Board of Regents' Statement Regarding Construction of New Student Housing
ADELPHI, Md. (April 9, 2007) - Since 1998, the University System of Maryland (USM) has been moving
from constructing student housing using USM revenue bonds to the greater use of
public-private partnerships and fully-private funding of dormitory
This allows the system to transfer some or all of the risk of the
financing and operating portions of student housing to the private sector,
which minimizes the amount of direct debt the system has to carry. In turn,
this mitigates the impact on USM's bond ratings and ability to finance
other capital projects where the capacity to issue debt is limited.
The fact is
that the use of private financing is a viable and effective delivery method for
student housing when the capacity for direct system financing is limited.
In the Spring of 2006, the
Board conducted a comprehensive review of all system-wide capital project
submissions, and it was clear that there would not be sufficient debt capacity
to accommodate all of the requests made by the institutions. Given that student
housing is typically the most attractive project to private developers-and that there
were numerous examples from across the nation of successful public-private and
fully private student housing projects-the Board placed all new housing
projects under the "fully private development option."
The intent of the Board's
action was to encourage USM institutions to pursue the fully private option
first; and once all options for non-USM debt had been exhausted, projects could
be considered for public-private debt (which carries an impact on the system's
debt capacity as indirect debt). This plan was approved by the Board as part of
its System Funded Construction Program (SFCP).
It is not correct to say that
the Board did not approve the University of Maryland, College Park new student housing
proposal-it did approve the project, but under the recommended "fully private
Contact: John Buettner