LEXINGTON, Ky. (Oct. 14, 2012) — The University of Kentucky Board of Trustees Sunday overwhelmingly approved a proposal to dramatically transform the UK campus by authorizing the next phase of a public-private partnership to construct more than 2,300 modern residence hall beds -- five new residence halls -- over the next two years.
With the board's approval following its retreat this weekend, more than 2,900 beds will soon be under construction at one time – perhaps the largest and quickest expansion of housing at any time in the institution’s history.
Construction of a 601-bed residence hall – New Central – is already underway and expected to be open in August 2013. The five new residence halls considered by the Board Sunday will open in fall 2014. Construction will begin in November.
“Last year, this Board of Trustees – responding to the voices of faculty, students and staff throughout our campus – articulated an ambitious and farsighted agenda to transform our campus infrastructure -- a critical path to take in enhancing undergraduate education and helping ensure that we have the capacity to improve learning and research space,” said UK President Eli Capilouto.
“Today we are proposing an additional, important step in that process -- one that will help us honor our Kentucky Promise to educate and prepare the young people of this Commonwealth for lives of leadership, meaning and purpose."
Specifically, the Board approved a proposal to authorize Capilouto to negotiate and execute a lease with Education Realty Trust (EDR), a private real estate company that specializes in university housing nationally. The company will construct and manage five undergraduate residence halls on four sites throughout campus for a total of 2,317 beds.
The five new residence halls represent an additional $133.7 million in investment by EDR. The New Central residence hall -- also built and managed by EDR -- is expected to cost about $25.2 million.
In total, UK is considering a public-private partnership with EDR over the next 5 to 7 years in which the private company would invest about $500 million to replace much of the university's current housing stock of about 5,200 beds, which average nearly 50 years in age. The University goal is to accommodate up to 9,000 undergraduate students on campus.
The public-private partnership, if it continues long term, would be unlike any in higher education today.
Students are retained at higher rates and perform better academically when they live on campus, where they can engage more readily with faculty and in university life, Capilouto has said.
At each stage of this public-private partnership, Capilouto and UK officials are bringing leases and an affiliation agreement to the Board for their evaluation and approval.
The new residence halls -- located at Cooperstown on South Campus, a new Haggin Hall on Central Campus and near Memorial Coliseum on North Campus -- will be a combination of two and four bedroom suites. The North Campus construction will include the demolition of the old Wildcat Lodge and the use of the Blazer Parking Lot of construction.
Depending upon their configurations and size, suites may come with one or two baths, kitchenettes and living areas.
Angela Martin, UK's vice president for financial operations and treasurer, said utilizing a third-party to provide equity financing for this massive construction will result in more modern beds being built on campus in a more cost-effective way -- a result that would not occur if the university used its traditional financing and approach to build one residence hall every couple of years.
At the same time, Martin said, using a private company to finance the construction minimizes impact on UK's debt capacity -- a critical element in the university's ability to debt-finance other necessary construction such as classroom buildings and research facilities over the next several years.
An independent study completed earlier this year found that UK currently has at least $400 million in debt capacity to finance additional facilities. The private equity that EDR is putting into construction of new residence halls will not affect that number.
"Revitalizing our campus infrastructure -- in this still challenging economy -- will require us to be innovative and creative," Capilouto said. "We know that we have to earn our way. Much of that revitalization will have to come from resources that we, as an institution, can generate or attract through private investment or increased philanthropy.
This partnership with EDR underscores our commitment to move forward creatively but responsibly. It is one more way that we are honoring the Kentucky Promise for another generation and for the Commonwealth that we serve."
MEDIA CONTACT: Jay Blanton, (859) 257-6605; Jay.Blanton@uky.edu