HAVING RECENTLY PARTNERED with the University of Massachusetts Boston to plan, develop, and build the first residence hall in the history of the campus, I understand the concerns around the affordability of student housing, and recognize that in a city where the average rent is over $2,100 per month there is no “one-size-fits-all” solution to building affordable college housing. But in my experience, when universities and developers work together in public-private partnerships (P3s), it is possible to build housing that meets the needs of students and universities – all while keeping costs down.
How did we – Capstone Development Partners and the UMass Boston and UMBA teams – approach the challenge? First, we were clear on whom this housing was for – and why it was needed. As recently reported in the media, some private universities are seeking to attract students who are willing and able to pay for a variety of luxury amenities—including housing. By contrast, UMass Boston has a student population of which 85 percent of students who live on campus applied for federal student aid. One in four of the university’s residential students come from families with an average income of less than $34,000 per-year. So our P3 team understood that the goal of building new housing was less about attracting students to this campus, and more about immersing them in their learning environment and helping them establish and integrate into the broader academic, social, and cultural community.
Second, the university wanted to make affordability a top priority. As the school’s development partner, we embraced that goal and had to deliver to university (and UMass Building Authority) design and construction standards. Even though we were building on-campus “dormitory-style” rooms as opposed to luxury apartments, we still needed to control costs. Working with other key partners and stakeholders, including the UMass Building Authority and not-for-profit owner Provident Commonwealth Educational Resources, we forged an innovative public-private partnership arrangement that made affordability central to the planning, design, construction, and operation of the new residential community and dining commons.
In particular, the combination of not-for-profit ownership and tax-exempt financing allowed us to secure an advantageous interest rate on 32-year tax-exempt bonds in 2016. (Timing was fortunate, as rates have since increased steadily.) This transaction structure allows the net operating surplus proceeds generated annually from project operations to flow through the not-for-profit owner to be used by or for the benefit of UMass Boston and its students. Unlike most privately owned and equity-financed public private partnership housing, this arrangement was determined to be the most advantageous option given not only the challenging and expensive Boston real estate environment, but also the high-quality design, construction, and amenities that we needed to deliver in order for the residence hall to be both maintainable and sustainable, resilient to the market, and attractive to students over the long term.
Third, we took a hands-on approach beginning in the early planning and design stages until the ribbon was cut (and beyond). This may seem obvious, but when it comes to building college housing, developers, architects, and construction companies make thousands of design and engineering decisions throughout the process. In our case, this included everything from identifying and selecting HVAC systems and windows that not only saved $3 million in construction costs but also optimized air ventilation quality, to utilizing flooring that was actually more expensive initially but more efficient over its life-cycle compared with traditional carpet, thus requiring less expense in the long-term maintenance of the flooring. These types of decisions not only impact student quality of life, but are also often where project costs can balloon from “on-budget” to “over-budget,” resulting in higher rents.
As those active in the student housing market niche know, there are no easy solutions to the issue of building quality, yet affordable, student housing on-campus. Each public-private partnership must take into consideration the unique needs of the university, the campus, and the students.
But at a time when housing affordability is putting stress on urban universities, this model demonstrates that progress, in the form of thoughtful efficiency, is possible. By being deliberate about the goals for the housing design and construction, by forging innovative partnerships that make affordability a priority and by paying close attention to the details that matter every step of the way, we believe universities in cities like Boston can build more high quality housing while ensuring more students have access to the quality education they need.
Jeff Jones is a principal with Capstone Development Partners, a national leader in on-campus student housing development and management.
