Uniting Church has been forced to make the ''heart-wrenching'' decision to close Acacia College in Mernda after receiving the ''shocking'' advice it was ''saddled with debt'' and ''unsustainable''.
The low-fee private school in the heart of Melbourne's northern growth corridor has 520 students in prep to year 9.
At a meeting of parents last night, Uniting Church moderator Isabel Thomas Dobson said a protracted legal dispute with the developer and unforeseen council costs meant the school could never become sustainable.
''I speak to you with a heavy heart … We recently engaged some external experts to assist us in our planning and the result was shocking,'' Ms Thomas Dobson said in a speech seen by The Age. ''The school can never become self-sufficient. It will be saddled with a debt that is growing by the minute and is unsustainable.''
The school will close on December 14.
Founding principal Andrew Houghton, who oversaw the opening of Acacia College in 2010 with just 121 students, is understood to be distressed by the closure.
Acacia College's website says enrolments are steadily growing at the school and by 2015 it expected to have 1200 students from prep to year 12.
Ms Thomas Dobson said Acacia College, which accepted students from all faiths and backgrounds, was a wonderful school and the staff and students were second to none.
''However, the church cannot commit more money to keep Acacia going and growing.''
The Uniting Church hopes to sell Acacia College so it can continue to operate next year.
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''We are in conversations with one or two other education providers, and will welcome interest from more, but I have to stand before you tonight to tell you that from the end of this year Acacia College will no longer be a Uniting Church school.''
Acacia College is the fourth low-fee independent school in Melbourne's rapidly expanding growth corridors to close in the past two years. Mowbray College, which had campuses in Melton and Caroline Springs, closed in June following the shock revelation it had accrued more than $18 million in debt.
The closure left more than 1000 students stranded mid-year - including 276 doing VCE or the International Baccalaureate - and 200 teachers without a job.
ICA Melton College in Caroline Springs and ICA Casey College in Narre Warren South collapsed in 2010 after parent company Independent Colleges Australia went into voluntary administration.
Parents at Acacia College had become concerned there had been almost no progress in the construction of the middle school.
In recent weeks the property board of the Uniting Church became aware of cost overruns.
''Substantial costs associated with the construction arising from a complex mix of an over committed developer (now deceased) who was unable to fulfil contractual obligations, City of Whittlesea compliance related costs and a consequent legal dispute with the deceased estate rendered the project unsustainable,'' the Uniting Church says in a statement.
Ms Thomas Dobson said it had been a ''heart-wrenching decision to end what had been a brilliantly run school by Andrew Houghton and his staff''. This is a decision the Uniting Church takes full responsibility for and and in no way does it reflect the sustained efforts Acacia's professionals have made to build it into a reputable education provider,'' she said.
''The Uniting Church intends to examine the true effect and reasons behind the loss.''
The closure of Acacia College raises concerns about whether there will be sufficient schools in the outer north to cater for the population boom.
In late 2010, principal Mr Houghton raised concerns in local newspaper Northern Weekly that demand for secondary schools in the outer north would go largely unmet.
''Demand for schools in this growth corridor will explode in the next five to seven years and I don't believe this demographic has been fully catered for yet,'' he said. Acacia College will make a list of school availability in the area for parents.
Reports will be prepared earlier than usual to assist students to enrol at other schools.
Counselling will also be provided for all students as required.
"The church realises this decision places extreme pressure on staff, parents and students and we welcome all options that will see the school having a future," Ms Thomas Dobson said.