Privatization of public university housing: a comparative cost analysis of alternative models for student housing in the Commonwealth of Kentucky

The conceptual and methodological issues of public university student housing were examined. Specific issues dealt with providing affordable student housing. The study performed a comparative cost analysis of the various student housing models currently available to public Kentucky universities.

Cost data were analyzed for the development and comparison of the baseline study project and three student housing models. Project development costs were analyzed to determine the development costs per square foot of student housing, the construction costs per square foot, the cost per resident or bed, and the cost to develop each bedroom or unit.

The study compared the affordability of each project by analyzing the net gains (or losses) of each model. Proforma analysis of cash flows were developed for each model and the baseline for comparison purposes. Such analysis considered typical revenues based on average rental rates and current building operating expenses. Debt coverage ratios for each project were calculated and compared to financial industry standards.

Currently many colleges and universities are privatizing their studen~ housing. Although the majority of the educational institutions appear to be very successful with their efforts, institutions are not fully aware of the benefits, pitfalls, or processes involved in the privatization of student housing. There are a number of issues that must be addressed prior to obligating a public educational institution to a long-term leasing agreement with a private firm.

This research discussed the financial issues pertaining to the development costs of various student housing models. From this study, conclusions regarding the most cost effective development of student housing facilities were stated. The examination provided for the identification of issues necessary to assess the financial performance of the various student housing models. The discussion of such issues may contribute. to more effective student housing decisions by higher education administrators. Implementation of the most cost effective model may provide a means for economically meeting their university's student housing needs.