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COMPREHENSIVE HOUSING PLAN

COMPREHENSIVE HOUSING PLAN. Final Presentation November 27, 2006. Agenda. Methodology Market Study Summary Program Goals Financial Results Implementation Plan Delivery Strategy Final Recommendations Next Steps. Comprehensive Housing Plan. Methodology. Interviews with Key Stakeholders

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COMPREHENSIVE HOUSING PLAN

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  1. COMPREHENSIVE HOUSING PLAN Final Presentation November 27, 2006

  2. Agenda • Methodology • Market Study Summary • Program Goals • Financial Results • Implementation Plan • Delivery Strategy • Final Recommendations • Next Steps

  3. Comprehensive Housing Plan

  4. Methodology • Interviews with Key Stakeholders • Focus Groups • Peer Institutions • Off-Campus Market • Student Survey • Program Development • Financial Model • Implementation Plan

  5. Peer InstitutionsPeers’ Enrollment Growth 1996-2005

  6. Peer InstitutionsPeers’ Latest Housing and Plans • California • Converting all housing to suite-style: just opened 447 suite-style beds; 350 beds under construction; when completed the 440 beds of semi-suites will be taken off line • Occupancy up 8.6% this fall after 9% last year • Kent State • Stopher Hall (1949) & Johnson Hall (1956) demolished in summer 2004; in the process of being re-built • Increased enrollment for fall 2005; decreased for spring 2006 from previous years; overall Univ. enrollment shows decline

  7. Peer InstitutionsPeers’ Latest Housing and Plans • Penn State Behrend • Newest residence hall, Senat Hall, opened in Fall 2004 • Slippery Rock • Construction of suite-style housing is underway; three buildings opened this fall • SUNY Fredonia • Newest residence hall is University Commons--in addition to 124 suite-style beds, the building also has a bookstore, convenience store, and café

  8. Attractive Features More activities Private bedrooms More space Less strict rules Kitchen; no meal plan Carpeted bedrooms New mattresses Better sound attenuation Exercise room Family housing Lower prices Unattractive Features Less connection to campus Rose Hall’s furniture Community baths No quiet hours No elevators Higher density Stricter rules Higher cost More of the same Focus GroupsFeatures for New Housing

  9. Student SurveyImportance of Providing Housing Source: ASL student survey

  10. Student SurveySatisfaction with Housing Source: ASL student survey

  11. Student SurveyReasons for Moving Off Campus Source: ASL student survey

  12. Student SurveySemester Rent Per Person

  13. Student SurveyFactors Considered in Choosing Housing Source: ASL student survey

  14. Student SurveyDesired Facility Improvements Source: ASL student survey

  15. Student SurveyDesired Amenity Improvements Source: ASL student survey

  16. Student SurveyDesired Student Life Improvements Source: ASL student survey

  17. Student SurveyMost Appropriate Housing Source: ASL student survey

  18. Student SurveyTested Units and Semester Rents • New Two-Double Bedroom Semi-Suite $2,950 Four-Single Bedroom Semi-Suite $3,310 Two-Double Bedroom Suite $3,310 Four-Single Bedroom Suite $3,670 Source: ASL student survey(Per-person, per semester rent)

  19. Student Survey Unit Preference Source: ASL student survey

  20. Student SurveyInterest in Preferred Housing Source: ASL student survey

  21. Student SurveyLack of Interest in Housing Source: ASL student survey

  22. FALL 2006 Definitely Interested Might Be Interested Full-time Capture 50% Capture 25% Off-Campus Projected Rate Closure Rate Closure Enrollment Demand Class Freshmen 1,006 7% 34 33% 84 117 Sophomores 914 15% 68 34% 77 145 Juniors 982 8% 40 46% 113 153 Seniors 1,053 6% 33 38% 99 132 Graduate Student 481 6% 15 22% 26 41 4,436 190 399 589 Program DevelopmentIncremental Demand by Class

  23. Program DevelopmentTotal Demand by Class

  24. Program DevelopmentIncremental Demand by Unit Preference

  25. Program DevelopmentTotal Demand by Unit Preference

  26. Program DevelopmentExisting Unit Assignment by Class • Existing Distribution • Unit Fit Key

  27. Program DevelopmentProgram Workshop Outcomes • Housing is a key factor in cross-applicants selecting another institution; new suites and apartments at CalU, Bloomsburg, and Indiana appeal to many • Conservatively assume modest decline in the number of freshmen • Renovated halls still need major work • Construction costs have risen: Dearborn and Earp cost about $66/s.f.; PASSHE uses $125/s.f. for planning • Replace current housing with a variety of unit types • Preserve some affordable housing • Allow better flexibility to address changes in demand.

