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UC using more private developers for student housing

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The University of California has been slowly expanding the use of private developers to build student housing over the last decade, authorizing seven such deals since 2000 at UC Irvine, UC Davis and UC Riverside.

The growth of these partnerships in the Golden State is part of a national trend reported by The New York Times last week. In California, the partnerships have enabled the universities to meet student demand for on-campus housing while focusing their resources on other facilities needs. But with fancier amenities, they sometimes cost students more than university-built housing options.

The share of beds built by private developers remains small, at 9 percent of the total. Still, new student housing developments built and financed by third parties on university-owned land have helped fuel an increase in on-campus housing options for UC students. University housing reports from 2002 and 2011 show the number of student housing units or beds has grown 64 percent during that period, from 47,100 to 77,088.

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UC Irvine opened Vista del Campo Norte, a 545-unit student apartment complex, in fall 2006. The project was developed by American Campus Communities in association with a nonprofit owner, the Collegiate Housing Foundation. The nonprofit financed the $91 million project with bonds issued by the California Statewide Communities Development Authority.

The amenities at Vista del Campo Norte are more luxurious than university-built digs, with barbecue grills and a resort-style pool. Students pay $585 per month for a bed in a three-bedroom unit and $1,225 monthly for a one-bedroom, 550-square-foot apartment. That's more than they'd pay for university-built housing.

Richard Orr, director of campus asset management, said the lease requires the management to keep rents at least 10 percent below market rates for off-campus apartments nearby.

"When you compare to the outside, you are saving them money from what they would pay externally," he said. "Rent is just one element. They may have to drive. There's a lot of hidden costs when you live off-campus."

Under the terms of the agreement, the management is required to keep rents at least 10 percent above what it costs to live in a comparable university-built unit on campus, Orr said.

"We want to make sure we have sufficient coverage on our end," he said.

The Collegiate Housing Foundation owns the development for 40 years, or less if it pays off the bond debt earlier. After that, the property reverts to UC Irvine.

Orr said the development and others have helped UC Irvine increase the percentage of students who live on campus from 28 percent about a decade ago to 43 percent now.

"The campuses are very proficient in building core labs, classrooms, the faculty offices, those types of things," Orr said. "We infrequently build housing. The funds for the capital program are focused on what the campus does well."

At UC Davis, all of the student apartments on campus were built by private developers. Rents for The Atriums at La Rue Park, Russell Park Apartments, Primero Grove and The Colleges at La Rue developments are competitive with the local apartment market, said Bob Segar, UC Davis' assistant vice chancellor for campus planning.

"We do it to create more choices for students to live," Segar said.

UC Davis officials said it's hard to compare the rents at these apartments with the cost of living in the university-built residence halls because the dorm prices include meal plans.

More recently, UC Davis partnered with private developers Carmel Partners of San Francisco and Urban Villages of Denver to open the West Village development, described as the largest net-zero-energy project of its kind. That means the buildings are supposed to generate as much energy as they use.

About 800 students, faculty and staff moved into the first apartments that opened in fall 2011, according to the university's website. The project ultimately will include 662 apartments, 343 single-family homes, commercial space, a recreation center and study facilities. The development also includes a site for a preschool and day care center. Under the agreement, the developers have a 65-year ground lease.

Although the West Village project is a private-public partnership, it differs from other third-party developments at UC in part because of its energy component and because the university invested $17 million to bring utilities and infrastructure to the site. It also has gotten state and federal grants totaling nearly $7.5 million for the project.

Rent for the apartments includes amenities such as utilities, phone and unlimited high-speed Internet service, but apartment rents are at the high end of the Davis market, starting at around $745 per bed.

Still, UC Davis spokeswoman Claudia Morain said West Village is not a traditional residence hall or apartment complex.

"Utility rates are structured in an innovative way that makes them very difficult to compare to standard housing," she said in an e-mail.

When the first apartments opened in the fall, UC Davis Chancellor Linda Katehi told The Sacramento Bee  that the university would no longer pay for or plan such projects itself.

"We are far beyond that old paradigm," she said.

Filed under: Higher Ed, Daily Report

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