Park West Student Housing’s P3 Structure: Creatively Financing Student Housing
“P3s Find Creative Ways to Finance Student Housing: Private Developers Provide Options for Universities” showcased how a P3 can help a college or university achieve its expansion goals.
Compared to other forms of financing structures, a P3 model can be a preferable option for colleges and universities. P3s can fund large and small infrastructure improvements without affecting the institution’s cash flow. Using a P3 structure, universities and their development partners can secure tax-exempt financing through a 501(c)(3) sponsor. Along with the developer, the sponsor enters a three-way partnership with the university through a long-term ground lease, development agreements, and operating agreements.
To realize Park West, Nonprofit National Campus and Community Development-College Station ground leased the land for A&M’s student housing project in College Station. Raymond James Financial financed the $368 million project, underwriting the bonds funded by New Hope Cultural Educational Facilities Financial Corp.
Servitas will provide management and operations through its management arm, the Servitas Management Group, in addition to developing the project itself.
Servitas is especially familiar with the P3 funding structure. Throughout the last 10 years, nine of Servitas’ on-campus projects used a P3 structure. Many of these projects, including Park West, provided infrastructure improvements to the campus in addition to an increased housing stock. Servitas’ Bayview Student Living project at Florida International University’s Biscayne Bay campus in North Miami, for example, included additional electrical infrastructure, new parking lots, additional classrooms, and meeting spaces.
At 3,406 beds of student housing and 2.2 million gross square feet, Park West is the largest single new construction student housing project ever completed under a P3. Initially a horse pasture, the Park West site was master-planned to include 15 independent buildings ranging from an eight-story tower to multiple three-story, walk-up flats that required new roadways and utility connections to support the increased density and traffic.
The master-planned site contains 3,000 square feet of dining and convenience retail located in the main lobby of the eight-story central tower, more than 140 study areas, three swimming pools (including one rooftop pool on a resort-style amenity deck that also features a fitness center, spa, and cabanas), two additional fitness centers, and various indoor and outdoor community areas for residents. Ten acres along the front of the site have been pre-planned for additional retail as well. Two buildings flanking the central tower are five-story, traditional residence halls, and bordering the property on two sides are apartment-style, pet-friendly, walk-up units. All of Park West’s residents have access to all the property’s amenities, no matter which building they live in or what rent they pay.
Park West is projected to generate hundreds of millions of dollars in P3 revenue for the Texas A&M system throughout the next 30 years. Texas A&M plans to use this income to improve and expand core building on its main campus, all while increasing the university’s credit rating.
Like most growing universities, Texas A&M faced a housing crisis. Other universities mentioned in the AXIOMetrics article—University of California, Berkeley; University of Nevada Las Vegas; and Texas Women’s University—faced housing shortages or the need to preserve debt capacities. According to the article, Berkeley was forced to house students in residence halls on other college campuses. At University of Nevada Las Vegas, a mere six percent of the student population found a home on campus. This low percentage hurt the university’s efforts to move away from being a commuter school.
All three universities found their answers in P3s.
P3 projects financed through third parties keep funding off a university’s balance sheet—assuming the development is successful.
When discussed at the InterFace Student Housing Conference, experts noted that P3s will likely not stop at student housing—though accommodating the growing need for student accommodation is simply the most immediate need. P3s are expected to expand to fund and develop projects ranging from food services to stadiums, per the AXIOMetric article.
P3 experts see this innovative financing option as the perfect way to allow colleges and universities to focus their resources on academics, research, staff, and faculty. In the face of budget cuts in many states, colleges and universities face the conundrum of building or replacing new residence halls and other infrastructure.
Still, college-goers of all types seek not only on-campus housing, or simply housing close to campus, but also look for housing with attractive amenities. Fitness centers, study lounges, pools, and retail or dining top students’ wish lists. To accommodate burgeoning student populations while simultaneously providing housing that increases interest and retention, more and more universities are finding the privatized, P3 model the answer they seek.