1. South Seattle Community College Feasibility Study for Student Housing
Presented by:
Cynthia P. Balogh, Partner
C. Joseph Carter, Consultant
Stephen A. Masini, AIA, Consultant
December 11, 2007

2. Introduction & Project Objectives
In April 2007, SSCC contracted with MGT to assist in preparing a Feasibility Study for Student Housing to determine the future course of action related to the development of student housing.
Guiding principles for establishing student housing:
Enhance the SSCC learning environment by providing options that focus on meeting student academic & social needs
Support anticipated growth in international student enrollments by expanding their access to housing
Support recruitment efforts for students from farther distances
Offer students a residential college experience

3. Introduction & Project Objectives
Confirm market demand for housing
International students
Domestic students
Evaluate the number of beds and units needed
Determine appropriate rental rates
Evaluate building site
Provide preliminary development & operating cost estimates

4. Project Methodology Research Activities:
Analysis of available enrollment & programmatic data
Interviews & focus groups with campus constituencies
Student survey
Site analysis
Local housing review
Review student housing offerings at selected institutions
Demand estimates for student housing
Financial pro forma for feasibility analysis
Customer research – interviews, focus groups, Web-based or mail surveys, market testing, student dining interests, housing demand estimates
Rental market analysis – off-campus availability, utilization, and rental rates
Peer and/or competitive institution review – national trends, recent facilities planning, construction, and renovation projects
Facilities assessment and programming – “walk through” or BASYS, inventory mix, facilities to support goals and programming, unit configuration and design concepts, site selection assistance, coordination with Campus Master Plan development
Financial analysis – rental rate projections, financing strategies (conventional and privatized models), capital budgets, operating pro forma, and cash low analyses

5. Research Findings: Interviews
Leadership Goals for Introducing Campus Housing:
Ease the path of international students into & through SSCC programs
Offer housing alternatives & reduce time/expense of commuting
Respond to demand of those interested in the “college experience” of a residential campus
Support student success & retention through a living/learning environment
Broaden the base of support for campus services that would benefit both commuters & campus residents
Support & promote recruitment efforts for culinary arts, oenology, & aviation

6. Research Findings: Interviews
Planning Priorities to Address Goals:
Attract single students, especially recent high school graduates, seeking a campus residential experience
Relieve limited supply & high cost of student rentals near campus
Offer international students a convenient & connected place to live
Expand capacity & options for housing international students
Provide housing opportunities for students from farther distances (e.g., culinary arts, wine, and nursing)
Support growth in baccalaureate programs at SSCC & with partner institutions
Provide accommodations for conference groups & “summer only” students
Be a self-supporting enterprise

7. Research Findings: Focus Groups
Student Interest in Living On Campus:
Convenience
Affordability
Participation in the “college experience”
Connection with the campus community

8. Research Findings: Focus Groups
Perceived Benefits of Living On Campus by International Students:
Help international students learn English
Offer housing alternative to host family living arrangements
Serve as an asset for recruitment because of its affiliation with the college

9. Research Findings: Focus Groups
Student Needs & Preferences for Campus Housing:
Interested in apartment-type housing
Units with kitchens (limited dining options close by)
Attracted to traditional residential program focused on:
Social
Cultural
Recreational
Intellectual & academic needs of residents
Concerned about rules & regulations that would govern life on campus

10. Research Findings: Focus Groups
Desired Amenities:
High quality soundproofing
Privacy
High speed Internet connections, including wireless
Cable television
Optional land line telephone service

11. Research Findings: Student Survey
SSCC students were surveyed about interest in & preferences for on-campus housing
139 surveys were returned
Over 75% of respondents were extremely or somewhat interested campus housing
Interest was stronger among international student respondents
100% expressed at least some interest
35% of student respondents live at home with their parents
46% of student respondents live in various types of rental properties

