UGA's new Real Estate Foundation can fast track important capital projects by issuing tax-exempt, 30-year revenue bonds instead of competing with 33 other schools for money from the state system

B Y - D O U G - M O N R O E - ( A B J - '6 9 )

hen Anna Armas of Rome received her admissions notice last spring, she didn't file her application for housing immediately because she wanted to know more about UGA's residence halls. The delay proved costly when, just three weeks before fall classes started, she learned there was no room at the inn. All 5,892 residence hall beds were spoken for. Armas was among an estimated 150-200 freshmen who wanted on-campus housing but were turned down. She now lives with three other young women at University Commons, a private apartment complex.

"At first, I was disappointed, but I ended up liking the idea of having my own apartment," says Armas, who admits she also feels somewhat removed from campus life.

Jim Day, director of University Housing, expects a similar overflow this fall. UGA's two newest dorms, Russell and McWhorter halls, were built way back in 1967, when the student body numbered 21,119. For more than 30 years, the state didn't provide funds for college housing. Hence, none got built. Today, enrollment is at 31,800.

In the past, virtually all major construction at UGA had to be approved and funded by the University System's Board of Regents. The process often took 10 years or more because UGA was competing for limited funds with 33 other system institutions around the state. When President Michael Adams arrived on campus, he found a pent-up demand for everything from dorm rooms to art studios to research facilities. He set out to bring new life to the physical campus.

In February 2000, Adams formed the UGA Real Estate Foundation to provide a creative way to finance new campus housing and other badly needed buildings—without having to go hat in hand to the regents. He modeled the foundation on similar organizations at other schools, including the University of Virginia and Pepperdine University.

"Basically, the process works like this," says Adams, who was vice president for university relations at Pepperdine from 1982-89. "To finance ambitious projects such as new residence halls, the Real Estate Foundation issues tax-exempt, 30-year revenue bonds and will retire the debt with parking or housing fees, rental payments, and private funds. The foundation leases campus land from the board of regents, which will ultimately receive the titles to the buildings once the bonds are paid off."

Adams tapped Atlanta real estate executive Jack Rooker (BBA '60), a managing trustee of the UGA Foundation, to serve as chairman of the Real Estate Foundation. In its first year, REF hired a savvy real estate pro from the private sector, Jo Ann Chitty, as executive director (see sidebar below right), and she was quickly promoted to president. With Chitty at the helm, REF has created a whirlwind of bricks-and-mortar activity that is already changing the face of the campus.

"The impact has been fantastic for two reasons," says campus architect Danny Sniff. "It delivers a product much faster and more efficiently than going through the state process, and it also has breathed enthusiasm into the life of the campus. It's an intangible morale-booster. Deans, vice presidents, and department heads who were really frustrated by the state process now see an avenue that was not here before."

New facilities are crucial to the University's ability to attract scholars, researchers and students. "New facilities can change the image and add to the fabric of the campus," says Sniff. "With the Real Estate Foundation, we can add top-flight facilities much faster and much more economically."

One of the first decisions Chitty faced was the fate of a block of retail property the foundation had already bought on Broad Street, just west of the Holiday Inn. The block had included a gas station, a bicycle shop, an auto parts store, and a futon store. The foundation didn't know what to do with the property, which marked an important extension of the University's footprint into downtown Athens.

Chitty's idea was two-fold: tear down the gas station and replace it with parking spaces, but save and renovate the stores because they had bow truss roof systems that could provide big classrooms without columns—perfect for studios, which is what they have become. The old stores now provide 30,000 bright-and-airy square feet for UGA's Lamar Dodd School of Art and for the College of Environment and Design, with 38 parking spaces in the former gas station lot and another 14 spaces behind the former futon building.

Eighty-five fourth-year environmental design students are happily ensconced at desks in the new studio space, says dean Jack Crowley, who notes that the REF approach was the only way the college could have moved into expanded quarters so quickly. "The University is growing so rapidly," says Crowley, "that it needs all the avenues it can find to build facilities to support the enterprise."

