You miss, or at least deflect, my point. There is no reason the private sector cannot build housing, on private land, for profit, and pay taxes. At most of the universities I am aware of, most of the housing is private, off campus.

On campus housing is typically, but not exclusively, for younger students, or for those who need/prefer more security.

Boise may like to think it is too big, or too special, and that the private sector is incapable of filling the need. However, if the private sector can make it work in Portland, Seattle, and on and on, there is no reason it cannot work here.

For forty years, give or take, BSU has purchased bonds through “revenue anticipation” means, These have build the additions to the Student Union and at least two of the newer student residence halls. Bonds secured by the anticipated revenue to be generated by fees paid by the students.

That was part of how the Horse House was built (now called the Pavilion). A part of the “deal” was that there would be a day-care center for the children of students in that structure, in order to use student funds to pay for the building (one of Barnes’ last deals). As soon as the students who were there at the time were gone, that child-care facility was deemed “inappropriate” and the newer, larger facility was built, and later added on to. It is also no longer restricted to the children of students, but also faculty and staff, space available.

Nearly every campus, public or private provides either housing or “approved housing” for students. BSU is certainly not unique in that. It used to be that the schools were located too far away from home to commute and the crunch of housing was too great not to provide assistance. The only difference between BSU and many other colleges/universities is the relative lack of “Greek Letter” housing facilities – the Sororities and Fraternities. The Greek system being week at BSU as it is at most commuter campuses.

I suspect that most public colleges and universities use some ‘creative financing’ to secure funds for campus purposes.

It is my understanding that BSU was proposing to lease BSU owned land to a private developer to build student housing. Under the land lease, BSU would receive ground lease rent and, presumably, BSU’s fee ownership interest would be superior to that of the ground lessee and its lender.

The label “public university” is somewhat of a misnomer. Only 27% of BSU’s budget is funded by the state legislature. The reality is that “public” universities need a diversity of financing resources to survive, much less to thrive.

E.g., UC Irvine has leased a lot of its land to bio-tech firms. They reap (i) land rent and (ii) fairly intimate interface with private firms and the UCI schools of science and engineering.

The Moody’s position about bond rating downgrade is still unclear to me. An unsubordinated ground lease (a lease which is superior to the interests of private lenders and tenants) involves no material fiscal threat to BSU. In fact, were the ground lessee to default, BSU could cut off his interest as well as the interest of his lenders. In the end, BSU would own the building.

The only residual cost to BSU would be the cost of operating the building which it inherited, but that will be partially or wholly offset by student rental income.

The BSU campus is relatively high density. Therefore building student housing off-campus on BSU owned land represents good land planning.

Perhaps Mr. Gunderson is a disgruntled former Boise State employee?

Amused, I am a former BSU employee — but not disgruntled as you state. I worked at BSU for over eight years and my son now attends BSU, as does my wife — so did my sister, my brother, and my dad.

But, it isn’t a secret that Dr. Kustra has taken actions in the past that I have found untenable in a public university setting (the selling of naming opportunities without adhering to State Board of Education policies being just one). BSU is a Public University, it exists by virtue of State Statute (Title 33, Chapter 40) and the Idaho Constitution (Article X) — regardless of who pays for campus operations. These laws stipulate very proscribed behavior for university operations, which do not allow an administration to run the campus as a private enterprise.

The proposed project is not unlike the scenario used in the California university system mentioned by Jack Harty — it’s referred to as a lease/lease-back. Where a land rich (but cash poor) public agency will lease its bare ground to a private contractor, who will in turn build a new facility and lease that facility back to the public agency. The contractor uses its own borrowed capital to finance the facility, and the terms of the lease in the “lease-back”, obligate the agency to pay the contractor its costs, profit, overhead, and interest on its construction loan.

In California this is often used to circumvent the public bid process since leases are not subject to award to the lowest qualified contractor (even when a public agency may have the assets to fund construction itself). It can also be used to circumvent the Federal Brooks Act, since the contractor can select anyone it wants to design the facility — it is not obligated to follow a qualifications-based selection process.

There are numerous studies that show how much public funds are lost when these schemes are followed by public agencies. The State of New Jersey, which now bans such development schemes, found that on average such projects cost the public 97% more than standard public-sector projects. Why do they cost more, when they appear to be crafted to help cash poor public agencies? More often than not, when a public agency extends the protective public umbrella over a private corporation it is repaid by shoddy construction and poor design — issues which begin to reveal themselves even before the construction projects are complete. These lead to project delays and inordinately high operation & maintenance costs.

In Idaho, such a “project” would allow the university administration to circumvent the normal public oversight of capital expenditures by both the Division of Public Works and the State’s Permanent Building Fund Advisory Council, since neither entity would have jurisdiction over the design and construction of the facility.

But, the reason why Moody’s feels this lease-debt obligation will impact the university’s bond rating has nothing to do with the university’s ownership of the land, or the probable poor workmanship of the end result — it has to do with the lease payments the university must make to the private developer for the new facility. These payments have to be made whether or not the university can fill the housing units. These required payments can adversely effect the university’s liquidity, its ability to make payments on other bonds (current and future).

BSU has several project-delivery options available to it to build student housing — if it had the money to do so. It could use a Design/Bid/Build with a Construction Manager (like it did for the last underclassman housing project on campus in 2004), or it could use a Design/Build process (like it did for the last Student Family Housing project at Chrisway & University, also in 2004).

BSU acquired the land for this housing tract under threat of Eminent Domain — and the State Board of Education granted the exercise of E.D. due to the driving need to meet a higher public good (the provision of student housing). The Board did not grant this authority to enrich a private entity by subsidizing its construction loan, or by removing its private competitors through a lucrative sole-source, long-term lease. Neither did it envision that the (oversight and qualifications-based selection) sideboards that normally protect the public’s interest would be removed by an ill-conceived development scheme.

BSU does charge students for their parking spots.. When I went to college it was $45/year for a residence halls permit.. a normal student general permit was more. (think double or more) Also worth pointing out is BSU throws all the dorm students out of the parking lots for the football games causing them to have to park where red lobster was on capital boulevard. This is soooo unsafe and walking from capital boulevard to chaffee/morrison/driscoll hall etc is a very long walk.
The school charges somewhere over $100 per game for tailgater parking spaces. When BSU won the fiesta bowl the first time the school got multiple millions of dollars… the football program got around 97% and the school got the other 3%…. wonder where all this money is going? I sure am.

Concise,

lmao

😉