The Journal of College and University Student Housing - Volume 43, No. 2 - 75

Public-Private Partnerships in College Student Housing

Many campuses were ill-prepared when enrollment increases led to heightened demand
for college student housing. Years of dwindling state resources left colleges with reduced
capital for investments in facilities, resulting
in outdated residence halls and academic facilities, as well as deferred maintenance (Turner,
2015). At many campuses, there was a shortage
of high-quality college student housing with
modern amenities, which became a more pronounced problem amidst fierce competition
for talented students (Slaughter & Rhoades,
2004). These high-achieving students were
important, in part, because they could improve
an institution's position in college rankings
and because those non-resident (i.e., out-ofstate) students provided a valuable revenue
stream (Jaquette, Curs, & Posselt, 2016). In
other words, the availability of state-of-the-art
college student housing became an institutional strategy to market the campus, recruit
students, and garner resources. Traditionally, public institutions financed new college
student housing through auxiliary bonds1 that
contributed to the state or university system's
debt. By taking on too much debt, ratings agencies like Moody's could downgrade the state
or university system's bond rating2, making
it difficult to borrow money in the future for
other critical institutional projects. Thus, many
states restricted campus construction projects

"Auxiliary bond" refers to a bond issued by an auxiliary
enterprise (e.g., student housing) in higher education. In this
case, a housing department is the issuer of the bond, seeking
to borrow money from investors to construct new facilities. In
exchange, the housing department agrees to repay the money
with interest over a specified time period.
2
Private entities, such as Moody's and Standard and Poor's,
provide ratings or evaluations of a bond issuer's financial
strength. In other words, their ability to pay a bond's principal
and interest in a timely fashion.

that burdened the debt capacity3, especially by
revenue-generating units like college student
housing. By partnering with private developers, public institutions saw an opportunity
to quickly and cheaply construct new college
student housing without contributing to the
state or university system's debt.

OVERVIEW OF PUBLIC-PRIVATE
PARTNERSHIPS IN STUDENT
HOUSING
Public-private partnerships in college student
housing take many forms, though in our
review of the literature, we identified three
common PPP models: 1) university land lease;
2) non-profit private foundation; and 3) equity
financing4 (Bernstein, 2010; Bronstein, Taylor,
& Samuels, 2010; Cole, 2012; Gagliano, 2015;
Lewandowski & Bielat, 2010; Sanseviro, 2010).
In the first model, the university land lease,
an institution owns land it leases to a private
developer, and the developer then commits
to financing, constructing, and managing the
housing facility. Leases are typically negotiated
for an extended period, for example 30 or more
years, during which time the institution maintains fee ownership of the land but student fees
or rent go to the private developer. In the nonprofit private foundation model, an institution
enters into a long-term ground lease with a nonprofit private foundation or an affiliated nonprofit entity, which is able to issue tax-exempt

1

State and local governments assess their total debt relative to
income as a means of establishing limits on future borrowing.
"Debt capacity" refers to the total amount of debt a state
can assume without risking its ability to meet repayment
obligations.
4
"Equity financing" refers to raising money in exchange for
ownership shares in a business venture. In this case, a private
developer supplies all or part of the money for a new student
housing facility in exchange for total or partial ownership.
3

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The Journal of College and University Student Housing - Volume 43, No. 2

Table of Contents for the Digital Edition of The Journal of College and University Student Housing - Volume 43, No. 2

Contents
The Journal of College and University Student Housing - Volume 43, No. 2 - Intro
The Journal of College and University Student Housing - Volume 43, No. 2 - Cover1
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