The art school is using the new space for painting studios, for interior design students, and for the offices of UGA's Study Abroad Program in Cortona, Italy.

Another immediate-impact project Chitty tackled was building a new parking deck on South Campus and getting it open in time for fall semester and the 2001 football season. The deck will serve primarily as the parking facility for the Paul D. Coverdell research building, which is being built through a public-private partnership with the federal government. REF has an advisory role with the Coverdell building.

The Real Estate Foundation had to erect the new Carlton Street deck in a hurry because it would eliminate 500 surface spaces in the Coliseum lot. Chitty, Danny Sniff, and UGA's senior vice president for finance and administration Hank Huckaby met with architects and contractors and asked the key question:

"How fast can we build a parking deck?"

		As president of REF, Chitty possesses the rare gift, says Jack Rooker, of seeing the full complexity of a real estate deal in her mind—from design to financing. Visionary deal-maker On a recent afternoon, Real Estate Foundation president Jo Ann Chitty convened a meeting to discuss revised plans for the new Information Technology Complex to be located in the River-bend Research Park. Chitty sat at the center of the table, flanked by REF project manager Krista Coleman-Silvers, campus architect Danny Sniff, and representatives from an architectural firm and a developer. As the discussion proceeded over how to reconfigure the building scheme for the technology complex, the meeting began to resemble a chess game. An architect suggested one approach. Chitty considered it, discovered what appeared to be a flaw, and said with a smile, "If you take away parking, they'll go nuts." A few moments later, she held firm on visual ambience, saying, "I don't think the quad can be sacrificed." Chitty's position is a far cry from the days when she managed a staff of nearly 100 as senior vice president of a subsidiary of the $1.8 billion TriNet Corporate Realty Trust. But she likes the face-to-face nature of what she's doing for the University. To make the most of her current position, Chitty spends time with scientists who will occupy UGA's proposed new Complex Carbohydrate Research Center to get acquainted with their personalities and with what they need in the new building. "I understand that they're superstars in their field—and what that does for the financing, " she says. "In talking with my investment banker, instead of doing conventional tax-free bonds with a foundation guarantee, I asked if he could look at their history, their grant funding, and negotiate a favorable credit enhancement—because this is not just an incubator. The answer was, 'Oh, yes.' Because of the scientists' credibility, we will get more favorable terms on the loan." Danny Sniff regards Chitty as an important ally in the return to a more traditional look in campus planning and design. But he also appreciates her willingness to back innovative ideas. Case in point: the Complex Carbohydrate Research Center. Sniff and his architects came up with a design that resembles an old mill, owing to the fact that the building will be located on a bend in the North Oconee River where old mills were once located. Chitty liked the idea and agreed to back it. Chitty started at the bottom in real estate and worked her way up, beginning after high school in Coral Gables, Fla. "I saw all these women driving around in Mercedes, and I said, 'Wow! I'll just do that!'" So she got her real estate license—and hated it. "It's kind of hard to advise people on buying a home," she says, "when you're 19 and you still live at home." After earning a business degree and an MBA at Jacksonville University, Chitty helped grow TriNet's portfolio to nearly $200 million. REF chairman Jack Rooker (BBA '60) says Chitty has a rare gift for seeing the full complexity of a real estate deal in her mind. "She's doing a good job," he says, "because she knows how to do it from design to financing." Chitty remembers the marching orders she got from Rooker: "Jack said, 'Remember every day that you're here to help the University of Georgia.'" —Doug Monroe

They decided to use pre-cast construction, with parts of the deck manufactured off-site, then trucked in. REF got access to the ground in March and opened the deck on Aug. 16, providing parking for 820 cars—a net gain of 320.

REF's third project was the acquisition of the 495-bed College Park apartment complex near East Campus, which Chitty says will be used to house transfer students.

"I saw that we weren't going to be able to deliver beds as quickly as we could build a parking deck," she says. "So, if we could buy something existing and increase housing stock, it seemed like a good thing to do. It had the added benefit of expanding the campus perimeters, in that the property is adjacent to existing UGA property."

