Approve Student Housing Rental Rates at UW Tacoma

Transcription

1 F 8 Approve Student Housing Rental Rates at UW Tacoma RECOMMENDED ACTION It is the recommendation of the administration of UW Tacoma and the Finance and Asset Management Committee of the Board of Regents that the Board of Regents approve the proposed student housing rental rates, as shown in Table A, for the University of Washington Tacoma, making the proposed rates effective July 1, BACKGROUND UW Tacoma Housing and Residence Life (H&RL) provides a vibrant livinglearning community that supports student development and enhances residents educational experience. Purchased in August 2016, Court 17 is UW Tacoma s first dedicated student residence hall. It features apartment-style units and includes 50 studios, 39 one bedroom, and 39 two bedroom apartments. Court 17 is currently configured to house up to 288 students in seven different living arrangements designed to suit the varying needs of first-time first year, continuing, transfer, graduate and professional students. H&RL regularly assesses Court 17 services to align our investments with our goals and objectives. Our rate development begins by assessing projected changes in known costs and then examines multiple scenarios to reduce costs and, if necessary, to increase revenues. H&RL does not assume a rate increase at the onset of our process and seeks to avoid or minimize cost impacts for our students. STRATEGY FOR DEVELOPING THE RATE CHANGE PROPOSAL We reviewed actual 2017 calendar year data to project FY19 operational costs and revenues rather than simply increasing the rates incrementally We developed several rate proposal options, including a straight across increase to all room rates and a right-sizing room rate Proposal options were reviewed with student representatives and residents A zero-rate increase option was analyzed for feasibility A comparison to market and peers was reviewed, see Table D This rate proposal is the result of forecasting FY18 known costs and adjusting revenue scenarios to meet these operational requirements. The proposed increase will generate an estimated additional gross revenue of $116,115 that will offset planned FY19 operational costs.

2 2) The following are the largest drivers of the proposed rate change. Please see Table B for additional details. Utilities: The current year (FY18) utilities allocation reflected an incremental increase over estimates generated during the acquisition process. Actual usage data from 2017 indicates an overall reduction in utilities for FY19. However, building-wide and student unit utilities rates are anticipated to increase in FY19. The rate increases are expected to be fully covered by lower usage. Salaries, Wages, and Benefits: University-wide merit, step, and fringe benefit increases are pending University approval but projected for FY19. In addition, Court 17 s current student staff to resident ratio of 41:1 is below the national average of 37:1 according to a February 2015 publication by the Association of College & University Housing Officers International (ACUHO I). Without increasing occupancy we would need to increase staffing to reduce risk and to meet program objectives related to student learning and building operations. In FY19 we aim to increase occupancy, both to meet student demand and to increase revenue. Consequently, we have proposed adding a 50% FTE live-in professional staff position; the cost of this new position is more than offset by the increased rental revenue. This position is pending UW Tacoma approval processes which will commence after FY19 rates are finalized. Capital Expense & Reserve: In-unit washers and dryers were installed in 2006, prior to UW Tacoma s ownership, and are rapidly approaching the end of their expected life-cycle. One FY19 scenario budgeted one-fifth of the $221,250 estimated cost of replacing 118 appliances and planned a continued reserve accrual for the remainder of replacement costs. Our final FY19 proposal includes costs for a feasibility study that will inform a cost benefit analysis of in-unit services versus a central laundry facility. H&RL would engage residents regarding the feasibility study results and reflect the outcome of this process in our FY20 Rate Proposal. In the interim, repairs and replacements will continue as needed during FY19. Internal Loan: This increase reflects the costs of purchasing furnishings to increase occupancy as well as higher than projected costs for housing management software. Facility Maintenance: The supplies and services required to complete the first building-wide unit turn process in Summer 2017 were higher than could be projected at the time Court 17 was acquired. Revenue: H&RL explored options for increasing revenue to offset the cost changes listed above. Court 17 opened with a waitlist in Autumn In FY19 we plan to convert one-half of a floor from unfurnished