12. Research Findings: Student Survey
Essential Housing Features:
High speed Internet connection (58%)
Campus security patrol (51%)
Clothes washer/dryer in each unit (49%)
Clothes washer/dryer in complex (45%)
Telephone line in unit (45%)

13. Research Findings: Student Survey
Configuration Preferences:
Most popular configurations
Two-bedroom apartment
Four-bedroom apartment
Least popular configuration
Four-bedroom suite
Willingness to Pay for Rent & Utilities:
On average, respondents pay $527 per month
For on-campus housing, respondents report they are willing to pay $450 to $550 per month

14. Research Findings: Local Housing Market
Ten apartment complexes analyzed (3 to 9.8 miles)
Per person apartment unit rent (1 to 4 bedrooms):
Average: $878 per month (phone, Internet, & cable included)
Range: $276 to $1,723 per month
Common amenities offered in off-campus facilities:
On-site fitness center (90%)
Dishwashers in apartments (80%)
Washer/dryer in each apartment (80%)

15. Research Findings: Selected Institutions
Colleges Selected for Comparison of Housing Offerings:
Big Bend Community College
Edmonds Community College
Green River Community College
St. Martin’s University
Skagit Valley College
Yakima Valley Community College

16. Research Findings: Selected Institutions
Colleges Selected for Comparison of Housing Offerings:
3 offer housing in traditional halls
2 only offer traditional housing
3 offer only apartment-style housing in 4-bedroom units
Only 1 institution offers students a variety of housing options (traditional, suites, & apartments)
Average rent for apartments per resident (all utilities included):
4 BR/1 BA: $488 per month
2 are building or planning new facilities

17. Projections: Enrollment
Academic Transfer & Professional Vocational Enrollment Projections Form the Base to Estimate Housing Demand
Approach #1: Annual enrollment growth was estimated at 5% for total enrollments
Approach #2: Enrollment trends were estimated separately for full-time & part-time students
Full-time enrollment growth was estimated at 0.5%
Part-time enrollment growth was estimated at 10%
Enrollments
3,857 in Fall 2006
Approach #1: 6,283 in Fall 2016
Approach #2: 7,590 in Fall 2016

18. Projections: Housing Demand Scenarios
Moderate housing capture rate
Enrollment Projection Approach #1: 176 by Fall 2010
Enrollment Projection Approach #2: 177 by Fall 2010
Aggressive housing capture rate
Enrollment Projection Approach #1: 311 by Fall 2010
Enrollment Projection Approach #2: 258 by Fall 2010
Estimated that, by Fall 2016, demand for housing would increase between:
235 to 254 students based on moderate scenario
359 to 417 students based on aggressive scenario

19. Proposed Project Description: 3-floor facility with 220 bed capacity
Apartment-style configuration for 4 residents
Private bedrooms (49 units with 4 BR / 2 BA)
Shared bedrooms (6 units with 2 BR / 2 BA)
Shared “common” space
Multi-purpose programming rooms
Study rooms
Laundry
Administrative space
Staff
Resident Manager/Hall Director
6 Resident Assistants (students)

20. Financial Analysis Objectives for Housing Facility:
Should support strategic interests of SSCC & the Foundation
Should provide student housing that is:
attractive
safe
affordable
Should be financially supportable from its own operating income

21. Financial Analysis Focus is Most Directly on Third Objective:
Project should be financially self-sufficient
Three Basic Assumptions:
Project will be debt financed by revenue bonds
SSCC Foundation will be owner & debtor of record (non-profit corporation recognized as tax-exempt under Section 501(c)(3) of the Internal Revenue Code)
Bonds will be issued through a conduit agency of government that can qualify interest paid to bondholders to be exempt from federal income tax

22. Financial Analysis: Assumptions
Project Development Schedule:
Major Steps from Inception to Completion with
Planned Occupancy in August 2010
Activity
Commence
Conclude
Designer Selection
December 2007
February 2008
Programming, Design, Preliminary Permitting
February 2009
Final Permitting
April 2009
Bid Period
May 2009
Bid Award (Calendar Year)
June 2009
Bid Award (Fiscal Year)
FY 2009
Construction
July 2009
July 2010
Months in Construction 13
Occupancy Date (Calendar Year)
August 2010
Occupancy Date (Fiscal Year)
FY 2011

