Page 30 - College Planning & Management, June 2017

WHY YOUR NEXT COLLABORATION MAY BE A P3
indicates Tim Michael, WSU’s associate vice president for Business and Auxiliary Operations and chief housing officer.
On campus, Michael’s team was turn- ing three-person rooms into four-person rooms, turning lounges into rooms and housing students in hotels. “In four years, the demand doubled from 200 to 400 beds,” he notes. And, with anticipated growth of the student body, as well as seeing an increase of students from farther out in the state, out of state and other countries, demand will continue to grow. “We have 3,050 students on campus now, and we anticipate that to grow to 3,800 by 2020,” he says. “Even at 3,800 beds, we’re still housing just 15 percent or less of our entire student body, so it’s not like we’ll run out of students interested in the op- portunity.
“Once we got to the point where both on-campus and community housing couldn’t meet demand, we developed a 10- year master plan to expand our on-campus housing capacity,” Michael continues. The plan, approved in January 2016, included a $250-million investment in new, renovated and removed facilities.
Administrators had five goals in fulfill- ing the master plan. They wanted numbers off the balance sheet to preserve the univer- sity’s capital borrowing capacity, to limit their credit impact, to maintain institutional control and identity, have cash flow to the university and maintain ownership of the
assets. “And so we knew we wanted to do some of it with a P3,” Michael sums.
UConn: In the early 2000s, UConn ad- ministrators conducted a survey of students who chose not to attend the university. “One of the reasons they gave was because there was nothing to do in Storrs,” the vil- lage where the school is located, says Tom Callahan, UConn’s associate vice president. Indeed, administrators had a challenge in terms of recruiting not only students, but also faculty and staff, because the commu- nity lacked a downtown area. There was no place for commerce, no place for people to gather off campus. As a result, the Down- town Mansfield Partnership, consisting
of members from UConn, the Mansfield business community and volunteers from the town of Mansfield and surrounding communities, was formed. The Partner- ship spent 10 years creating a vision for Storrs Center, a mixed-used area that would include apartments, and it hired Leyland Alliance, Tuxedo Park, NY, to develop it.
Project Financials
WSU: Administrators partnered with East Greenwich, RI-based Corvias to meet their housing master plan goals. “Most P3s are real estate transactions,” says Michael. “We’re using the Concessionaire model, which is a financial transaction in which a Special Pur- pose Entity (SPE) captures all of the revenues generated. The only claim on repayment of debt is the revenue stream; there’s no lien on
buildings or land. The guarantee is the cash flow — the rent paid by the students. It shifts the risk of having to pay debt service and oc- cupancy to the third-party entity.”
Michael and his team anticipate receiv- ing $300 million in June, $100 million of which will pay off the existing debt on
the current housing. “Two-thirds of the remainder will pay for demolition and construction of housing,” he explains, “and several million will be used to set up a series of reserves and contingency funds as required by the lending agreements.”
It’s a 40-year partnership, and the agreement allows administrators to renovate the facilities every 10 years. “Our unique approach, which allows all the value and cash flow to stay in the facility partner- ship,” says Geoff Eisenacher, Corvias’ vice president of Partnership Development, “is self-sustained. It’s comforting to know that the facilities will remain modernized with funds in place, not having to raise new debt or find income, for 40 years.”
UConn: The Downtown Mansfield Partnership was struggling with how to make the numbers work and where to
get the financing. Then they brought in EdR, which provided capital. “We helped fulfill their vision by condominiumizing the project, whereby individual units are independently owned and can be sold, to provide more collegiate housing for upper classmen, faculty and staff,” says Trubiana. Today, EdR is the owner and operator
What, Exactly, Is a P3?
A P3 is a contractual arrangement
between a public agency and a private-sector entity in which the skills and assets of each are shared to deliver a service or facility — in this case a service or facility for students.
“In addition to the sharing of resources, each party shares in the risks and rewards potential in the delivery of the service and/or facility,” as indicated by Washington-based National Council for Public-Private Partnerships (www.ncppp.org), a nonprofit, non-partisan organization that is a forum for the brightest ideas and innovators in the partnership arena.
30 COLLEGE PLANNING & MANAGEMENT / JUNE 2017
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PHOTO COURTESY OF WAYNE STATE UNIVERSITY