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The business case for USF St. Petersburg’s $33 million student housing project
Growing demand for student housing is behind the University of South Florida St. Petersburg’s plan for a new 375-bed residence hall.
The current on-campus living options are maxed out and 80 students are on a waiting list, according to an analysis for the Florida Board of Governors, which approved the project on Nov. 8.
The USF Financing Corp. plans a $33 million bond issue to finance construction of the residence hall and equipping it.
The new six-story, 125,000-square-foot residence hall will be near the northwestern corner of campus on 6th Avenue South between 3rd Street South and 4th Street South, across from the university police department and adjacent to the Tampa Bay Rowdies practice field.
It will include a full-service dining hall, which the university does not currently have. Construction is expected to begin in spring 2019, with the new building projected to open in July 2020. The Beck Group is the designer-builder for the project.
The new residence hall will give students more affordable housing options downtown while increasing the number of beds on campus by nearly 70 percent, a press release said.
Stephanie Goforth, chair of USF St. Pete’s campus board and a member of the USF System Board of Trustees
“This is more than just a building,” said Stephanie Goforth, chair of USF St. Pete’s campus board and a member of the USF System Board of Trustees. “It’s the next step in the evolution of USFSP. It demonstrates our commitment to helping students connect with one another and the university.”
USF St. Petersburg currently has 541 revenue-generating beds, the Board of Governors analysis said. Although students are not required to live on campus, 604 students chose to do so as of September. To accommodate them, some single-occupancy bedrooms were temporarily converted to double occupancy.
The university hired Brailsford & Dunlavey to study demand for new on-campus housing. The study concluded that by fall of 2020, 395 more students will want to live on campus than there are beds available currently.
The consulting firm also looked at rents in off-campus apartments in the area around USF St. Petersburg and found that the most comparable ones range from $4,494 to $5,080 per bed per semester. In the fall 2019 semester – one year before the new project opens – USF St. Pete will charge $4,671 for single occupancy units and $4,505 for double occupancy units, under a rate schedule approved by the board two years ago.
About 60 to 75 percent of the new residence hall will be four-bed, two-bath single occupancy units, with the rest being two-bed, one-bath double occupancy units. About 30 percent to 40 percent of the single-occupancy units will be flex units that can be converted to double occupancy.
The project’s break-even occupancy is estimated at 83 percent by the university, but the consulting report anticipates 100 percent occupancy based on identified demand, the analysis said.
The construction includes 12,000-square feet of shell space for a 400-seat dining facility. The dining facility will be operated by the university’s current dining services operator, Sodexo. Sodexo will be responsible for an estimated $2.8 million in costs to build out the interior and equip the dining facility, and will recoup its upfront investment from meal plan revenues stemming from a 10-year contract. The university requires Sodexo to offer a diverse array of meal plans, including an unlimited/all-you-can-eat option, and to keep those plans affordable to students, the analysis said.
Overall, the residence hall project is expected to achieve an internal rate of return estimated at 9.94 percent.
The bonds issued to pay for the new structure will include rental revenue and fees from USF housing system facilities, including parking and retail and commercial uses of the housing system, the analysis said.
“The demand for the project appears adequate and university-provided projections indicate more than sufficient system revenues to service the additional debt,” the Board of Governors staff wrote in recommending the project.
The university considered a public-private partnership, similar to that used to build the Village student housing project on the USF Tampa campus. That project includes five residence halls, a Publix grocery store, a health and wellness center and a dining commons. The small size and scope of the USF St. Pete project did not make the P3 approach advantageous, the analysis said.
The bond counsel for the debt will be Bryant Miller Olive. The disclosure counsel is GrayRobinson, and the financial advisor is PFM Financial Advisors LLC.
