To address a growing student body and a hot rental market, Texas A&M University is working to add enough apartments near its College Station campus to house more than 3,400 students.
But the housing won't be built by the school; A&M is instead looking to the private sector to manage the project on university land. A&M officials say that arrangement, one of many private-public partnerships pursued by the school in recent years, will reduce the university's risk and bring in as much as $600 million in revenue over the next 30 years.
Making that work will require some financial wrangling, however. The buildings will be owned for the first 30 years by the nonprofit NCCD-College Station, a new entity formed by a group devoted to helping governments partner with private companies to build infrastructure. And the apartments, known as Park West, will be developed and managed by the Irving-based Servitas, LLC.
The project will cost about $360 million to build and develop, school officials said, but as a nonprofit NCCD-College Station doesn't have access to capital markets. So bonds to pay for the construction will be issued by the New Hope Cultural Educational Facilities Finance Corporation, a government group associated with the Collin County town of New Hope, population 614.
“At Texas A&M we continue to find innovative ways to provide 21st century tools in order to meet 21st century needs," said A&M President Michael K. Young. "This project will generate revenue that we can invest into high performing faculty, research and teaching that allow our students to receive an elite education at an affordable price."
NCCD-College Station will pay A&M $18.5 million at the start of the lease. In addition, it will pay the university a portion of its future revenue. University officials estimated A&M's share to average $20 million each year over the next 30 years.
At the end of the 30-year term, ownership of the buildings will be transferred to A&M.
The development will be built on 48 acres of pasture across the street from the south side of campus. Future plans call for retail development on adjacent land owned by the school, though nothing has been finalized. The apartments are expected to open before the 2017-18 school year.
Renderings for the project show three large, multi-story apartment buildings surrounding a short avenue. There are three swimming pools, a large parking lot in the back and over a dozen townhomes on each side of the development.
"At more than 3,400 beds, the scale of this development is like nothing else in College Station, or anywhere else in the U.S., in terms of new student housing," said Michael Short, chief operating officers of Servitas.
The project furthers A&M's recent effort to look toward the private sector to make money from school services. Park West is the fifth private-public building project pursued by the A&M System in College Station in recent years. Officials estimate that all of those deals combined could bring in more than $900 million in revenue over the next few decades.
And under Chancellor John Sharp, the university system has inked deals to outsource on-campus dining, building maintenance and landscaping. Those efforts generated some opposition at the time. Faculty and staff worried that employees in affected jobs would have their wages and benefits reduced. And many students were outraged when the university unveiled a plan to require them to buy on-campus meal plans soon after the dining services were outsourced. That plan was later pared back significantly.
School officials have also publicly explored requiring incoming freshmen to live on campus, but they said Thursday that nothing is in the works.
A&M officials said those outsourcing projects have also generated millions of dollars in revenue. That can be done while keeping affordability for students in mind, they said. For instance, rent at the apartments will be below market rate, they said.
"Every extra dollar we can generate or save is one less dollar from the students, their parents or Texas taxpayers," Sharp said in a press release.
Disclosure: The Texas A&M University System and Texas A&M University are corporate sponsors of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.