The Real Cost of Housing

1

The Real Cost of HousingDate: June 21, 2012Presented by: Gabby Rosas, Project Manager

University of California – IrvineUniversity of Cincinnati

University of California San Francisco Medical CenterUniversity of Chicago

University of Colorado at BoulderUniversity of Denver

University of HartfordUniversity of Idaho

University of Illinois at Urbana‐ChampaignUniversity of Kentucky

University of Maine at AugustaUniversity of Maine at FarmingtonUniversity of Maine at Fort Kent University of Maine at Machias

University of Maine at Presque IsleUniversity of Maryland

University of Massachusetts  AmherstUniversity of Massachusetts  Dartmouth

University of Massachusetts  LowellUniversity of Michigan 

University of MinnesotaUniversity of Mississippi Medical Center

University of MissouriUniversity of Missouri ‐ Kansas City

University of Missouri ‐ St. LouisUniversity of Nebraska at Kearney

University of New HampshireUniversity of New HavenUniversity of North TexasUniversity of Notre Dame

University of OregonUniversity of Pennsylvania

University of PortlandUniversity of RedlandsUniversity of RochesterUniversity of San Diego

University of San FranciscoUniversity of St. Thomas (TX)University of Southern Maine

University of Southern MississippiUniversity of Tennessee, Knoxville

University of the PacificUniversity of the Sciences in Philadelphia

University of VermontUpper Iowa University

2

Please Ask Questions

Enter questions here at any point during the webinar

Please call us at (203) 530‐1313 with technical questions – audio, video, etc.

3

The Real Cost of HousingThe financial impact of on‐campus student housing

AGENDA:

• Quick introduction of Sightlines and what Housing Measurement, Benchmarking and Analysis is.

• Explore how different programs use student revenues generated through on‐campus student housing to support the day‐to‐day activities of the program. 

• Examine 2 case studies to see how they are using the information & benchmarks from Housing MB&A to grow their on‐campus student housing programs:

Institution A: With a strong historical housing program, the department needs to advocate for financial resources to reach their goal of growing to keep pace with the enrollment increases. 

Institution B: With a number of vacancies in their student housing, this program is looking to make changes to housing policies in order to meet their participation & occupancy targets.

4

Sightlines – an introductionA vocabulary for measurement

Common vocabulary, Consistent methodology, Credibility through benchmarking

Facilities MB&A

Go Green MB&A

Housing MB&A

11 year old company based in Guilford, CT Common vocabulary and consistent methodology 95% Annual retention rate Tracking $5.9 billion in operations budgets and $4.2 billion 

in capital projects Database of 23,500 buildings and 825 million GSF

5

Student housing is an evolving market

Dormitories

Residence Halls

Student Life /Communities

Changes from year to year• Demographics• Student preferences• Market rates• Mission

6

Service vocabulary

“Treat the building like a building” “Treat the building like housing”

Facilities MB&A Housing MB&AVs.

Difference between Facilities MB&A and  Housing MB&A

7

Families of Metrics for HousingA focused strategic planning tool providing the knowledge to take action

MarketDemographics

Rates

AssetsInventoryAttributes

Construction

OperationsOperating

CostsStaffing

Housing MB&A Members

Located within 12 states

Covering more than 13M GSF in 300+ Residential 

Facilities

Housing more than 45,000 students

Over $225M in revenue in FY2011

8

HOUSING TRENDS IN HIGHER EDUCATION

9

Varying rates across our members

10

Housing costs are increasing annuallyUS Department of Housing & Urban Development’s Fair Market Rent

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

FY2007 FY2008 FY2009 FY2010 FY2011

Rate of Increase

National HUD FMR

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

150%

FY2007 FY2008 FY2009 FY2010 FY2011

Housing MB&A Members’ Mean Rates

11

Rates ‐ Student Housing FeesWhat are students paying for?

What students thinkthey are buying

What else students are buying

Res Life Expenses Daily Operating Expenses

12

How student fees are utilizedSplit between the Res Life program and the cost of keeping the doors open

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

A B C D E F G H I J K L M N O P

$/Be

d

Res Life Expenses

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

A B C D E F G H I J K L M N O P

$/Be

d

Daily Operating Expenses

Average $413 Average $2,440

Arrayed in order of increasing Undergraduate Participation in Housing

13

Total of day to day expenses

86%

14%

Average Mix of Expenses

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

A B C D E F G H I J K L M N O P

Total Operating Expenses

Daily Operating Expenses

Res Life Expenses

Arrayed in order of increasing Undergraduate Participation in Housing

$/Be

d

14

Net revenues translate to Non‐Operating Expenses

Non‐operating expenses – Repayment of Debt Service, Institutional Contributions, and Project Funding

15

PROTECTING ANNUAL NET REVENUECase Study A

16

Institution A: A case studyStudents are feeling the impact of rising tuition and housing costs

‐5%

0%

5%

10%

15%

20%

25%

FY2007 FY2008 FY2009 FY2010 FY2011

Housing Rate Relative to Annual Tuition

Housing Increases Tutition increases

‐5%

0%

5%

10%

15%

20%

25%

FY2007 FY2008 FY2009 FY2010 FY2011

Enrollment & Participation in Housing

Total Enrollment Housing Participation

17

Housing costs are higher than the FMRAcross the campus, there is limited housing availability

18

Housing revenue and expense detailTotals shown in millions of dollars

$0

$2

$4

$6

$8

$10

$12

$14Total Expenses FY2011

Housing Administration  $1.9M

Daily Service & Utilities$3.4M

(Physical Plant Allocation)

Interest/Debt Service$2.6M

Institutional Contributions$2.3M

(Institutional Allocation + Administrative Allocation)

Reserve Contributions$2.6M

Projects$0.4M

Res Life$0.4M

Utilities$0.1M

Total Revenues FY2011

Student Fees$13.1M

Other Rent$0.2M

Summer Programs$0.2M

Misc Income$0.2M

Student Fees only include Room, not Board.

