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Colleges dabble in development as high-priced housing markets squeeze their employees – Higher Ed Dive

Local conditions vary, but from Vermont to California, college leaders are seeking ways to make sure their students and employees can afford housing.
About 20% of faculty and staff at Middlebury College, in Vermont, commute in from New York state.
The Vermont side of Lake Champlain is just too expensive for many people, said David Provost, executive vice president of finance and administration at the college. That’s having an effect on the private liberal arts college’s ability to attract and retain faculty and staff.
Now, Middlebury College is working with a developer to build affordable, workforce and market-rate housing on a property that is walkable to both downtown and campus. Though the apartments won’t be limited to people who work at the college, Provost said the institution is still likely to benefit.
“We as the largest employer believe just by the law of averages we will end up with most or a lot of the housing, because we have all the people,” Provost said. “We can’t build these soon enough. We think they’ll go very quickly.”
Middlebury is just one of many colleges across the country getting creative with how to grow affordable housing in their regions. As the U.S. sees both the housing and rental markets boom, living in a college town is becoming more expensive, with impacts on students, faculty and staff.
Provost said the lack of affordability in Vermont is in part a supply issue. The region is well-stocked with second homes and was also a destination for people leaving dense cities at the beginning of the pandemic.
“The general supply issue that Vermont was facing before the pandemic is just magnified, but I don’t think it goes away until we add tens of thousands of units across the state,” he said.
The development project will yield about 100 housing units, with both income-limited housing — which receives state subsidies — and market-rate housing available. To make it possible, Middlebury College spent $1.5 million to buy 35 acres.
“We can’t build these soon enough.”
David Provost
Executive vice president of finance and administration, Middlebury College
The land was on the market for several years, Provost said, before the college provided institutional leverage to make a deal go through. Middlebury College will only be a temporary owner, selling the land to the developer, which will then sell to homeowners as it finishes construction.
In addition to helping the college itself with staffing, the development will also demonstrate that it operates in service to the area.
“There’s a reliance on the college to help with the economic vitality that goes beyond good-paying jobs and good benefits,” Provost said. “And the college takes that responsibility and role seriously.”
Middlebury College is participating in the development deal even as it’s rethinking the part it plays in the area’s existing housing stock.
Currently, the college owns more than 70 single- and multifamily homes in the area that it’s acquired in various ways, including through gifts. Faculty can live in them, Provost said. But maintaining those houses isn’t part of the college’s core business, and others would probably do a better job of it, he said.
“The board is shifting to, ‘We don’t have to own everything, and let’s focus our efforts on educating the 18-24 year olds,'” Provost said.
Several pressures are aligning to prompt colleges — often called anchor institutions because of their major role in local communities — to examine local housing markets. The development goes beyond residential colleges’ traditional focus on providing housing for their students and is spurring some commuter institutions to think about housing in ways they haven’t before.
Jim Hundrieser, vice president for consulting and business development at the National Association of College and University Business Officers, said he expects more and more colleges to begin dabbling in affordable housing.
“When I’m talking with leaders on the campuses, certainly they’re talking more about how the Great Resignation, or whatever we want to call this, is leading to shortages in staffing,” he said. “Those that are in expensive urban areas are certainly struggling to find good talent, and then when they find good talent, there is the affordability piece.”
Growing housing stock can also be important in rural areas that may attract wealthier retirees and transplants, Hundrieser said. For commuter campuses, building affordable housing can be one way to attract more students.
“Having these affordable options is absolutely going to be a part of the way to get more people, whether that be traditional-aged students or nontraditional students, into the enrollment mix,” he said. “Providing them with housing, especially those campuses that are looking to grow the on-campus, in-person experience — this is going to be the way to do it.”
How each institution goes about the process will be different and depend on resources, locality and other factors. Most will likely look at some sort of partnership agreement, Hundrieser said, with many following the tenets of a public-private partnership, also called a P3.
