Campus News

Board of Trustees Approves First Step in Residence Hall Transformation

LEXINGTON, Ky. (Feb. 21, 2012) – The University of Kentucky Board of Trustees Tuesday approved a plan to work with a private company to build a 600-bed residence hall that would be opened in August 2013 – the first step in what is expected to be a $500 million overhaul of UK’s residence hall system.

“We cannot wait for tomorrow to begin what our students need and deserve today,” said UK President Eli Capilouto. “Our time is now. To fulfill the Kentucky Promise, forged nearly 150 years ago, we must renovate and build the kinds of facilities that will help our students reach their potential. They will create the kind of economy our state needs to compete in the 21st century.”

The board’s action Tuesday allows Capilouto to enter into an agreement with Education Realty Trust (EdR) on a 50-year ground lease to develop and manage the new residence hall on Haggin Field near the W.T. Young Library. The residence hall will house honors students as well as some high-tech classrooms and office space.

EdR, a publicly traded company based in Memphis, would own the building it constructs and manage basic operations, such as maintenance. UK would maintain control of student programming such as resident advisers.

At a retreat last October, the UK Board of Trustees unanimously voted to focus on enhancing the university’s undergraduate education with a specific emphasis on significant upgrades to facilities critical to living and learning on campus.

Among many reasons for moving forward with new residence halls is the impact, Capilouto said, on student performance in terms of retention and graduation rates. "Quite simply, our students do better -- much better -- when they live on campus, when they can become part of a vibrant university life, and when they are able to more readily reach out to faculty and staff, who can help nurture their progress," he said.

In fact, students who live on campus have a retention rate some 20 percent higher than those students who live elsewhere -- nearly 90 percent compared to 68 percent. "That's a significant difference and serves to underscore why our efforts have a sense of urgency attached to them," Capilouto added.

To that end, Capilouto formed a committee – composed of a student, faculty and administrators – to issue and review responses to a request for proposals to evaluate a public-private partnership to overhaul the residence hall system. EdR was selected in December and university officials have been negotiating the terms of the recommended agreement taken to the board Tuesday.

If the process is successful, the university would quickly move forward, with the board’s approval, to replace and build up to 9,000 beds over the next five to 10 years on the UK campus. UK currently has about 6,000 residence hall beds, only 600 of which are modern. At the end of the project, all but six of UK’s 22 residence halls would be replaced. The average age of UK’s residence halls is nearly 50 years old.

A lengthy waiting list exists for the 600 modern beds on campus, meaning UK is turning away students each year to live on campus. Retention rates for students living on campus are nearly 90 percent – some 20 percent higher than students who live off campus.

The same process approved by the board Tuesday – EdR constructing and owning the buildings, while entering into ground leases with the university – would be used at each step of the multi-year initiative.

UK is thought to be the first, large public research institution to contemplate a public-private partnership that would encompass a university’s entire housing stock. The UK project also is expected to create hundreds of good-paying construction jobs over the next several years, a significant economic impact and boost to Fayette County and the region.

EdR has an established track record in student housing, having completed $2.3 billion in student housing transactions and currently owning or managing 57 housing properties with 34,000 beds in 23 states.

In the UK partnership, EdR is proposing to provide a 100 percent equity investment in the housing initiative. Capilouto said the innovative partnership, in addition to modernizing the university’s housing stock, would also save some of the institution’s debt capacity to take on other needed building projects, particularly classroom and research space. UK currently has more than $1 billion in deferred maintenance needs on its campus, the oldest in the state’s public system of higher education.

In the budget he proposed last month, Gov. Steve Beshear authorized UK to spend $175 million over the next two years on the residence hall project. In addition, the Governor’s budget allows UK to spend up to $200 million in agency bonds – bonds that would be paid off with University revenues – on building projects across the campus.

“We are living in a new normal in terms of the public support we will receive to help fuel our ambitions for Kentucky,” Capilouto said. “That means we have to form partnerships – partnerships with the state and federal governments and partnerships with private enterprise that will enable us to continue our ascent. The important step today taken by our Board of Trustees affirms the faith they have in our campus and in our plans to be the state’s beacon of hope.”

To view the ground lease agreement, click here.