Information Item - Board of Regents Meeting November 18-19, 2010 Montana State University- Bozeman Proposed Student Housing Enhancements Long Term Housing Committee Examination of On-Campus Housing Charged with formulating long term business plan for the MSU Housing Enterprise Assimilate student housing demands/trends into MSU’s projected enrollment to assure adequate levels of housing are available to students Housing committee work and conclusions Freshman live-on requirement should be maintained, as it contributes to the success and retention of our students Increased availability of housing in Bozeman has resulted in a competitive market Lack of privacy options and outdated facilities do not meet students’ and parents’ expectations of housing facilities, especially given that freshmen students are required to live on campus Several enhancement scenarios were considered Low - Maintain current capacity, upgrade restrooms and rooms– borrow approximately $8 million Medium - Add minimal bed spaces, upgrade restrooms and rooms of existing inventory most in need of improvement– borrow approximately $15 million. High - Add moderate number of bed spaces with restroom and room upgrades of existing inventory– borrow approximately $30 million. Housing committee recommendation At this time it is not financially or logistically feasible to convert existing living units to semi-private arrangements. The Medium option is recommended as an appropriate blend of new bed spaces, critical renovations and reasonable level of debt service.

MSU Bozeman Residence Life Occupancy Trend Opening Week of Fall 2010 semester  197 students placed in alternative room assignments  127 Placements include guest apartments, double-as-single hosting, triples in larger rooms, and rooms intended for 21+ year old occupants converted to underclass utilization  70 placed in Family and Graduate Housing Apartments  By the end of the first week, 75 “no shows” freed up bed spaces that allowed absorption of students into the Residence Life facilities  Continued to receive 20 “walk-ons” for two more weeks As of late October 2010  90 students remain in alternative room assignments

MSU Bozeman Student Housing Enhancements Proposed Project Components $7M - Renovate 2 existing complexes  Hapner Hall – All female hall  Built in 1959, no major renovations have occurred since the original construction  Langford Hall – All male hall  Built in 1960, minor renovations in Summer 2010 to provide ADA compliant restrooms/laundry facilities on main floor $1M – Other Projects  Housing share of hail damaged roofs  Awaiting final adjusters findings and settlement  Longer term energy saving projects  Energy Auditors currently on campus, awaiting identification of projects $7M - New Construction  Hedges Suites – Co-ed suite- style room configuration  2 buildings of this design were built in 1998  This project adds a third complex with service amenities to serve all 3 Hedges Suites

Plan of Finance Borrow $15 million, and repay through 2026, a short horizon, at which time the Housing system will be debt free. A short horizon yields lower interest rates Identify a minimum of $550,000 per year for initial debt service, which will increase beginning 2018, when existing debt service falls off $218,000 additional revenue –Raise all FY12 Room & Board rates by 1%, on top of what it would cost to cover all inflationary adjustments $320,000 decreased expenses –Eliminate annual support for University’s Student Recruitment costs – and have General Operations budget (appropriately) assume that responsibility Reallocate $20-30,000 of Annual Major Maintenance Funds (out of the approximately $2.2 million annually expended at current levels) Other opportunities to decrease expenses and raise revenues were identified as well, including increased retention of upper-classmen due to the new available space featuring a semi-private configuration. Project Timeline Summer $2.0 million –Upgrade Student Rooms in Hapner and Langford Halls –Install energy enhancements Summer $6.0 million –Renovate restrooms/public areas in Hapner and Langford Halls Spring Summer $7.0 million –Construct 3rd of 3 Hedges Suite Buildings- $7M Montana State University- Bozeman Student Housing Enhancements Financial and Timing Elements