Keeping the housing open to anyone, rather than limiting units to faculty and staff, can be a good idea, Hundrieser said. As enrollment grows and shrinks, keeping units available to the public allows for vacancies to be filled easily. Giving students, faculty, or staff first pick before the public can also be an option.
The colleges looking into affordable housing, and the reasons they do so, are diverse.
Knoxville College, a historically Black college in Tennessee, lost its national accreditation in 1997 and its state accreditation in 2015, then closed its campus in 2017. Now the college, which has been enrolling a few dozen online students, is under new leadership and making a push for a comeback. Part of that involves hopes of converting some of its property to affordable housing for low-income families. The idea is that some resident candidates might be expected to earn an associate degree or credential.
As the housing market continues to squeeze college town residents, college leaders will likely continue to look for those creative solutions, trying to balance what’s right for their campus with what they can afford.
“It’s a growth trend that we hope to see,” said Hundrieser.
In California, the housing shortage has been especially acute — and for a long time. Long Beach City College, a two-year college with about 24,000 students in Los Angeles County, has seen this firsthand. Housing affordability has been a struggle for students and an impediment to success. A recent survey found that at least 70 students were sleeping in their cars. The college runs a program that allows those students to park in secure areas. It has also been exploring building and buying its own affordable housing.
But just being interested in building housing doesn’t mean it will make financial sense for every institution right away.
Last year Gov. Gavin Newsom, a Democrat, signed a bill that created the Higher Education Student Housing Grant Program. The program provides grants to California Community College, California State University, and University of California institutions for planning and constructing affordable student housing. The bill calls for making about $2 billion available over a three-year period.
“It’s really important that when we talk about supporting housing-insecure students or even unhoused students that we think holistically.”
Mike Muñoz
Superintendent-president, Long Beach City College
Long Beach City College applied for $75 million to $90 million in grants to build dense student housing. But the college’s construction grant application was rejected. Of $6 million in planning grants it applied for, Long Beach City College was approved for $120,000.
“We’re using this year to build upon our feasibility study that we did on affordable housing and begin to start to do some of the pre-requirements that would put us close to shovel-ready in terms of being able to be more competitive in the next round of construction grant applications,” said Mike Muñoz, the college’s superintendent-president. “The cost of the construction of the units is one of the main driving factors.”
The college would eventually like to build about 400-500 beds in its development, Muñoz said, in order to serve the most students possible with the money it hopes to have available. The college also partners with local organizations to provide transitional housing and support to some students. But those partnerships serve fewer than 100 students right now.
Because the state grants are only available for student housing, faculty and staff will not be able to live in the eventual development, Muñoz said. The college is also in conversation with Marymount California University, which announced it will be closing this summer, to lease 10 units to be used by students with dependents.
“It’s really important that when we talk about supporting housing-insecure students or even unhoused students that we think holistically,” Muñoz said.
“A critical part of our ability to offer a high-quality education to our students is recruiting and retaining the faculty and staff needed to run the campus.”
Traci Ferdolage
Senior associate vice president for facilities development and operations, San José State University
San José State University, a Cal State campus in the San Francisco Bay Area, has been embarking on a project to demolish the nearby Alfred E. Alquist State Office Building, owned by the state government, to build housing for faculty, staff and some graduate students.
“We recognize that a critical part of our ability to offer a high-quality education to our students is recruiting and retaining the faculty and staff needed to run the campus,” said Traci Ferdolage, senior associate vice president for facilities development and operations at San José State.
Salaries for the system are negotiated in collective bargaining agreements that apply to every campus, meaning it can be difficult to pay people more in an expensive area like San Jose. A lack of middle-income housing exists in the area, Ferdolage said. While low-income housing has been built, university staff don’t qualify.
Discussions began in 2020, and in 2021 Newsom signed a law that allowed the state to sell the Alquist building to the university.
Ferdolage said original plans needed to be scrapped because they didn’t work financially. Now the university is trying to build a competitive proposal to attract a developer. It hopes to receive approval from the system’s board of trustees by January 2023.
– Lilah Burke
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