The charge to this group was to select a developer to pursue a possible P3. We have not made
the decision. When I saw the article in the Wall Street Journal, I kind of gasped a little at the first
sentence. We have not said "yes, this is a done deal and we are moving forward. That is not it at
all. We asked this committee to evaluate the proposals and pick one developer to start negotiations
because these types of deals are so intricate that it is not feasible to actually go through negotiations
with more than one developer at the same time. So, we have asked the committee to pick a developer
to negotiate with and then we will evaluate which option we want to go.
How did the committee evaluate these proposals? As I said before, it was based on the
wherewithal to finance such a large project. Of course, we are also looking for a developer that has
prior history with building and constructing large scale projects, and we wanted experience with
managing student housing.
The committee went through an extensive evaluation process. We had an educational session,
and we toured our own facilities. We had a presentation on the status of housing. We even had
assistance by extemal advisors. We had Anderson Strickler, who is a well-known education real
estate consultant. And, we also called upon BKD, our extemal auditors, to help us evaluate the
proposals and the impact on our financial statements, because that was one of our key goals through
this examination. The committee had a comprehensive examination and discussion of each proposal.
We did reference checks and had presentations and interviews. We short-listed the proposals and
brought in three companies. We also perfonned site visits to some ofthe developments.
I am pleased to tell you that the committee has recommended to President Capilouto that we
pursue a possible P3 with Education Realty Trust. Education Realty Trust is a REIT or real estate
investment trust. For those of you on the Investment Committee, this is very familiar. It is a publicly
traded company. It has more than 50 years of experience in student housing, including four on-
campus facilities with the University of Louisville. And, what is really amazing to us is they
proposed a significant equity investment. It might be helpful if I take a few seconds to explain the
history of these public/private partnerships. This is not new.
Prior to 2008, the common practice was to fonn separate 50l (c) 3 corporations and issue l00
percent debt. It was a way to off balance sheet the debt. After the economic downtum, Moodys and
S & P, as well as the accounting profession itself; said we have got to start recognizing this debt, both
in tenns of bond ratings as well as possibly recording the debt on the balance sheet. So, the evolution
of P3 arrangements has really changed over time. EDR, the companys stock symbol, proposed a l00
percent equity investment for Phase I and Phase II. It is likely unprecedented. Nonnally, today you
can see up to about 35 percent equity investment, but EDR really sees this as a potential game
changer for the industry, where we are not just going to do one or two donns, but we are really
looking at how we can replace all of housing and do it in the most affordable way for students.
EDR has experience with not only the University of Louisville but also the University of
North Carolina at Chapel Hill, the Penn State System, and the University of Colorado. They have
developed over 83,000 beds in the country. They also are very familiar with sustainability efforts.
They have done many projects with gold and silver LEED certification, and they have proposed to
look at the possibility of geothennal heating and cooling on our campus as well.