University of Louisville Affiliation Agreements between Schools and Off-Campus Housing providers Shannon Staten University of Louisville Sarah Samuels Jason Taylor The Scion Group LLC

Session Overview What is a student housing affiliation agreement? Motivating factors Institutional participation Case studies

Basic Concepts Aspects of affiliation agreements Balance of risk and control Application and outcomes

What is an Affiliation Agreement? A formal agreement in which a college or university directs students to an off-campus property as if it were part of its own inventory.

What is an Affiliation Agreement? In addition to directing students to the property, the college/university may… control some aspects of operations lease the land to the owner offer some guarantees

What is an Affiliation Agreement? In addition to providing housing to students, the property owner may… adhere to the school’s residential policies share some decision-making authority provide financial incentives

Motivating Factors Address an urgent need Expedite development Gain experience and expertise Reduce risk Broader planning goals Limit credit impact Obtain favorable balance sheet treatment

Institutional Participation “The college/university may…” Control aspects of operations Residence life (staffing and training) Community living standards Security Information technology Marketing / Room assignments Billing / Collection Maintenance / Custodial

Institutional Participation “The college/university may…” Lease land to owner Offer some guarantees Assumption of bad debt Occupancy guarantee Master lease for some portion or period of time Assume construction / delivery risk

Institutional Participation “The property owner may…” Adhere to the school’s residential policies Restrict marketing activities Agree to mediate landlord/tenant conflicts Provide residence life staff and/or programs Enforce student code of conduct

Institutional Participation “The property owner may…” Share some decision-making authority Construction standards Life safety requirements Rental rates Early contract termination

Institutional Participation “The property owner may…” Provide financial incentives Annual affiliation fee Fee for school’s services Profit-sharing from operations or sale Reversionary rights Right of first refusal or last offer

Institutional Participation Generally, a school’s control over a property and exposure to risk are directly proportional to its level of participation with the affiliated property. OR… The more involved you become  the more control you have  the more risk you take

Case Studies University of Michigan Off-Campus Housing Program The University… Lists properties on its website Provides landlord/tenant conflict mediation services Hosts an annual “off-campus housing fair” Property owners… Pay an annual fee Agree to use the University’s standard lease Enter conflict mediation before civil litigation

Case Studies University of Michigan Off-Campus Housing Program As a result… Decreased landlord/tenant litigation Increased compliance with municipal codes Improved town/gown relationship Annual off-campus rental rate and occupancy report

Case Studies University of Illinois Private Certified Housing ~3,000 beds in 15 properties Satisfy first year live-on requirement Participate in U of I residence life staff training Provide on-site dining services and meal plans

Case Studies University of Louisville Affiliated Student Housing UL had a need for 2,100 additional beds of apartment-style student housing and could not provide land or a master lease. In fall 2007, UL issued an RFP to property owners and developers. UL reached agreement with two developers to provide up to 1,600 beds by fall 2011; 850 of which opened in fall 2009.

Case Studies University of Louisville Affiliated Student Housing ULP Residence Halls (1,288 beds – Opened 2000-07) EDR Realty Trust On University-owned land, ground leased to foundation Joint design decisions Delivered by design-build-manage RFP process Goal to deliver a seamless experience to students Common application and license Common billing & collections Considered on-campus inventory

Case Studies University of Louisville Affiliated Student Housing The Province (858 beds – Fall 2009) Edwards Communities UL designated the amount of graduate student housing Adhere to UL life safety and on-site staffing guidelines Rental rate increases tied to campus housing and HEPI Early termination agreement Common application Annual affiliation fee Profit-sharing from property sale UL right of first refusal to purchase

Case Studies University of Louisville Affiliated Student Housing Benefits to the University Increase housing inventory Purpose-built LLCs Flex space for on-campus renovations Control experience based on institutional priorities Extend campus border Created affiliated housing tiers Retain control over community development

Case Studies University of Louisville Affiliated Student Housing Continuum of Housing Affiliations Five levels for 16 communities Define UL participation

Case Studies University of Louisville Affiliated Student Housing Continuum of Housing Affiliations Application Assignment Lease / Licensure Agreement Billing / Collections Facility management Reception / Security staff and systems Fire / Life safety standards and monitoring IT / Voice / Cable

Case Studies University of Louisville Affiliated Student Housing Continuum of Housing Affiliations Mandatory Dining Plan Housing staff ratio UL point of contact Policy enforcement Resident group Community living standards responsibility Student development / residence life Management fee target

Housing Affiliation Agreements “You can privatize your housing, but you can not privatize your relationship with students and parents”

Thank You! Sarah Samuels - sls@thesciongroup.com Shannon Staten – sdstat01@louisville.edu Jason Taylor – jat@thesciongroup.com www.thesciongroup.com www.louisville.edu/housing