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Development Of New Student

Housing

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Topics We Will Discuss Today• Defining the Need• Opportunities with a Revitalization Of Housing Inventory• Traditional Model• Developer Model• Benefits of Privatization• Product• Contract Between Parties• Privatized Financing• Land Lease• Developer Accountability• Developer Acceptance of Risk• Grambling State University – Louisiana

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Defining the Need

• Very dated housing inventory as compared to peer institutions

• Current housing inventory does not meet the expectations of today’s students

• Recommend 200 to 500 new beds at present

• Opportunity for additional phases

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WVSU – Prillerman HallConstructed 1936

Efficiency Apartments

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WVSU - Gore HallConstructed – 1926

Residence Hall for Men

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WVSU – Sullivan HallConstructed – 1969

Residence Hall for Men and Women

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WVSU – Dawson HallConstructed 1922

Renovated 1976 and 1999Residence Hall for Women

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Opportunities with a Revitalization of Housing Inventory

• Grow university enrollment• Enhance ability to attract out-of-state and metro tuition

area students with modern housing• Enhance recruitment of West Virginia residents outside

of the commuter zone• Enhance and grow graduate education• Projects of these types typically have positive enrollment

and competitive consequences with peer institutions• Meet university housing needs now and in the future

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Traditional Model

• Funding procured through state system• Architect hired (possibly through bid)• Architectural drawings completed• Contractor hired after bid process• Design-Bid-Build model - all activities done

separately – no overlap• Very competitive financing rates usually obtained• University bears all costs

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Developer Model

• Architects, engineers, contractors and financing teammates from project inception

• All parts moving at once enhance project delivery timelines• Funding not procured through state system – brought by

developer through an outside agency• Example: Tax-exempt revenue bonds issued through a local

or state authority• Funding typically achieved within six (6) months of choosing

a development team• Funding secured by the developer and is non-recourse to the

university

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Benefits of Privatization

• Speed of delivery• Flexibility of project structure• Development expertise• Appropriate financial structure

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Product

• Designed to meet university guidelines and standards• Amenities students want - private baths and rooms• “Stick and Brick” product – approximately 50 year life

span• Ground leased “as is”• Developer provides project• At the end of term project is given to the university or

developer tears it down• Financing and project model subject to our approval

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Contract Between Parties

• Clear and concise Request for Proposal (RFP)• Options for future phases• 30+ year ground leases• Profit split after equity earns return• Fill up guarantees• Joint marketing

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Privatized Financing

• Typically achieved through the use of tax-exempt revenue bonds secured by the developer

• Local issuing authority issues the bonds flowing to a 501c3 Not-For-Profit foundation for the construction of housing

• Rent pays the debt service. This model typically has a minimal impact on the balance sheet of the university by accounting standards due to the use of a foundation

• Developer’s job to strategize with an investment banker to secure the lowest interest rate for the benefit of the project

• Interest rate is very competitive to the university borrowing rate

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Land Lease

• University ground leases land to the foundation for the term of the bonds. This is typically 30 years

• All improvements revert to the university at the termination of the bonds and are debt free

• During term of bonds all excess cash flow from the rental proceeds after debt service, reserves and operations may revert to the university

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Developer Accountability

• Developer serves as the lead and centralized point of contact for the university and in turn monitors and reports all progress of team members to the institution

• Developer contracts with the architects, engineers, contractors and other professionals instead of the university maintaining those contracts

• This process enables procurement efficiencies because it is the job of the developer to serve as the university’s representative to bring the project on-time and within budget

• Penalties are often put into place within the contract that provides damages if timelines are not met

• Responsibility of the developer to oversee and limit the opportunities for change orders back to the project which increase cost and cause delays

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Developer Acceptance of Risk

• Developer accepts the risk for budget and schedule of delivery

• If budget is exceeded, the developer is responsible• If delivery schedule is missed, liquidated damages are in

place which require the developer to house students in hotel rooms and provide transportation to and from campus

• During pre-construction (prior to the close of financing) the developer works and directs work of team members at their cost and with no cost to the university. The closing draw of funds will reimburse the development team for costs to-date

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Grambling State University – Louisiana

• Enrollment of approximately 5,200 students• Replaced one of the worst housing inventories in United States according

to one developer.• Added 2,000 beds and a dining facility in two (2) phases.• In 2005-2006, the State of Louisiana enhanced admissions standards for

baccalaureate institutions. Grambling went from Open Admissions to Selective Admission criteria.

• With advent of new housing in 2008-2009 Grambling’s enrollment increased at a higher level than in previous years and in comparison to peer institutions. The new admissions standards were in effect while this growth took place

• Personnel at Grambling attribute this growth directly to the new student housing project

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Grambling State University – Phase II Grambling, LAOn Campus Student Housing August, 2008

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PROJECT OVERVIEW

Size – 815 Beds

Units 354

Unit Mix 4BR/2BA, 2BR/1BA, 1BR/1BA super-suites

# of Buildings – Five

Building Design – Three-story brick

Completion Date – Aug. 2008

Total Par Amount $40,148,000 M

Financing – Tax-Exempt Bonds

Architect Niles Bolton Associates

Contractor – Hinton Construction Company

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Project Description - Five all brick exterior corridor loaded, open breezeway residential buildings encompass approximately 289,139 sf - Community features Resident Assistants offices and classrooms dispersed throughout - Study rooms and laundry rooms are located in each building - Units feature swipe card entry, living areas and kitchenettes - New Ticket booth and Bating Cages for the Baseball complex were included in the project scope