AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization...
Transcript of AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization...
![Page 1: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/1.jpg)
AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING ON CAMPUS
June 10, 2015
CERTIFICATE OF ATTENDANCE
The undersigned certifies that ______________________________________ attended “Privatization of Student Housing on Campus Audio Conference sponsored by the Employment Law Alliance. The program consisted of 60 instructional minutes. The program contained no credit for continuing legal education for legal ethics, elimination of bias in the legal profession or prevention, detection and treatment of substance abuse.
To be completed by Attorney or Attendee after participation in the above-named activity.
By signing below, I certify that I participated in the activity described above and am entitled to claim the following continuing education credit hours:
Total Hours
Signature
![Page 2: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/2.jpg)
“Privatized” Student Housing on Campus
Wednesday, June 10, 2015
![Page 4: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/4.jpg)
Brandon Lewisohn Parker Poe Adams & Bernstein Charlotte, NC [email protected] Paul W. Reichel Bond Schoeneck & King Syracuse, NY [email protected]
Speakers
3
![Page 5: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/5.jpg)
ADVANTAGES OF
PRIVATIZING
Paul W. Reichel Bond Schoeneck & King
4
![Page 6: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/6.jpg)
• Improved balance sheet • Preserve debt capacity/capital • Expedited development timeline
Advantages of Privatizing
5
![Page 7: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/7.jpg)
• Access to latest trends/expertise • Focus on core competencies
Advantages of Privatizing
6
![Page 8: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/8.jpg)
DISADVANTAGES/RISKS OF PRIVATIZING
(Depends on Structure)
Paul W. Reichel Bond Schoeneck & King
7
![Page 9: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/9.jpg)
• Forego revenue stream • Less control over pricing, operation, etc. • Quality of construction?
Disadvantages/Risks of Privatizing
8
![Page 10: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/10.jpg)
• “Reputational risk” • Still “on-credit”? • Impact on tax, permitting and other
exemptions
Disadvantages/Risks of Privatizing
9
![Page 11: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/11.jpg)
STRUCTURE
ALTERNATIVES
Brandon Lewisohn Parker Poe Adams & Bernstein
10
![Page 12: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/12.jpg)
GROUND LEASE TO DEVELOPER; MASTER LEASE TO UNIVERSITY
11
• Developer owns and operates as a private for-profit project. Incur construction risk, however has captured tenant for term (generally term is commensurate with amortization of debt)
• Construction quality • Liability issues • Lower cost if outside of state procurement rules
Master Lease
![Page 13: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/13.jpg)
Ground Lease to Developer
12
• Developer owns and operates as a private for profit project. University receives a percentage of rental income or fixed rental amount. At end of term project ownership reverts to University for nominal amount.
• Low risk • Low control by University
![Page 14: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/14.jpg)
GROUND LEASE TO DEVELOPER; MASTER LEASE TO UNIVERSITY
13
• Limited Obligation Bonds (“LOBs”) • Since rent is derived from State, entity satisfies government test
and bonds are tax exempt • Full control • Credit risk • Operation risk • Recourse is to project and, possibly, reputation
![Page 15: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/15.jpg)
• 501(c)(3) designated entity (“Foundation”) • Issue tax exempt bonds to finance • Other than Foundation, parties included
are all private for profit entities, so profit drives the project.
• Concern on traveling 501(c)3 entities
Foundation-Owned Project
14
![Page 16: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/16.jpg)
FOUNDATION-OWNED PROJECTS
Paul W. Reichel Bond Schoeneck & King
15
![Page 17: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/17.jpg)
• Create new 501(c)(3) or use existing (c)(3) such as College Foundation, Faculty-Student Association or Auxiliary Services Corporation
• If use existing (c)(3), establish wholly owned LLC for protection
Foundation-Owned Projects
16
![Page 18: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/18.jpg)
• Foundation leases facility to school – Master lease between Foundation and school
OR • Foundation licenses rooms directly to
student – Operating agreement between Foundation
and school
Foundation-Owned Projects
17
![Page 19: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/19.jpg)
• Advantages: – Expedited process – Significant control – Off balance sheet (perhaps) – Preserve debt capacity – Tax-exempt (financing, sales tax, property tax)
Foundation-Owned Projects
18
![Page 20: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/20.jpg)
• NY community colleges have no authority to construct/operate residence halls
• College sponsors (counties) may be reluctant to incur debt
• Solution: Foundation-Owned Project
Community College Model (New York)
19
![Page 21: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/21.jpg)
• County ground lease to Foundation • Foundation finances and constructs • Foundation operates residence hall by
contract with College
Community College Model (New York)
20
![Page 22: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/22.jpg)
PROTECTING THE SCHOOL’S INTERESTS
Brandon Lewisohn Parker Poe Adams & Bernstein
21
![Page 23: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/23.jpg)
• Tax-exempt bonds • Private use • Greek housing • Random audits
Audit Risks
22
![Page 24: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/24.jpg)
• Management • Debt pressures (rent) • Liability (developer-owned) • Links between private entity and institution
Control Risks
23
![Page 25: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/25.jpg)
• Siphoning • First fill or similar arrangements • Debt pressures • Unfilled units
Capacity Risks
24
![Page 26: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/26.jpg)
CREDIT IMPACT
Paul W. Reichel Bond Schoeneck & King
25
![Page 27: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/27.jpg)
• Off balance sheet, on-credit? • The greater the likelihood the school will
step in if project fails, the greater the impact on school’s credit rating.
Credit Impact
26
![Page 28: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/28.jpg)
• School’s credit rating more likely to be impacted if: – Project located on central campus or on
adjacent land – Significant percentage of total beds – School shares in cash flow – School provides/guarantees debt – School provides fill covenant – Occupancy tests before new housing may be
constructed
Credit Impact
27
![Page 29: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/29.jpg)
Chris Helwick Hirschfeld Kraemer San Francisco, CA
Brandon Lewisohn Parker Poe Adams & Bernstein
Charlotte, NC [email protected]
Paul W. Reichel
Bond Schoeneck & King Syracuse, NY
Please Contact Any of our Speakers for More Information
28
![Page 30: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/30.jpg)
Join us for our next Higher Education Council webinar:
“Higher Education Update in the UAE.” July 8, 2015.
More information to come.
29
![Page 31: AUDIO CONFERENCE ON “PRIVATIZATION” OF STUDENT HOUSING … of Attendanc… · “Privatization of Student Housing on Campus . Audio Conference sponsored by the Employment Law](https://reader033.fdocuments.net/reader033/viewer/2022042210/5eae49594de1895be35c7302/html5/thumbnails/31.jpg)
Please complete the survey that should appear on your computer screen when you disconnect from the webinar.
To listen to this webinar again or to any past ELA webinars, please visit our website at: www.employmentlawalliance.com.
The ELA is not authorized to give continuing education credit for its webinars; however, a Certificate of Attendance and supporting materials are posted on the ELA website (click this webinar’s title; the link to the Certificate is on the landing page). Attendees seeking continuing education credit should submit these materials directly to the appropriate organization.
Please Complete our Survey
30