“…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.”

Grumpy, your facts ain’t facts. The Pavilion opened up in 1982, my son attended the daycare there until 1993 when he was ready for kindergarten. The facility operated for several more years out of the Pavilion before it moved to it’s much larger facility at the corner of Oakland Ave & Beacon St. That’s a far cry from it being shut down as soon as the early 80’s students were gone. It simply was not large enough to handle the needs of a student population that had increased by 50% in the time it was open.

lmao

😉

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.

EDITOR NOTE–The U of I scenario probably has NON-PROFITS owning the housing, instead of “for PROFIT” corps. Most of those commenting are in agreement: private or public is OK, but to mix and match only creates inequities, opens the door to inappropriate schemes aimed at getting around the system.

If student housing is to be built on private land it should be built, owned and managed privately.

BSU is both a commuter and residential university. BSU should decide how much and what kind of student housing is on campus, and not commenters on the Boise Guardian website.

Full disclosure: I am a BSU Alumni, and, fyi, that fact has had a MAJOR effect on the quality of my life.

EDITOR NOTE–Rod, I don’t think you will find anyone here that disagrees. Dr. Bob seems to be the only one who seeks private buildings on public land.

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.