San Diego State Eyes Private Partners For Mission Valley Development
Wednesday, June 6, 2018
Photo by Kris Arciaga
San Diego State University is working with a private developer to build a university-style housing complex just a half a block south of its main campus.
School officials say this project could be a blueprint for the kind of public-private partnership San Diego State plans to use to develop the Mission Valley Stadium site. The school is hoping to buy Mission Valley land to develop an auxiliary campus.
The project is called the Montage on College and it is located just a short walk south of campus.
Scaffolding covers the outside of the six floor College Avenue building which will house students taking classes at San Diego State.
"These are a little more done, watch your step," Bruce McKee of Capstone Development Partners tells a visitor as they walk through the second floor of the construction site. Most of the apartments are in some state of disarray as crews install plasterboard, windows and plumbing.
Construction workers are pushing to have the building ready for fall classes.
Inside the structure's large main lobby, McKee described what future residents will see.
"As students walk in they're going to be greeted with the administrative offices where Stan Diego State Residential Life Staff as well as building maintenance and facilities staff will be. Not unlike what a student would experience on campus, entering a San Diego State University on-campus housing project," McKee said.
And that's one of the project's keys.
New Way To Finance Housing
The 300 or so students that end up living here should feel like they are living on campus, even though Capstone is operating the complex facility on a 50-year lease.
"We've adopted the San Diego State University on-campus housing regulations so they abide by the same regulations here as they would if they lived on campus," McKee said.
So, when students lounge around the swimming pool-sized hot tub in the structure's central courtyard, it will feel like an on-campus housing unit, not a private development located a short walk from the school. This partnership with a developer could be the basis for developing the Mission Valley Stadium site.
"Every public-private partnership is a little bit different," said Eric Hansen, San Diego State University's director of Housing Development.
"In this situation, the developer was able to provide some revenue upfront to the SDSU research foundation. And then there's a profit sharing that goes on along the terms of their ground lease," Hansen said.
This is a new way to meet the school's appetite for campus housing.
SDSU says on-campus housing is a key to student success and it also generates money.
Six years ago the campus only had 3,200 beds, but university officials are working to have campus housing for most freshmen and sophomores.
"Right now for this next fall, we'll have about 5,700 beds that we will be operating. And we anticipate when the sophomore success program is fully implemented we'll have about 8,000 beds that we will be operating," Hansen said.
SDSU has traditionally used revenue bond financing to build housing. A new west campus tower is located on-campus and will be paid off with student rent over time. Like other campus buildings, the project is exempt from property taxes.
But the Capstone development is different. Under this new approach to building housing, the developer leases the land, builds the structure and manages the building for 50 years.
Because this is student housing, Capstone gets a pass on paying property taxes, which was an important financial consideration for the developer.
It Has Been Done On Other Campuses
This kind of relationship might be new to SDSU but it has been done at other CSU campuses.
"We've got a lot of experience developing capital projects going back many decades. There are some types of projects that we do very well. There are other types of projects where we think the risk is maybe a little higher for us. Maybe it's a particular type of project that is not within our expertise," said Robert Eaton, the California State University Assistant Vice Chancellor.
CSU officials have approved more than 20 of these public-private partnerships, according to Eaton.
The Innovation Village at the Cal Poly Pomona campus and the StubHub sports center at the Dominguez Hills Campus are just two. Both generate some property tax revenue through possessory taxes. That's when a private entity operates a business on the publicly owned property.
"Those are excellent examples of what we've been able to do and our capabilities. And we can take that expertise and we can translate it to the vision of the university at the Mission Valley development," Eaton said.
That's important because CSU trustees will have to sign off on any deals negotiated by San Diego State University.
SDSU officials have big plans for the Mission Valley stadium site if they get a chance to buy the land. The school wants to build a campus annex with more than 4,000 housing units. Those include market rate, affordable and student-faculty housing units.
School officials are adamant that those projects will generate property taxes for the city and they say the public-private deals will eliminate the need to spend taxpayer dollars.
San Diego State University tests a private-public partnership to build student housing, just off campus.
KPBS is a service of San Diego State University.
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