the real cost of housing
DESCRIPTION
We all know that Student Housing can be a source of revenue for College and University campuses. If the beds are all filled, and the daily costs are managed in an effective way, there is potential to invest in non-operating opportunities. This webinar explored the different ways institutions are allocating their net revenues within Student Housing. We reviewed 2 different housing operations and explored how they performed to their targets and what resources they have to further their programs.TRANSCRIPT
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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
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Enter questions here at any point during the webinar
Please call us at (203) 530‐1313 with technical questions – audio, video, etc.
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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.
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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
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Student housing is an evolving market
Dormitories
Residence Halls
Student Life /Communities
Changes from year to year• Demographics• Student preferences• Market rates• Mission
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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
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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
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HOUSING TRENDS IN HIGHER EDUCATION
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Varying rates across our members
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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
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Rates ‐ Student Housing FeesWhat are students paying for?
What students thinkthey are buying
What else students are buying
Res Life Expenses Daily Operating Expenses
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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
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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
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Net revenues translate to Non‐Operating Expenses
Non‐operating expenses – Repayment of Debt Service, Institutional Contributions, and Project Funding
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PROTECTING ANNUAL NET REVENUECase Study A
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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
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Housing costs are higher than the FMRAcross the campus, there is limited housing availability
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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
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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
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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.
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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
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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
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ADJUSTMENTS TO MAXIMIZE REVENUEInstitution B: A case study
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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
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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
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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
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$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
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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
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$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
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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
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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.
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OUR GOAL AT EVERY INSTITUTION
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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
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QUESTIONS AND COMMENTS