The foundation now turns its attention to its most formidable and important task: the construction of on-campus residence halls. REF plans to build a complex of halls on East Campus with 1,200 beds and occupancy by 2003. The new residence halls will require the building of a new parking deck to accommodate the surface spaces that will be displaced. A mock-up of the new dorm rooms won rave reviews from students who toured it (see photo below).

REF has announced a number of other projects:

Complex Carbohydrate Research Center
The 120,000-square-foot Complex Carbohydrate Research Center will be located in UGA's new Riverbend Research Park off College Station Road along the North Oconee River. The design concept is to give the center a mill-like appearance. The CCRC is expanding its 13-member faculty to 18 and will house 150 individuals and equipment such as nuclear magnetic resonance spectrometers. The new facility will help make the CCRC more competitive to win research funding, says director Alan Darvill: "We will have well over $10 million of analytical equipment to study the structure and biology of carbohydrates."

Information Technology Complex
Also located in the Riverbend Research Park, the Information Technology Complex will provide 120,000 square feet of space in two buildings, one to house the State Board of Regents' Office of Information and Instructional Technology and the other for UGA's Enterprise Information Technology Services. The complex will allow these two high-tech groups to collaborate. The state-of-the-art buildings will include both office and training space.

Alumni Center
UGA's new Alumni Center will be built adjacent to Lake Herrick and the intramural fields on East Campus. The 120,000-square-foot center will provide extensive meeting facilities for alumni, as well as office space for the external affairs division, the UGA Alumni Association and alumni relations staff, and the UGA Foundation. With landscaped gardens and terraces, the center will house a library and an archival collection preserving UGA's history. To pay for the Alumni Center, Chitty says REF will issue bonds and the project will be paid for largely from earnings from the UGA Foundation's endowment and private contributions.

"Now that the University is at the point of achieving world-class status," says Dave Muia, executive director of the alumni association, "it warrants a facility like this."

Baxter Street property
A $3.3 million purchase from the Athens Housing Authority of six acres in the Parkview housing project on Baxter Street—including 28 boarded-up units, an office, and a warehouse—will eventually provide more parking. Campus Housing plans to use the office and warehouse for the time being and hopes to buy more of the aging public housing project in the future.

Cole Business Park
REF purchased approximately seven acres of land behind the former Roberds Building on the Atlanta Highway. It plans to build a warehouse that will provide cost-efficient, off-campus storage for UGA.

New parking deck and University bookstore
REF is in the early stages of planning a new parking deck and University bookstore that would complement the new 200,000-square-foot Student Learning Center, a regents project now under construction between the Tate Student Center and Lumpkin Street.

Space analysis projects
REF is conducting a space use analysis for the Terry College of Business that could result in new business school facilities.

The Real Estate Foundation issued $25 million in bonds to fund the Carlton Street Parking Deck ($9.5 million), the Broad Street properties ($3.5 million), and the College Park Apartments ($11.4 million). It plans to issue a total of $160 million more to fund the other announced projects.

Unlike similar foundations at other universities, REF hasn't undertaken any speculative projects, such as office parks. Even without speculative building, REF has an enormous potential for growth, says chairman Jack Rooker.

"There is a strong demand for more physical space," says Rooker. "There are professors at the University who do not have adequate space to do their jobs. And there's pressure for private space, too. It doesn't have to be right on campus, but it has to be very accessible to what's going on at the University."

An example of the need for private space is the pharmaceutical industry, says Rooker, with companies that want to be close to the University's research because of the time pressures of drug development.

hen Chitty hit campus in the fall of 2000, she found the hardest part of her job was simply gathering vital information from different departments and individuals.

"There are lots of silos here," she says, "so the challenge was getting to the right information-keepers. I needed to know where the money would come from to pay the rent. I didn't know if new money would be appropriated for new leases or if they had to take it out of the existing budget. I had to spend a lot of time getting to know the campus."

It's a good thing Chitty is a quick study, according to Jim Day, who says, "The coming of the Real Estate Foundation certainly is the only way of building new housing."

