Public/Private Partnerships

What does the University Get from Public/Private Partnerships?

• Modern High Tech Housing within 18 months:
  • 6 months in planning
  • 12 months in construction.
• Developer’s Creativity, Expertise and Vast Resources.
  • An integrated Residence Life Program.
  • More students getting involved with faculty and extra-curricular activities.

What more does the University Get from Public/Private Partnerships?

• A way to compete to attract and retain top notch students.
• "Control" through the Budget Approval Process.
• Any "cash" remaining after expenses and debt service as annual payment of ground rent
• Land and Buildings return to University at end of ground lease (generally 30 to 40 years)

Public/Private Partnerships: The Players

• Developer and/or Property Manager
• College/University and its Advisors
• (501)(C)(3) Tax Exempt Owner Entity or Developer LLC
• Underwriter
• Bond Issuer
• Bond Insurer
• Credit Enhancer
• Bond Trustee
• Bond Investors
• Their Real Estate and Bond Attorneys
• Rating Agencies

Why Partner with a Developer?

• You Can Build Your Housing, Research Park, or Mixed Use Project Now
• Developer brings national expertise and a successful track record working with other Colleges/Universities
• The Developer’s reputation is also on the line for quality delivery, on time, on budget
• The University gets a lot:
  • Immediate housing with significant control over the project’s budget, management and residence life program
  • Any remaining cash flow from rents after operating expenses and debt service over the term of the bonds or ground lease goes to the University.
  • All the land and the buildings at the end of the ground lease.

What does the Developer Get?

• Market Rate Development Fees
• Market Rate Property Management Fees
• Easing of barriers to entry-land assemblage and zoning
• 100% Tax Exempt Bond Financing or conventional financing if privately owned
• No need for expensive equity partner-but also eliminates right to residual
• Minimization, not elimination, of development risk
• University facilitates student awareness of availability of new housing
• Diversification of Business Risk and Minimization of Market Volatility
• Location, Location, Location

Off-Balance Sheet Transaction

Note: Off-Balance Sheet Borrowing Can Utilize Debt Capacity

• Full use of debt capacity
  • university commits to minimum rental revenues
  • university guarantees a minimum number of students
• Possible use of debt capacity
  • Project is on campus
  • Project is an essential component of student housing
  • University receives revenues from the project
  • University provides services on-site at project
  • University retains control over rent levels
  • Note: Moody’s new category of Indirect Debt