3 3) private rooms to furnished, shared undergraduate units which will accommodate an additional 12 residents. RIGHT-SIZING ROOM RATES H&RL adjusted rates incrementally in FY17 and FY18 based upon the rate structure in place when UW Tacoma acquired Court 17. To develop FY19 rates we analyzed actual operational costs and revenues and developed an allocation formula that distributes costs based upon known relationships associated with each unit and occupancy type. Our goal is to allocate costs in a transparent and equitable way. Students expressed concern about the impact the largest percentage increases would have on residents in those units. In response, H&RL proposes to phase this right-sizing of rates over a two year period and complete this process in FY20, taking into account any additional variations in costs and revenues. TABLE A - PROPOSED RATES Unit Type REVIEW AND APPROVAL # of Residents Per Resident per Month # of Residents Per Resident per Month Dollar Change Percent Change 2 residents, furnished 68 $ $ 992 $ % One Bed 1 resident, unfurnished 4 1, , residents, furnished Studio 1 resident, furnished 9 1, , resident, unfurnished 10 1, , residents, furnished Two Bed 2 residents, unfurnished 10 1, , Total Weighted Average FY18 FY19 Proposed $ 858 $ 888 $ % Each year, we work with various groups to solicit and gain feedback about the oncampus living experience in Court 17. Department-level: H&RL discussed the annual budget and rates review process starting in November 2017 and continued through February Collaborative discussions have resulted in our FY19 Draft budget and the current proposal.

4 4) Student Feedback: H&RL engaged residents, the Residence Hall Association (RHA) and ASUWT in the rate development process as described below. H&RL met with the RHA twice (1/10 & 1/24) regarding budgeting, the rate development process and decision-making for FY19. H&RL sent an all-resident survey on 2/12 regarding current services and overall satisfaction. H&RL sent two all-resident s (1/29 & 2/5) to communicate proposed rate changes and invite students to two open forums (1/31 & 2/6). H&RL contacted ASUWT on 1/8 to invite student governments participation in the process. ASUWT members attended both RHA meetings. H&RL staff then attended the ASUWT director s meeting on 2/7 when ASUWT students expressed the following concerns: 1. The impact proposed right-sizing may have on residents in units experiencing the largest rate changes. H&RL acknowledges the impact that a 20-30% rate change have to an individual student s budget and shares ASUWT s commitment to UW Tacoma s values of access and equity. By phasing in the right-sized rates over two years we are working toward an equitable and transparent rate structure while keeping rates more accessible for returning residents who may be affected by the increases. 2. The lack of support from UW Tacoma General Funds for expenses. H&RL is a self-sustaining auxiliary enterprise. Consequently, the services provided are paid for by those who directly benefit from them. Funding from UW Tacoma s General Funds would require all 5,000 plus UW Tacoma students to share costs that support ~300 of their peers. 3. The costs and benefits of living in Court 17 versus a private offcampus rental. By design, on-campus living and learning communities are different from private rentals. Court 17 offers educational and social programming; brings faculty and student services into the building; provides 24-7 staffing support; fosters community and provides the convenience of living close to classes and campus services. H&RL

5 5) recognizes that not every student wants the benefits of living oncampus. Our commitment is to make sure the cost of accessing Court 17 s benefits remain accessible and justifiable to UW Tacoma students who want a residential living-learning experience. ASUWT took an advisory vote on the proposed rates; zero were in support, four were opposed, and two abstained. Tacoma Campus Leadership: UW Tacoma Vice Chancellors Mentha Hynes-Wilson and Tye Minckler reviewed the rate proposal before H&RL staff presented it to Chancellor Mark Pagano & Tacoma Executive Budget Committee on 2/12; UW Tacoma campus leadership endorsed the proposal as submitted. POTENTIAL COST REDUCTIONS, 0% INCREASE If a rate increase were not approved, H&RL would make the following changes to maintain a successful program and avoid an operating deficit. Please see Table C for additional details. Phase out washer/dryers (in-unit or centralized) to reduce costs. Reduce front desk hours, which will affect students access to services. Convert all private & graduate/professional housing to shared undergraduate housing to increase headcount & revenue. This would limit the populations of students served by UW Tacoma s only residence hall & would be a one-time benefit that could not be leveraged in future years. A zero percent increase scenario was not presented to ASUWT or to students for their consideration during our rate proposal engagement process but has since been shared with ASUWT accompanied by an updated draft of this proposal.

