Student Housing: Public College, Private Dorm

Student Housing: Public College, Private Dorm

By RONDA KAYSEN for New York Times

With state budgets tight and demand for a college education at a high point, public universities across the country are increasingly turning to the private sector to build and finance on-campus dormitories. Even before the recession, states found that companies that specialize in student housing could build residence halls more rapidly and cheaply than universities could. They can ease the burden of being a landlord. And perhaps most important, these partnerships free capital for facilities like classrooms and laboratories.

But as bad economic times make these arrangements even more appealing, the new efforts raise questions about how private ownership of dorms will affect student life and costs in years to come.

Public universities that have entered into or are considering such partnerships include the University of California, Irvine; Arizona State; Portland State; the University of Kentucky; and Montclair State in New Jersey, which in the fall opened the Heights, a two-tower complex with 2,000 beds and a 24,000-square-foot food court that officials say is the largest residence hall complex in the state.

Private colleges and universities have been slower to embrace the concept as they have traditionally financed their student housing with endowments, philanthropy and student fees. Private colleges are less attractive to private developers because they tend to be smaller, so their housing needs are less extensive.

Although proponents of private partnerships point to lower costs for construction and operation, those savings are not necessarily passed on to students. A room at the Heights, for example, costs about $1,000 more a semester than a room in Montclair State’s other dorms.

“These things are often sold as savings, but they don’t often result in savings,” said Edward P. St. John, an education professor at the University of Michigan and an editor of “Privatization and Public Universities,” published in 2006.

Montclair State officials point to additional amenities available at the Heights and its mint condition as reasons for the premium price tag. A committee of university officials and employees of Capstone Development Partners, the builder, will determine the cost each year.

Capstone developed the Heights, enlisting the Provident Resources Group, a nonprofit organization, to finance the $211 million project with tax-exempt bonds issued by the New Jersey Economic Development Authority. Capstone will manage it for the next 40 years or until the bonds are paid off and the title reverts to the university. The university will retain authority over student conduct within.
Montclair State previously financed its capital projects with tax-exempt municipal bonds. But after a decade of ambitious construction projects, the university had a lot of debt. The New Jersey Economic Stimulus Act of 2009 gave it the authority to enter into a partnership with a private firm.

“We needed to provide housing for our students, and we needed to find a way to do it,” said Susan A. Cole, the president of Montclair State.

Private developers have long had an interest in student housing. As student populations surged in the decades after World War II, universities quickly built out their own campuses, and builders responded with inexpensive, bare-bones low-rise and garden apartments.

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