Commercial Real Estate Firms in Louisiana by uiz16265

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									 From Enclave to
Urban Institution:
  The University,
the City and Land
          David C. Perry
  University of Illinois at Chicago
                  and
           Wim Wiewel
       University of Baltimore
   Universities as Urban Developers
  Washington Consortium of Universities
             May 24, 2006
      Rethinking the University
            and the City

FROM “ENCLAVE” - removed from the
 “turmoil” of the city. A campus for the
 “academic community”
TO “URBAN INSTITUTION” - not simply “in
 the city, but of the city” - an “engine” or
 “driver” of contemporary urban
 development
                                               2
    University as Urban Developer
• The “campus” isn’t the campus any more…it’s
  much more
• University development is increasingly “mixed
  use” development - blurring academic and
  commercial uses, the edge of the old campus,
  even the meaning of “university building”
• Campus master plan as city plan/city plan as
  master plan
• Dramatic shifts in the institutional practices of
  universities in cities: partners in economic
  development sites, multi-university real estate
  projects and programs
                                                      3
 The University as Urban Developer:
Three Topics and Some Conclusions
• The “Campus” and the “City” - university-
  community development practices at the level of:
   – Neighborhood
   – Central City
   – Region
• The “Deal” Acquisition, Finance and
  Development Strategies
• The Ethics of the Institution: The Societal Role
  of the University and Real Estate Practice
• Summary Statements: to introduce our key
  findings
                                                     4
        The Campus and the City
University-Community Development Practices,
from Neighborhood, to Central City to Region
• Neighborhoods and Universities
   – Town-Gown conflict - Columbia, Northeastern
   – Urban renewal and public land clearance - U of C
   – Community development principles - new practice in
     universities
• Central City Core and Universities
   – Re-urbanization anchor - U. Wash Tacoma
   – Cluster development - Auraria Campus, Denver, Georgia
     Tech
   – Urban politics as university practice - Pitt
• City, Region and University
   – Leadership – Georgia State
   – Negotiation - Victoria (U of Toronto)/McKinsey
   – Political and financial management of risk - IUPUI
                                                             5
                   The “Deal”
 Acquisition, Finance and Development Practices
• Fiscal practices of acquisition and
  development
  – Debt
  – Revenue
  – “Endowment”
• The partners in the “deal:” university, city
  and private sector
• The deal and the dealmakers
  – Politics - Temple vs. Penn
  – Partnerships - DePaul University
  – Intermediaries - Ohio State/Campus Partners
                                                  6
      The Ethics of the Institution
The Ethics of University Real Estate Development
• How closely should the “business” of university
  real estate practice adhere to the mission of the
  academy? The farther away from the academic
  mission, the less successful the deal.
• Does the university take on a different obligation
  as “developer?” A real conflict between market
  success and public good.
• What key lessons do we learn from the expanding
  role of university as developer? Does this mean
  the university has become the “engine” of urban
  growth?
                                                       7
  …a few summary statements to
         introduce our key findings
1. If not “engines” of urban development, universities, at
   the very least, are sources of increasingly “mixed”
   use development - blurring the edge, the structure
   and in some cases the very meaning of “campus.”
2. It is also clear, that real estate practices are key to
   the fiscal and programmatic future of higher
   education - program, endowment and urban context
3. As such, as universities embed themselves ever
   more fully in the land economy of the city, they
   become more visibly important, perhaps even
   foundational, urban institutions.
                                                             8
                      Questions
• How do universities conduct real estate
  development projects outside traditional
  campus boundaries?
  –   Motivation
  –   Type of projects
  –   Impact
  –   The process:
       •   Leadership
       •   Internal structure
       •   Partners
       •   Relations with community
       •   Relations with city government
       •   Time lines and obstacles
       •   Financing
                                             9
Motivations, Projects, Impact