6 6) TABLE B PLANNED EXPENSE & REVENUE ADJUSTMENTS Category Supplies & Services Summary of Changes Additional e-commerce, Increase Credit Card Processing Fees Allocate supplies for planned new position Effect on Rate (%) Insurance Projected 3% increase for Annual Premiums 0.04 Facility Maintenance Internal Loan Projected 3% increase for Janitorial Services Recognize higher than previously budgeted in-unit costs Recognize FY18 Furniture and Planned FY19 Purchases Recognize Housing Management Software Expense Capital Expense & Reserve FY19 Feasibility Study: Centralized Washer/Dryer Facility 1.32 Salaries, Wages & Benefits Utilities RATE PROPOSAL OVERVIEW Projected Merit, step increases, min. wage & fringe changes New Position: Residence Life Program Assistant Due to 2017 Usage Data, reduce previous allocation for FY19 Utilities Projected 3-5% Utility Rate Increases (0.43) Recognize FY18 revenues as regular and ongoing for FY19 Revenue Partial phase out of Parking Fees as H&RL revenue Recognize additional revenue from FY18 1st Floor unit conversions (0.25) Additional revenue related to planned FY19 1st Floor unit conversions Proposed Room Rate Increase (weighted average) 5.08%

7 7) TABLE C 0% SCENARIO - EXPENSE & REVENUE ADJUSTMENTS Category PROGRAM CHANGES OVERVIEW IN CASE OF 0% RATE INCREASE Summary of Changes Effect on Rate (%) Facility Maintenance Reduced Room Cleaning Scope, carpet cleaning No repairs to washer/dryers due to planned phase out No provided replacement lightbulbs/batteries Internal Loan Additional furniture expense to support 1st & 5th floor conversions 0.61 Capital Expense & Reserve Salaries, Wages & Benefits Revenue Begin phase out of washer/dryers as a provided service No Feasibility Study, No Unit Replacement Additional student RA on 5th Floor to support conversions Reduce Front Desk from 40 hours/week to 20 hours/week Convert 1st Floor South to shared undergraduate, +11 residents Convert 5th Floor Studios to shared undergraduate, + 7 residents Adjust planned occupancy percentage to reflect conversions Additional staff room on 5th floor to support densification (0.89) (1.12) (0.31) (3.43) Net Impact of Changes, no rate change for FY19 (5.14%)

8 8) TABLE D MONTHLY RATE COMPARISON - SIMILAR ROOM TYPES UW Tacoma UW Bothell Comparison The Evergreen State College Pacific Lutheran University University of Puget Sound Thea's Landing Vue 25 Apartments Villaggio Apartments Harmon Lofts Traditional Shared, One Bed Studio Two Bed Shared, Private, N/F Shared, Private, Private, N/F Shared, Private, N/F FY19 Proposed , ,226 1, ,086 FY , ,020 1, , , , , , , , , , , Comparison Classifications: "Shared" - shared bedroom space "Private" - private bedroom space "" - furnishings included in monthly cost "N/F" - provided unfurnished Rate Data Sources: Educational Institutions: Academic Year Posted Rates Privately Operated Apartments: Trulia.com rental listing information as of February Adjusted to include monthly electric, internet, and cable TV expenses reflected in UW Tacoma rates.