With the public sector turning more and more to the private sector for certain jobs, the University System of Georgia is following suit with one of the biggest aspects of campus life.
Officials plan to have a partnership in place by the end of 2014 that would privatize dorm rooms in universities and colleges across Georgia, including the University of North Georgia’s Dahlonega campus.
“What the university system is pursuing is an alternative method of financing,” Susan Hart Ridley said. Ridley is the University System of Georgia’s associate vice chancellor for fiscal affairs. “What we’re seeking to do ... is to find a private sector partner to come in and take over the financing responsibilities because ultimately with the current financing structure, the Board of Regents as a whole ... is obligated to make rental payments for all of the system’s facilities.
“So what we’re looking for is an alternative method of financing that brings the private sector to the table,” she continued. “They bring their financing to the table. They are at risk for enrollment changes, for occupancy changes, for changes in rental rates. ...So it’s removing from a model where all of that risk is on our balance sheet to a model that shares that risk with the private sector.”
It’s not unprecedented, with the University of Kentucky and the University of South Carolina being more recent examples of higher institutions selling beds to private companies. This is a little bit different, though, with multiple properties on the table rather than just the individual institutions.
The plan will allow the University System to spend time on its real purpose, officials say.
“Our primary focus is college completion,” spokesman John Millsaps said. “That’s our No. 1 priority. Our No. 2 priority is ... guess what? The college completion rate.”
The proposal on the table for Dahlonega’s campus is to sell 314 of the existing beds, with an additional 400 to be developed in 2015 and 2016. Right now the campus can house up to 1,452 students.
The University of North Georgia is not alone in the first phase of privatization; there are seven other institutions planned, with the nearest being Dalton State College and Georgia State University. The plan is to sell a total of 6,195 existing beds in the University System of Georgia, and then to add 2,300 for a total of 8,495.
But when asked about cost savings, Ridley was hesitant to give a concrete number.
“We certainly expect that this will be advantageous for us from a cost standpoint in the long run,” she said. “But I would also say it’s too early to tell. We are fairly unique ... in that we have 31 institutions currently in the system and we are pursuing this under a portfolio type of transaction, eight campuses and multiple facilities, multiple assets being included in the sale.
“We’re certainly going to strive for the overall best and lowest price that we can get, but we do want a good long-term quality partner,” Ridley added. “Price is just going to be one component.”
It’s also too early to tell if it means students get to save on college expenses, but Ridley said rent control mechanisms will be required, so rental rates can’t be increased exponentially.
“One of our No. 1 priorities for all of this is maintaining affordability for students,” she said emphatically, adding students and parents should notice no change at all. The private company would be in charge of maintenance and repairs, but the institutions would have control over any residential life or academic programs in the dorms, as well as security.
“From the private sector standpoint, that gives them an advantage because that’s what parents and students want, most typically,” Ridley said. “They want the institution ... to provide that security, to provide the academic programming that enriches the on-campus experience.”
The request for proposals is a two-step process. Ridley anticipates it will begin sometime in the spring asking for interested parties to send their qualifications.
“We’d like to get a sense from the investor community,” she said. “The level of interest, the types of qualifications, the types of financing structures that different teams can bring to the table.”
Once that information comes in, a small group would pre-qualify to move to the next step of more formal bidding for the project, anticipated in fall 2014. The idea would be to have one investor for the entire portfolio, as well as to develop the additional housing.
“This is such a large transaction,” she said. “We would expect to reach a closing on the transaction sometime in early 2015. Our target for the new beds, including those at North Georgia, would be for those to be open in the fall of 2016.”