1. Need for space
    •   Academic (research)
    •   Dorms
    •   Entertainment
2. Improve the neighborhood
3. Income


                                10
University of Washington, Tacoma




                                   11
Auraria University Campus




                            12
University of Illinois, Chicago
      South Campus




                                  13
University of Illinois, Chicago
      South Campus




                                  14
University of Illinois, Chicago
      South Campus




                                  15
                   Process:
1. Leadership
   • Personal commitment from the top
        - OSU, Penn, Marquette, Georgia State, Pitt vs.
          Ryerson, Temple, Louisville
   or
   • Institutionalize commitment
        - Victoria, U of C, Denver




                                                      16
                  Process:
2. Internal structure
    • Small team for partnerships
    • Strong internal capabilities
    • Expertise and decision-making ability




                                              17
                  Process:
3. Partners
    • Half acted alone
    • Fully authorized intermediaries


  Community intermediary will not deflect
  heat.



                                            18
                 Process:
3. Partners – Private developers
  • Ground lease, developer at risk
  • Joint venture
  • For-fee


 Vary along risk-reward continuum



                                      19
                  Process:
4. Community relations
   •   History of urban renewal
   •   Progress on ethics; cycles of learning
   •   Role of intermediaries: worth it?
   •   “There is no such thing as vacant land”
   •   History, image, politics matter more than
       land



                                                   20
Ohio State University




                        21
Northeastern University
 Davenport Commons




                          22
Northeastern University
 Davenport Commons




                          23
University of Pittsburgh




                           24
                  Process:
5. Relations with city government
   •   PILOT
   •   Regulations
   •   Comprehensive and Master Plans
   •   Mixed conflict & cooperation
   •   Relationships matter
   •   Need for more consistent joint planning


                                                 25
                  Process:
6. The long and winding road
   • Longer than usual because of:
     •   Unclear conceptualization
     •   Unclear development entity
     •   Multiple constituencies
     •   Exit not an option




                                      26
                  Process:
7. Financing
   • Methods
     -   Bonds
     -   Certificates of Participation
     -   Capital grants
     -   Private capital and leasing
     -   Debt finance through intermediary
     -   TIF
     -   Loans
     -   Gifts
     -   Operating funds
   • DePaul case
                                             27
DePaul University
 Loop Campus




