The South Carolina State University Real Estate Foundation is lining up $12.5 million in financing to purchase the six-acre, 288-bed University Village apartment complex on Chestnut Street.
“It will be a wonderful new amenity to house our students,” said Maurice Washington, the SCSU Board of Trustees’ chairman and its representative on the foundation trustee board.
“It’s also an investment for our future,” he continued. It will “support the enrollment goals of the university as we move from where we are right now at 4,300 to 4,400 students to about 8,000 students.”
“We can’t wait until we get there to expand” the student housing capacity, Washington said. “We have to be doing that right now.”
Separately, on-campus housing units for 755 students are scheduled to go into service by the end of this month. Those structures were financed with a nearly $40 million federally guaranteed loan.
University Village is privately owned. It was built in 2002 by Bostic Brothers Construction, one of the nation’s largest builders of multifamily and student housing.
“It would be a very attractive property for the university,” said James Patterson, a part-owner of University Village.
“There certainly have been discussions and those discussions are continuing,” Patterson said in a phone interview.
“It’s mostly their students who are there,” Patterson said. “Many times universities will acquire properties where their students live. It’s not unique.”
Although university officials initially saw University Village as a private-sector rival to campus housing, the university has become the complex’s biggest customer, renting units there and at other apartment complexes when demand for on-campus housing exceeds the available supply.
“We’re paying an enormous amount of money on a monthly basis to house over 200, sometimes 300, students at that facility, somewhere in the ballpark of $90,000 a month,” Washington said.
“If we’re going to pay that, we might as well pay for ownership versus rentership,” Washington said. “The wonderful thing about this debt is, it’s not (going to be) on the university’s books.”
The real estate foundation is one of several nonprofit entities affiliated with the university. Its creation was authorized by the university trustee board.
Washington said the University of South Carolina, Clemson University and the College of Charleston are among the institutions of higher education that have established real estate foundations.
“We’re kind of late to the game, but better late than never,” he said.
The foundation has its own governing body, whose chair is the Rev. Sam Glover, a former member of the SCSU trustee board. The foundation’s executive director is Dr. Kevin Rolle, who is also the university’s vice president of student affairs.
“The Real Estate Foundation exists primarily for the purpose of acquiring land and physical structures for university use,” Washington said.
“It is important as we look to the future that we expand the physical footprint of the university, and this gives us an ideal opportunity to do just that,” he said.
“Whereas we may not be able to purchase” desired properties “because of lack of funding and because we have stretched our debt ratio out to its capacity, we may still be in need of additional land or structures to carry out the mission and vision of the university,” Washington said.
“The fact we can keep about $12 million off our books in terms of debt plays well to the future development needs of the university,” he said.
“We may want to reserve our ability to incur debt for other purposes, going forward, like our engineering building for example, and the expansion of Hodge Hall, and (the replacement of) Turner Hall and the library,” he said. “It’s always good to have that entity in place to assist us in moving the agenda forward.”
The foundation can obtain loans because “the collateral is the facility” being purchased, Washington said. “That’s why we’re only paying market value, appraised value.”
If the foundation defaults on the payments, the bank can foreclose on the loan and repossess the property, but that is unlikely, he added.
“Orangeburg County has been discovered,” he said. “Developers are heading this way. Property values will only escalate. Those who fail to get on the front end of this wave will be very sorry five, 10 years out from now. You either buy now and pay less, or buy later and pay more.”
Orangeburg County Council held a public hearing Monday on the proposed issuance of $12.5 million in South Carolina Jobs-Economic Development Authority Student Housing Revenue Bonds.
Proceeds of the bond will be loaned to South Carolina State University Housing LLC, which was described as a “South Carolina manager-managed limited liability company” whose sole member is the SCSU Real Estate Foundation.
The SCSU Board of Trustees discussed the matter behind closed doors at its quarterly meeting Thursday.
Upon returning to public session, the trustees voted to approve a management agreement between the university and SCSU Housing LLC.
The agreement specifies that the university will maintain the facilities “in good repair and condition and at a minimum as required by university policy for student housing facilities.”
It also says campus police will provide law enforcement and the university “shall adhere to any applicable federal, state or local ... laws and regulations pertaining to health or the environment.”
Washington said the university is prepared to install a security gate, additional lighting and other safety enhancements at University Village.
“Things appear to be moving along very smoothly,” Washington said. “We have been approved by JEDA. Bank of America has approved the loan as well.
“We need Budget & Control Board approval and that matter will come before them on Tuesday (Dec. 12),” he said. “The closing date is somewhere in February.”
Earlier in the year, Washington said, “We believe in smart growth. We realize, to grow this institution, we can’t be afraid of incurring debt, but it has to be done very deliberately and carefully thought out.
“We just have to be very intelligent about how we approach this, and at the end of the day, if the numbers all fit, and we can handle the new debt without partially sinking the ship, then we’re going to try to make it happen.”