23. Financial Analysis: Assumptions
Space & Configuration Specifications:
49 apartment units with single-occupancy bedrooms
4 bedrooms
2 bathrooms
Size: 913 NSF
6 apartment units with double-occupancy bedrooms
2 bedrooms
Size: 843 NSF
Total Design Capacity = 220 Beds
Community, Administrative, Support Space = 4,000 NSF
Total Project
53,795 Net Assignable Square Feet
71,727 Gross Square Feet

24. Financial Analysis: Assumptions
Estimated Project Development Costs
Construction ( FY 09 Bid Date)
$10,357,560
Soft Costs
$217,509
Design
$543,772
Project Administration/Inspection
$326,263
Developer
$435,018
Furnishings
$484,000
Contingency Fund
$517,878
Project Development, Total
$12,882,000
Total Debt Issue
$15,308,000

25. Financial Analysis: Assumptions
Operating Expenses for Proposed Project:
Estimate based on FY operating budget for student housing at Green River Community College
Expenses recognized in the Base Model include:
Rental, Payroll, Administrative, Common Area, Grounds, Utilities, Interior Unit, Maintenance, Taxes, & Insurance
Expenses recognized in the Alternative Model include:
All expenses listed above in Base Model
Fee for management by a third party contractor

26. Financial Analysis: Assumptions
First Year Operating Budget for Proposed SSCC Student Housing Facility
College Managed
Contractor Managed
Total Operating Budget
$565,111
$632,678
Per Gross Square Foot
$7.88
$8.82
Per Bed
$2,569
$2,876
Annual Escalation Rate
3.5%

27. Financial Analysis: Assumptions
Operating Revenue:
Twelve month leases
Per Person Rental Rates (FY ) (includes utilities)
4 Bedroom, Single Occupancy = $575 per month, $6,900 annually
2 Bedroom, Double Occupancy = $475 per month, $5,700 annually
Average occupancy rate = 95%
Miscellaneous Income = 5% of total rental revenue
Annual Escalation Rate = 5%
First year total projected revenue = $1,640,395

28. Financial Analysis: Financial Feasibility
Key Measures for Determining Financial Feasibility are:
Net income sufficient to fund
operating expenses
debt service
repair & replacement reserve
Net operating income equal to at least 1.2 times its annual debt service

29. Base Model Pro Forma Cash Flow Summary of Results
Financial Analysis
Base Model Pro Forma Cash Flow Summary of Results
Year One
Year Eight
Year Sixteen
Operating Revenue
$1,640,395
$2,308,200
$3,410,263
Operating Expense
$565,111
$718,978
$946,757
Net Operating Income
$1,075,284
$1,589,222
$2,463,506
Debt Service & Mandatory Transfers
$986,873
$997,373
$1,012,359
Net Income
$88,411
$591,849
$1,451,147
Debt Service Coverage Ratio
1.09
1.60
2.49

30. Financial Analysis Findings & Conclusions:
The project would not initially achieve the desired 1.20 debt service coverage ratio
Base Model achieves required ratio in Year 3 (FY 2013)
Alternative Model achieves required ratio in Year 4 (FY 2014)
The project would produce positive net income from Year 1 forward
$88,411 for Base Model (SSCC Management)
$20,844 for Alternative (Contracted Management)
Options for overcoming shortfalls in debt service coverage ratio:
Project financing structure
Reducing project costs
Increasing project revenues

31. Project Summary & Recommendations
Benefits of campus housing for SSCC have strong appeal
Potential demand for the project appears adequate
Positive net income & the target debt service ratios appear to be achievable
MGT concludes that development of housing on SSCC’s campus is a desirable & achievable objective

32. Questions & Discussion