A Crash Course in P3 Housing (Public Private Partnerships) Session #904 A Crash Course in P3 Housing (Public Private Partnerships) Patrick “PC” Call Executive Director, Housing and Residential Education, University of Denver (DU) Matt Crouse Director, Housing and Residential Life, New Mexico State University (NMSU)

Who are we? PC Patrick Call University of Denver Four Year Private MC Matt Crouse New Mexico State University Four Year Public

Our 3 Objectives Articulate different management agreements associated with a P3 Housing Partnership (Ancillary Partnerships) Able to evaluate the financial opportunities and risks to public institutions associated with a P3 partnership (Fiscal Resources & Control) Able to provide two supervision strategies for leading a staff through transitions associated with a P3 agreement negotiation or implementation (Supervision)

P3 Projects Rated by Moody’s 1998-2015 Setting the Context P3 Projects Rated by Moody’s 1998-2015 1998-2009 2010-2015 36% 84% 10 out of 28 Projects 21 of 25 Managed by the University

Our State Environments State Appropriation Trends 2005-2015 2010-2015 0.5% Annual Growth of State Appropriations Expenditure Growth 2010-2015 IPEDs Private 2 & 4 Years Public 2 & 4 Years Unrestricted Revenue Growth 0.8% 0.7% Annual Growth of Expenses 1.9% 1.5% Source: Parthenon-EY Education Practice – Public Private Partnerships in Higher Education: What is right for your institution? (http://parthenon.ey.com/po/en/perspectives/public-private-partnerships-in-higher-education--what-is-right-for-your-institution)

Our State Environments Enrollment Growth 2007-2015 2% Total Enrollment Growth at US Higher Education Institutions Most states saw relatively FLAT enrollment rates. Source: Parthenon-EY Education Practice – Public Private Partnerships in Higher Education: What is right for your institution? (http://parthenon.ey.com/po/en/perspectives/public-private-partnerships-in-higher-education--what-is-right-for-your-institution)

Part I: The Art of the Deal Why do housing departments (or more accurately institutions of higher education (IHE)) enter into private-public partnerships? What might an institution get out of the deal? What are the management/partnership deals that arise from these P3s?

Why do housing departments enter into P3 deals? To address an Urgent Need To gain experience or expertise To expedite the development process Source: Scion Group LLC White Paper – Public-Private Partnerships in Student Housing: Why and How Institutions of Institutions of Higher Education seek partners to deliver, own, and operate (http://www.thesciongroup.com/pdf/scion_whitepaper2.pdf)

What might an institution get out of the deal? To reduce RISK To preserve debt capacity To obtain favorable balance sheet and credit treatment (Wayne State example)

What are the management/partnership models? Referral Affiliation Structured Ownership Delivery Operations IHE Participation

Management Deals/Continuum Referral An institution agrees to direct students to the third party partner’s property in exchange for concessions such as discounted rent, participation in mediation prior to evicting student tenants, and/or payment of a nominal fee. Affiliation A more formal arrangement in which an institution directs students to a third party partner’s property as if it were a part of its own inventory and has some control over operations – typically related to student life. Sometimes land lease and/or some institutional guarantees. Structured A not for profit entity (existing or new) issues tax exempt debt to finance the project and its board controls all facets of delivery and operations. Typically land leased and institutional guarantees.

Management Deals/Continuum “Referral” “Affiliate” “Structured” (did not happen) Equity Model ”quasi-Affiliate” External build, external manage External build, self manage Hybrid system External build, hybrid manage 2007 2011 2010 2008 2016

Part II: Developing a Partner/ Influencing the Process How do we select a partner? Is there help navigating the process? Who needs/should be at the table? What do I need to know as a C/SHO?

Developing a Partner/ Influencing the Process Request for Proposals (RFP) & Request for Quotation(RFQ) Process Use of Consultants (P3, Bond Council) Campus Housing Master Plan as driver Pre-Closing Agreement Financing the Deal Tax Exempt Bonds (and taxable bonds) USDA Bonds Private Equity

Part III: Impact to Staff/ Leading Others How did your housing staff view the possibility of a P3? What are some ways you and others have lead internal staff through a P3 process?

Impact to Others/Leading Your Team Focus on Residence Life through LLCs (MC) Focusing on our mission (PC) Sharing the balance book (MC) Constant communication in person & in writing (PC) Involve Central Staff in interaction with acquisition partners – tours example (MC) Show your positivity about project at all times (PC)

Part IV: Managing the Message/ Leading the Campus Conversation What impact did this have on current relationships housing had on campus? How did the institution or housing drive a conversation with internal or external stakeholders? In hindsight, would you do anything differently in the management of public relations related to the P3?

Leading the Campus Conversation Governing Bodies/Board of Regents Top Level Administrators Internal Housing Stakeholders – LLCs, athletics, international, admissions External Housing Stakeholders – parents and students External audiences – media; state/local governments

Questions? Need the info (our jump drive) with the presentation content and articles? Email Matt at mcrouse@nmsu.edu

SESSION #904: A Crash Course in P3 Housing Complete Your Session Evaluation and return it to the moderator! SESSION #904: A Crash Course in P3 Housing