Building out of the Crunch: As Enrollments Climb, Schools Turn to Private Developers to Finance, Design, and Manage Student Housing-And Save $$. (Cover Story Campus Housing)

Article excerpt

FIVE YEARS AGO, MCNEESE STATE UNIVERSITY in Lake Charles, LA, faced a critical student-housing crisis. Though ordinarily only about 10 percent of the school's 8,000 students live on campus, deferred maintenance had left five of the university's dorms in need of complete restoration, with several totally unusable. To compound the issue, asbestos contamination made the necessary renovations economically unfeasible. The state legislature couldn't offer financial assistance, and the school had little bonding capacity of its own.

The conundrum forced dean of Student Services Ricky Mestayer to be creative, and Look into private development. Then, after two years of obstacle-climbing, the decision was finally made to go the privatized route. In May 2001, a not-for-profit foundation was formed by issuing tax-exempt revenue bonds in the foundation's own name. The foundation was able to raise $21 million (effectively solving the funding issue), Georgia-based Ambling Companies (www.ambling.com) was selected to develop the housing, and a plan was formed to tear down five existing dorms and replace them with five brandnew facilities. In July, Ambling broke ground. In addition to construction, the developer holds a Lease on the buildings for 30 years and will be responsible for maintaining and managing the student housing. In August 2002 when the new facilities open, McNeese will have 642 new on-campus beds--a blend of suites and apartments--and a new company on campus to handle all of its student housing maintenance. While Mestayer terms the effective housing result "an answered prayer," privatization as a housing shortage solution is also part of a growing trend on university campuses across the country.

Why is privatized student "housing-in-a-hurry" so common now? Several reasons, say the universities: First, student enrollment is currently at record Levels, and the Department of Education predicts it will increase by more than 20 percent nationally during the next decade. Second, oldstyle dormitories built in the 1950s and '60s are decaying, and no longer meet the lifestyle demands of today's students who expect such facilities as fitness and game rooms, and "wired" study areas. Finally, schools and state legislatures are increasingly reluctant to spend money on non-instructional buildings on campus.

The result: An increasing number of schools are turning over to outside developers everything from financing their new student housing, to design and management.

DON'T CALL THEM DORMS

But whatever you do, don't call these new facilities dorms.

"Housing professionals shun the use of the word dorms," says Bill Mills Jr., president of the St. Petersburg, FL, development firm University Housing Services www.uhsi.com). "A `dorm' connotes gang showers at the end of the hall; stuff that was built in the '50s or '60s." Today, most university developers are building "apartments" or "suites" that typically offer private bathrooms, full kitchens, living rooms, high-speed Internet access, and cable TV.

Developer Cecil Phillips, president of Place Collegiate Properties in Atlanta, GA, (www.placeproperties.com) puts it this way: "An 18-year-old is not going to drive his father's Oldsmobile, and he's not going to live in his dorm, either."

SPEED, COST, AND MANAGEMENT

The new facilities are built to appeal to the lifestyle and privacy demands of today's college students, but, for the school, the main attraction is how quickly the facility can be built. Private developers can often plan, fund, build, and open new student housing in 18 months or less, compared to a three-to five-year horizon for projects planned and executed by universities.

Neil Hawk, vice president for Business Affairs at the University of North Carolina at Pembroke, can attest to this. The school has about 4,000 students now, but is anticipating an enrollment spurt of 10 to 15 percent over the next several years. …

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