                    28
   Multi-University Real-Estate Projects
                                                                             Reason for
Institution name                                     Project name
                                                                             development
University of Arizona, Phoenix & Arizona State
                                                     ASU Satellite Campus    Need for space
University, West
South West Texan University Temple College at        Round Rock Higher       Community
Taylor, & Austin Community College                   Education Center        Development
Berklee College of Music, New England                Hynes Convention
                                                                             Need for Space
Conservatory, and Boston Conservatory                Center
Berklee College of Music, the Boston Conservatory,
                                                     Boston Arts Academy     Community
Emerson College, Massachusetts College of Art, and
                                                     Charter High School     Development
the School of the Museum of Fine Arts
Boston Hebrew and Andover/ Newton Theological
                                                     Newton Campus           Need for Space
School
Drexel University & University of Pennsylvania       Biotech Park            Need for Space
                                                     Merck Research
Emmanuel College & Harvard University                                        Need for Space
                                                     Building
Louisiana State University & Tulane University       Bio-Innovation Center   Need for Space
DePaul University, Roosevelt University, and
                                                     University Center       Need for Space
Columbia College.
University of Arizona (Phoenix) & University of      Mount Graham
                                                                             Need for Space
Minnesota                                            Telescope Project                        29
                                  Boston Arts Academy
                                  High School
                                               • Structure:
                                                 – Renovated vacant building (226,000 sf.)
                                                 – Shared space with another high school
• Institution Names:                           • Financing:
   – Berklee College of Music, the Boston         – Universities pledged in kind resources
     Conservatory, Emerson College,            • Cons:
     Massachusetts College of Art, and the        – Finding suitable space
     School of the Museum of Fine Arts            – Initial budget constraints
• Synopsis:                                       – Duel-enrollment programs: feeder school
   – A consortium of universities developed • Pros:
     the first and only arts high school in       – Community and city buy-in:
     downtown Boston.                                 • The BAA only accepts applications from
• History:                                               students who live in Boston.
   – ProArts is an association of six             – BAA is now almost completely self-
     neighboring Boston art universities that       sufficient thorough donor dollars
     formed a 501.c3. Through this 501.c3, a • Key to success:
     charter school was conceived,                – Ability to accept unexpected results.
     developed, & graduated its first students
     in 2001                                                                               30
                                           Bio-Innovation
                                           Center
                                           • Structure:
                                             – New 130,000 square foot facility
                                             – Located on Canal Street in downtown
• Institution Names:                           New Orleans.
  – Louisiana State University & Tulane      – Scheduled to open Fall 2007
    University
                                           • Financing:
• Synopsis:                                  – $30 million
  – The New Orleans Bio-Innovation         • Pros:
    Center is a technology business
                                             – Supports the commercialization of
    incubator created to foster                research developed at the LSU and
    entrepreneurship within the New            Tulane health sciences centers.
    Orleans bioscience community.            – Attracts out-of-state bioscience firms to
  – To assist companies commercializing        Louisiana.
    biotechnologies from New Orleans-      • Cons:
    based universities.                      – Delays in completion
• History:                                 • Key to success:
  – A 501.c3 formed through funding from     – Continued commitment from the State
    the LA Department of Economic
    Development.
                                                                                     31
                                                           University Center
                                                           • Structure:
                                                              – 35,000 square feet of retail
                                                              – Dormitory houses 1,700 students.
                                                              – Construction began on June 1, 2001 and
                                                                officially opened August 16th 2003.
• Institution Names:                                       • Financing:
  – DePaul University, Roosevelt University, and              – $151 Million through tax exempt bonds
    Columbia College                                          – All three agreed to cover the rent for their
• Synopsis:                                                     beds upfront for the first year if the
  – University Center of Chicago is the largest joint           property wasn't fully leased.
    student residence hall in the United States.              – U.S. Equities Student Housing, can offer
                                                                the apartments and suites to students if
• History:                                                      not fully leased.
  – In the late 1990s, DePaul tried to persuade the
    city of Chicago to let it build a dormitory, but the   • Pros:
    city, eager to see a grandiose project there that         – Provides multiple avenues of revenue
    could help revitalize that end of the South Loop,           (conferences, retail, community & student
    turned down DePaul's request.                               housing)
  – DePaul approached its neighbors and collectively       • Cons:
    formed a 501.c3                                           – Risk of diluting Universities’ culture
  – The city government donated the building's site
                                                              – Increases in cost of operation
    to the Educational Advancement Fund which is
    developing the project.                                • Key to success:
  – University Center was about six years in the              – Developing a single vision
    making.                                                                                              32
             Conclusions
• Major projects require strong leadership
• Neighborhood improvements successful, but
  take long time
• Most universities “go it alone”
• Private developers’ and formal intermediaries’
  role needs specification
• Community relations amenable to improvement
  & learning
• Relations with government too episodic
• Little difference between public & private
  universities
                                               33
                  Background
• Great Cities Institute. University of Illinois at Chicago
  and the Great Cities Commitment
       http://www.uic.edu/cuppa/gci/
• Lincoln Institute of Land Policy and the Great Cities
  Institute: City, Land and University Project
        http://www.lincolninst.edu/subcenters/clu/
        http://www.uic.edu/cuppa/gci/
• Annual workshops: Boston, Toronto, Atlanta, Portland
  and Chicago
• David C. Perry and Wim Wiewel (eds.) The University as
  Urban Developer: Case Studies and Analysis (M.E.
  Sharpe, May 2005)
      dperry@uic.edu and wwiewel@ubalt.edu
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