  28. Program DevelopmentPreferred, Ideal, and Final Programs • Preferred Program • Based on surveyed students’ demand and preferences • No judgment as to what is or is not appropriate • Ideal Program • Incorporates EUP’s residence life approach • Does not focus on constraints • Final Program • Best fit of ideal program into existing context • Addresses: • Financial realities • Existing housing system • Development and phasing considerations

  29. Program DevelopmentTarget Population and Ideal Unit Distribution by Class

  30. Program DevelopmentIdeal Program Fit and Gap with Existing • Program Fit • Gap Between Existing and Ideal Unit Distribution

  31. Program DevelopmentRenovation vs. New Construction • Reconfiguration of traditional halls to semi-suites or suites is cost-prohibitive and inefficient • New construction is self-supporting from first year • New construction through foundation cannot cover EUP debt service from renovations to existing halls • Towers are likeliest candidates for full renovation • Both halls already have sprinklers • Renovation could make desirable bathroom improvements • Renovation would not meet unit configuration goals • Appeal of new suite unit types will make traditional beds less desirable than current demand would suggest

  32. Program DevelopmentFinal Program Distribution

  33. Program DevelopmentFinal Program Fit

  34. Financial PlanApproach • Benefits of a Strategic Financial Plan • Addresses new construction, renovation, reconfiguration, and demolition • Assures the proper allocation of resources • Leverages time value of money to build rents and reserves • Allows projects to cross-subsidize each other • Uses long-term financing to leverage cash flow and maximize capital improvements

  35. Financial PlanApproach • Plan Basics • Requires that system be self-sustaining, although individual projects may incur operating deficits • Net Operating Income (revenues less expenses) is available for debt service and reserves • Excess cash flow accumulates in reserve fund • Reserves are available to fund system operating deficits, fund renewals and replacements, provide additional debt service coverage, and fund other institutional programs

  36. Financial PlanScenario Development • Baseline • Demolish Scranton and Shafer • Fully renovate Dearborn, Earp, Rose, and Towers • Add 750 new semi-suite and suite beds • Towers Renovation • Demolish Scranton and Shafer • Fully renovate and improve Towers • Partially renovate Dearborn, Earp, Rose, and Towers • Add 750 new semi-suite and suite beds • Towers Replacement • Demolish Scranton, Shafer, and Towers • Partially renovate Dearborn, Earp, and Rose • Add 1,500 new semi-suite and suite beds

  37. Financial PlanFinal Scenario • Dearborn & Earp: • Keep online indefinitely subject to continued demand • Most attractive due to recent renovations • Continued operations will cover substantial debt • Additional renovations can wait until after other projects • Rose: • Like Dearborn & Earp but needs more extensive renovation • Candidate for demolition if demand falls off in out years • Towers A & B • Demolish after initial phase of new beds come online • Scranton & Shafer • Without sprinklers, cannot operate after 2006-2007 year • Demolish after end of academic year

  38. Financial Plan”B” Assumptions • Phasing Schedule

  39. Financial PlanAssumptions • Revenues • Rents • All halls subject to escalation of 5% thru 2012 • Completion premium 5.6% • Rents for new units (from survey) • Two-Double-Bedroom Semi-Suite $5,900/AY • Four-Single-Bedroom Semi-Suite $6,620/AY • Two-Double-Bedroom Suite $6,620/AY • Four-Single-Bedroom Suite $7,340/AY • Projected Revenue • Post-completion occupancy 95.0% • Other revenues 2.22% of net rents

  40. Financial PlanAssumptions • Expenses • Operating Expenses • Existing halls and new suites $7.15/gsf • Fixed costs during renovations 100.0% • Annual escalation 3.00% • Non-Operating Expenses • Capital expenses 10% of surplus • Existing debt service ~$1,000,000 thru FY 2022 • New debt service Begins FY 2008 • Reserves Remainder

  41. Financial PlanAssumptions • Development Budgets • Construction Costs • New partnership construction $125.00 /gsf • Renovation (Rose Hall) $31.25 /gsf • Renovation (Dearborn, Earp) $18.75 /gsf • Demolition $10.00 /gsf • Design and Soft Costs 8% of Above • Development Costs 3% of above • Contingency 5% of above • Annual escalation 3.00%

  42. Financial PlanAssumptions • Debt Service and Reserves • Financing Terms • Interest rate of 6.00% for 30 years for new construction, private financing • Capitalized construction period interest • Debt service coverage of 1.2x is target minimum • Reserves earn interest at 3.0% annually • Capital Expenses • Annual renewals at 10% of surplus • Renovations for deferred maintenance plus improvements funded from new debt

  43. Financial PlanDevelopment Summary

  44. Financial PlanAnnual Results • Bed Distribution

  45. Financial PlanAnnual Results • Occupancy

  46. Financial PlanAnnual Results • Revenue Per Bed

  47. Financial PlanAnnual Results • Operating Expenses

  48. Financial PlanAnnual Results • Operating Position

  49. Financial PlanAnnual Results • Capital Requirements

  50. Financial PlanAnnual Results • Debt Service Coverage

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