Operating Expenses

Non‐Operating Expenses

19

Incomes & expenses have increased at different ratesInstitution A is contributing more toward Non‐Operating expenses than peers

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Peer Average Institution A

$/Be

d

Operating Expenses Non‐Operating Expenses

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

FY2007 FY2008 FY2009 FY2010 FY2011

$/Be

d

Income Expenses

Income & Expenses Operating Expenses

20

Historic spending in Non‐Operating categoriesMore funding is going back to the institution than at peer campuses

42%

37%

21%

Private Peer’s 5 Year Average of Non‐Operating Expenses

43%

17%

40%

Peer’s 5 Year Average of Non‐Operating Expenses

48%

42%

10%

Institution A’s 5 Year Average of  Non‐Operating Expenses

Interest/Debt Service

Institutional Contributions

Projects

Institutional Contributions include 13% of Housing’s revenue, Administrative and Institutional Allocations.

21

Historically low investment back into the facilitiesRelease reserve funds for building improvement projects

$1.0$1.4

$2.1 $2.5 $2.6

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

FY2007 FY2008 FY2009 FY2010 FY2011

Millions

Interest/Debt Service Institutional Contributions

Projects Reserve Contributions

$1.0$0.5

$1.1$1.0$1.4

$2.1$2.5

$2.6

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

$8.0

$9.0

FY2007 FY2008 FY2009 FY2010 FY2011

Millions

Housing Funds Reserve Contributions

Annual Investment Target Non‐Operating Allocations

22

Protecting annual net revenueSummary

• Despite rates increasing faster than tuition, the housing program at Institution A has been successful in maintaining a high occupancy of their on‐campus beds.

• The operating costs of the beds have been consistent with what other institutions are spending. 

• The case has been made to increase the amount of project funding by decreasing the annual contribution rate as the student fees increase. Market

AssetsOperations

23

ADJUSTMENTS TO MAXIMIZE REVENUEInstitution B: A case study

24

Housing growth outpaces enrollment increasesStrongest participation from Freshmen, who are required to live on‐campus

Fall 2006         Fall 2007        Fall 2008        Fall 2009        Fall 2010 Fall 2006         Fall 2007        Fall 2008        Fall 2009        Fall 2010

25

Lower participation than peer institutionsGreek Housing for First Year Freshmen contributes to low participation

Increasing Freshman participation to 67% would fill all Institution B’s Housing 

options to capacity

20%

25%

24%

31%

Fall 2010 Undergraduate Enrollment

First Year Freshmen SophomoreJunior Senior

45%

29%

14%

12%

Fall 2010 Housing Participation

Institution B

2006    2007   2008   2009   2010 2006    2007   2008   2009   2010

26

Vacancies provide revenue opportunitiesOver $1M yearly in additional revenue if all facilities were fully occupied in FY11

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

Hall A Hall B Hall C Hall D Hall E Hall F Hall G

Annual Revenue Opportunities in Under‐Capacity Buildings

124 60 23 13 15 Vacancies

Revenu

e Opp

ortunity

Vacancies(# beds):

Total Vacant Beds:  235

Average annual rate per bed: $4,875

Total Revenue Opportunity: $1,041,000

Traditional Residence Halls Suite-Style Residence Halls Apartments

27

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

$16,000,000

FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

$0.3$0.6

$0.9$1.1

Modeling potential opportunities at 100% occupancyBy not filling all beds, built‐in revenue opportunities are lost each year

Assumptions –Rates increase annually by 2%At 100% occupancy by FY2015 (Fall 2014)

22% increase in revenue

Income

Maximizing Revenue by Increasing Occupancy

Expenses Increased Revenue

Net revenue with no occupancy increase

Net revenue at 100% occupancy

28

Potential opportunity from reaching 100% occupancy Assumes no additional debt service

92%

7%1%

Institution B’s 5 Year Average of Non‐Operating Expenses

Interest/Debt Service

Institutional Contributions

Projects

73%

5%

21%

Potential breakout at 100% occupancy by FY2015

Interest/Debt Service

Institutional Contributions

Projects

Not Designated

29

$0.29$0.57

$0.85$1.14

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

Millions

Total Investment vs. Target

Total Spending Projected Spending Additional Revenue

Target Investment Need

Life Cycle Need

Allocating revenue towards building projectsIncreasing the annual project spending levels 

30

Allocating revenue towards building projects

$2.84

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

2007 2008 2009 2010 2011 2012 2013 2014 2015

Millions

Total Investment vs. Target

Total Spending Projected Spending Additional Revenue

Target Investment Need

Life Cycle Need

Which could be saved and used in a single year for a full renovation

31

Adjustments to Maximize RevenueSummary

Market

AssetsOperations

• Even though participation in on‐campus student housing has been increasing over the last 5 years, there is still a need to house more students. 

• The Institution is looking into redefining the Freshman housing requirement to not include students who live in Greek Housing. Currently, the on‐campus housing department is not receiving revenue from those residents.

• By increasing the number of students living on‐campus, at the current bed count, the program could generate an additional $1M annually, which could be set aside to help renovate the older housing facilities on campus.

32

OUR GOAL AT EVERY INSTITUTION

33

An iterative process designed to…

Consistently measure and document housing 

management and investment 

Effectively tell your student housing story from the dormroomto the boardroom

Track progress annually against your own goals

Give systems and consortia the ability to share, compare, and facilitate discussion

Measurement, Benchmarking & Analysis

34

QUESTIONS AND COMMENTS