The new residence hall complex on East Campus will end the on-campus housing drought that began when the state began trying to improve its financial standing and bond rating three decades ago, says Day. As a result, bonding programs for such projects as residence halls were stopped or curtailed at colleges and universities throughout Georgia. It became impossible to win funding for dorms—except for special circumstances, such as the 1996 Olympic Games in Atlanta, which is how Georgia Tech got new residence halls.

During the 30-year drought, UGA's housing department had to be ultra-thrifty, squirreling away savings, practically a dollar at a time, to remodel existing housing.

"Prior to President Adams' arrival, our plan was to renovate and rehabilitate what we had, to save up money and knock them off one at a time," says Day. "We did a lot of kidding about car washes and bake sales. It was a very slow process because we couldn't borrow money."

Last year, University Housing grossed $18 million, with expenses of $13 million. The $5 million difference will be invested in renovation. The next major renovation project is Myers Hall on South Campus. Part of the dorm closed in January, the rest in May. The renovated Myers will reopen in 2003 with 400 rooms, down from the current 475, but with a number of amenities and improvements (see Back Page).

The Real Estate Foundation will help in upcoming renovations of Payne, Rutherford, Mary Lyndon, and Morris halls. And additions are planned for new capacity at Oglethorpe House and Morris Hall.

The impetus for new on-campus housing at UGA is driven by the knowledge that students who live on campus tend to have a higher grade point average than those who live off campus and tend to enroll for more credit hours.

"We know from our research," says Day, "that students who live on campus in the right setting are much more engaged in the life of the University."

The new residence halls on East Campus, near the Ramsey Center, will be a far cry from the relatively spartan quarters built on campus in decades past, with the traditional communal bathrooms and two beds squeezed into a tight space.

"They'll appeal to sophomores, juniors, and seniors," says Day. "They'll offer more bedroom and bathroom privacy than traditional college dorms that freshmen start out in. Upperclassmen want more privacy. These will be all single-occupancy bedrooms, with bathrooms shared by one, two, or three other people. A majority will be what we call 'super suites,' or apartments without kitchens."

The structures will be five and six stories high, which will enable them to have a more classic look. "It's going to be a complex of four traditional-style buildings surrounding a traditional quad," says Chitty.

While the University welcomes the return of residence hall building, the foundation's ambition is causing some concerns beyond the campus. John Barrow (AB '76), the Athens-Clark County commissioner whose district includes the campus, calls it a mixed blessing.

"I agree with the administration's position that more undergraduate students ought to be living on campus," Barrow says. "But our private market is overbuilt."

The market for older apartment units in Athens is in recession, says Barrow, who points out that the market was overbuilt during the era when the University built no housing on its own, while continuing to expand enrollment. Now the Athens rental market is beginning to cannibalize itself, as developers continue to build new complexes that lure students from older quarters.

The advent of the HOPE scholarship has made more money available for student housing off campus, driving up the demand for apartment complexes with more luxurious amenities. Barrow is trying to find a way to impose limits and controls on Athens' growth, advocating a moratorium on large-scale multifamily developments.

Chitty stresses that the Real Estate Foundation is not trying to take students out of apartments in Athens, only to meet the demand of students who want to be on campus.

The Real Estate Foundation is moving at such a rapid pace that concerns arise that its projects might end up with a slapdash look. But the handsome brick façade of the Carlton Street Parking Deck offers promise that the new projects will have a high-quality, traditional look.

"What we build here is going to be here 100 years from now," says Chitty, "and I feel a strong responsibility to make sure that we do it right."

Danny Sniff, who is helping the University return to a more traditional style of architecture in keeping with the North Campus model, considers Chitty a kindred spirit in his efforts "to make sure we turn the campus back into a campus."

Chitty says REF's board members share a common vow: "It's a beautiful campus. Let's not build anything ugly. Let's make sure that what we build really does contribute—not only to the University, but to the campus."

So far, the Real Estate Foundation is on track. And a very fast track it is.

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