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8 > Image 8 of Minutes of the University of Kentucky Board of Trustees, 2011-12-13

Part of Minutes of the University of Kentucky Board of Trustees

-3- average age of housing on campus is 44 years. The deferred maintenance ofthe housing facilities totals over $200 million dollars. UK has a $2.7 billion budget, but we have to put that in perspective ofthe housing enterprise. The $200 million deferred maintenance compares to housings annual budget of less than $30 million, which is a large issue. The reason why this is so important is that we know that students who live on campus are more successful at UK and across the country. UKs on campus freshmen had a retention rate of 83 percent this past fall, but off campus students only had a retention rate of 76 percent. UKs on campus students had a GPA of 2.9, and off campus students had a GPA of 2.5. There is definitely a track record of success. President Capilouto has set a long tenn goal to basically replace and renovate all under- graduate and graduate housing, as well as expand the number of beds to serve the students. As part of this overall plan, we have an immediate short-tenn goal of opening a new residence hall of at least 600 undergraduate beds in the fall of 2013. This is a very aggressive timeline and means we have to start construction on April 1, 2012. We are looking at basically two different options on how we develop and meet this challenge: go the traditional route for housing as in the past, which is funded by agency or university debt and managed intemally. We are also looking at an altemative approach which is a public/private partnership. What we are trying to do in evaluating this method is to find the best option that first and foremost maintains affordability for the students. We also want to preserve the universitys financial capacity, which means debt capacity. We have a lot of capital construction needs on campus, and the way we can preserve debt capacity, if we went into the public/private partnership, is by having a partnership with a developer that can provide a significant amount of equity. Hopefully, they can bring money to the table that is not debt but equity. And finally, we want to meet this aggressive timeline with as minimal disruption of the campus as possible. A little infonnation on affordability is that our average annual increase in housing rates over the last nine years has been 6 percent every year. If you think about the condition ofthe facilities that we have and the rate increases that we have been dealing with, you can see that we cannot really continue on this path in the future. Our rates are very comparable to the local markets, and we are already getting into the issue of affordability with our students. Our traditional halls rate for this years fall and spring semesters is $4,510, and our premium residence hall rate is $6,030. To evaluate which method we want to use, we issued a Request for Proposal in October. We asked developers to submit proposals to replace and expand, as well as manage our housing enterprise. We broke this into two phases. We know Phase I. We want a facility open August 2013. Phase II is the larger concept of doing everything else. What we were looking for was a developer that basically has the financial wherewithal and the experience to do such a project. President Capilouto created a committee to evaluate the proposals, and there are eight members on the committee. At this time, I want to thank this committee. They worked incredibly hard over a small period of time, even devoting the Sunday of Thanksgiving break. We have three of the members in the audience: Sergio Melgar, Robert Mock, and James Hardymon. I want to offer a special thanks to Mr. Hardymon, who through his dedication and love ofthe institution agreed to give so much of his time to this proj ect.