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Development Of New Student Housing 1. Topics We Will Discuss Today Defining the Need Opportunities with a Revitalization Of Housing Inventory Traditional.

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Presentation on theme: "Development Of New Student Housing 1. Topics We Will Discuss Today Defining the Need Opportunities with a Revitalization Of Housing Inventory Traditional."— Presentation transcript:

1 Development Of New Student Housing 1

2 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 2

3 Defining the Need Very dated housing inventory as compared to peer institutions Current housing inventory does not meet the expectations of todays students Recommend 200 to 500 new beds at present Opportunity for additional phases 3

4 WVSU – Prillerman Hall Constructed 1936 Efficiency Apartments 4

5 WVSU - Gore Hall Constructed – 1926 Residence Hall for Men 5

6 WVSU – Sullivan Hall Constructed – 1969 Residence Hall for Men and Women 6

7 WVSU – Dawson Hall Constructed 1922 Renovated 1976 and 1999 Residence Hall for Women 7

8 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 8

9 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 9

10 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 10

11 Benefits of Privatization Speed of delivery Flexibility of project structure Development expertise Appropriate financial structure 11

12 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 12

13 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 13

14 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 Developers 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 14

15 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 15

16 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 universitys 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 16

17 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 17

18 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 Gramblings 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 18

19 Grambling State University – Phase II Grambling, LA On Campus Student Housing August, 2008 19

20 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 20

21 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 21

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