Prioritizing Institutional Mission in Private Partnerships
Cornell University Student Housing & Public-Private Partnerships
Identify developers and transaction structures that would allow Cornell to develop new graduate and undergraduate housing, improve the overall quality of its student housing inventory, and do so while benefiting from third-party development experience.
By 2015, Cornell University recognized it urgently needed to expand its housing options, given the tight and expensive private housing market in Ithaca, prohibitive to many students. Many graduate students in particular were living far from campus and in units that were sub-standard or past the end of their useful lives. Graduate student surveys and stakeholder interviews confirmed widespread dissatisfaction regarding location, quality, and type of off-campus housing, especially among international students and families.
Until this point, the University had self-developed and self-financed all of its student housing. However, it recognized self-development would not be the best solution for an envisioned graduate student housing project. First of all, Cornell needed to preserve its borrowing capacity for other mission-critical, non-revenue-generating projects planned for its core academic campus. Moreover, it expected that a third-party developer would be able to execute this project more quickly and at less cost than Cornell could on its own. Thus for the first time, Cornell sought to develop a strategy for a public-private partnership to deliver new student housing – while ensuring housing costs remained affordable for students.
Expand student housing options through private developer partnerships, while ensuring quality and student affordability.
Leverage U3’s experience in student housing planning, transactions, and public-private partnerships to manage comprehensive third-party developer selection and negotiation processes specifically tailored meet Cornell’s mission-critical goals.
Cornell’s first student housing public-private partnership opened in 2018, supplying 872 graduate student beds all set at below-market rates. This $80M transaction with Greystar was funded entirely from private capital and is not reflected on Cornell’s balance sheet, freeing Cornell’s capacity to take on other core institutional projects.
To launch this effort, Cornell engaged U3 Advisors in 2015 to assist with redeveloping Maplewood Apartments, an outdated graduate housing complex at the campus edge that housed more than half of Cornell’s graduate and professional student housing. Maplewood presented an opportunity to both densify and add to the stock of graduate housing beds, while bringing existing graduate beds to more modern standard that would better meet student needs.
U3 managed a competitive RFP process that resulted in the selection of national student housing developer EdR (now Greystar). Our work included negotiating a pre-development agreement with Greystar, working with the developer to refine the project finances, navigating the public approvals process, and negotiating a 75-year ground lease for the site. We were able to maintain a key provision of the ground lease that set the starting rents at below-market rates, in order to ensure student affordability.
Opened in 2018, the $80M project produced 872 new beds of housing, improved and expanded open space and student amenities, and generates ground rent to the University and tax revenue to the Town of Ithaca—all financed with developer equity. The project is a crucial resource for Cornell students, particularly those unable to easily find housing options in the tight Ithaca market, and exemplifies how the University’s clear priorities can direct the structure of third-party transactions successfully.
U3 has also worked with Cornell on broader student housing strategy. In January 2016, Cornell’s Division of Student and Campus Life selected U3 Advisors (in partnership with Design Collective, Inc. and Demographic Perspectives) to develop a comprehensive student housing master plan for its Ithaca Campus. Cornell was planning for enrollment growth at a time when half of its undergraduate students and the vast majority of its graduate and professional students lived off-campus. This fact, coupled again with the tight real estate market in Ithaca, resulted in the University’s need to provide more on-campus housing to relieve student housing pressures.
Given the range of possibilities the University faced, it needed to identify clear priorities for capital investments and housing policies. Our team engaged university administrators, staff, and students through detailed surveys, focus groups, interviews, community meetings and design workshops. By April 2017, we had integrated findings and analysis into the Master Plan, establishing a framework for optimizing Cornell’s student housing portfolio. Our team identified sophomores as the students most in need of on-campus housing, for a variety of programmatic reasons. As Cornell ultimately implemented a requirement for sophomores to live on-campus, we then centered the Master Plan on addressing deferred maintenance and increasing the overall supply of beds in order to carry out the new housing requirement.
Following completion of the Master Plan, U3 then managed a developer solicitation for a new 2,000-bed undergraduate housing initiative on behalf of Cornell, who ultimately elected to self-fund the project with a fee developer.
