Universities are strapped for cash. Being debt-restricted by recession-paranoid governments, many schools are looking to alternative delivery models to meet the demand for housing stock across the country.

At the University of Toronto, housing stocks are low, and plans are underway to build a tower of a tower. Thirty-plus stories of student housing. Typically, more beds is met with much rejoice, but this is being met with caution. The plan is to have the tower managed privately, through a Public-Private Partnership, which involves the university relinquishing control over certain aspects of planning, management, and operation.

UBC faces a similar housing-crunch. While past UBC administrations have fought vehemently against the P3 model, advocating for its own UBC3 model (where the public partner is UBC, and the private partner is UBC), rumour has it that the current admin has been reassessing that stance to meet demands. (Sidenote: There’s great stories of Martha Piper shouting at senior ministerial staffers on this very issue. It worked.)

In light of numbers assessing the need for more dorms, the Campus Plan states UBC’s goal is to have 50% of its undergraduate population on campus. The Campus Plan does not answer how, and P3’s are the low-hanging fruit.

The Province will not likely be able to commit the money for the massive expansion. UBC had to exert considerable pressure on them for the debt needed to expand Totem Park by a few hundred beds. Image the The problem: Government doesn’t like having the million-dollar debt-loads on its books, when it won’t be seeing the black for some time, particularly given the recession. A P3 model gets around this problem. The debt isn’t carried by UBC, it’s on the back of hedge funds.

It’s still too early to see if this is a win for students. Private firms are concerned about one thing, their bottom line, while Universities are concerned about their reputation. Typically, private firms respond to demands because it effects their bottom line, but given the absurdly high the demand for student housing is, the inability for true low-/no-income rental competition in West Point Grey, and the simple appeal and added-value of being a student on campus, there’s plenty of opportunity for gouging.

And that gouging would fester in the regulation blackout of many campuses, UBC included. Educational institutions are given wide-range to run housing as they see fit, often exempted from the rules of the private market (see: 4b.) This is somewhat appropriate, because the bottom line matters less to Universities, who are more interested in providing a holistic, accommodating experience to their students (it is half of their business, after all.) For private firms, all that comes secondary to more profit, so students would need rent controls and other tenancy rights to protect their interests.

How these concerns are managed and negotiated at UofT will set the model for the rest of the country. At stake is how public our public institutions ought to be, and the role of universities in providing student life.


5 Comments so far

  1. Dan Pagan on July 16, 2010 1:01 pm

    Someone mentioned that the Mount Royal University and the Southern Alberta Institute of Technology in Calgary, used the P3 model for residence buildings along with several public and private universities/colleges in U.S.

    Would be interesting if someone can do a research on the benefits and cons of the P3 residence models in America?

  2. Pierce on July 20, 2010 9:02 pm

    From what I know of, continental European universities have a mix of privately and university run student dorms scattered throughout their cities (not clustered next to the university, which invariably creates a prison). However I believe Germany is the exception. From what I’ve read and heard from my German friends, it is the national or local Student Union’s responsibility for dorms.

    A lot of American universities have co-operative housing – most notably the Berkley Student Cooperative which houses 1,300 students – but unfortunately the only thing red about Canadians are the flags, so this is a non-starter.

  3. Pierre on July 21, 2010 12:58 pm

    Hey guys, Pierre here, your CFO (aka “ze VP”).
    We have looked at the P3 model for housing in the past. The bottom line was that FOR UBC, this delivery did not make much sense. Costs were higher (driven by risk premium, private partner margin and cost of borrowing), and additional management complexity would be introduced as well. The UBC model on the other end (UBCPT develops at no profit, UBC operates and maintain effectively, our credit rating is excellent, and we have both scale and excellent management) works well. Except… that we need to access more debt indeed.
    We are having in-depth conversations with the government on how to best achieve that, and P3 delivery is not on my list, not because of ideology but because of pragmatism.
    I will update you when we know a bit more, likely in the fall. In the mean time, we are continuing to aggressively plan for the first hub – Ponderosa – to respond to Student feedback and the (still) huge demand out there.

  4. Alexander Cooke on July 22, 2010 4:26 pm

    The University of Toronto has always been a little creative when it comes to residences. For a few years, about a decade ago, they rented space for 250 undergrads at a nearby Best Western—they had made a commitment to house all first years, and simply didn’t have any more space of their own. Unfortunately the hotel was not in a particularly good area, and was infested with bed bugs.

    Later they actually bought an entire 28-story hotel behind city hall for about $70M and made it an official residence. It’s a little far from campus, but they kept the chef on. I don’t know if the revolving restaurant still revolves.

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