Rochester Institute of Technology College Town Project James Fisher Assistant VP for Finance &...

Rochester Institute of Rochester Institute of TechnologyTechnology

College TownCollege Town

ProjectProject

James FisherAssistant VP for Finance & Administration

IPED ConferenceJune 28, 2007

Brief RIT ProfileBrief RIT Profile

Founded in 1829 as Rochester AnthenaeumFounded in 1829 as Rochester AnthenaeumCoeducational, privately endowed universityCoeducational, privately endowed universityEnrolls over 15,500 full-time & part-time students Enrolls over 15,500 full-time & part-time students in eight collegesin eight collegesCareer-oriented education & leader in cooperative Career-oriented education & leader in cooperative education since 1912 offering A.S., B.S, M.S, Ph.deducation since 1912 offering A.S., B.S, M.S, Ph.dOver 100,000 RIT alumni in all 50 statesOver 100,000 RIT alumni in all 50 statesOperating budget of approximately $430MOperating budget of approximately $430MSituated on a 1,300 acre campus in suburban Situated on a 1,300 acre campus in suburban RochesterRochester

RIT CampusRIT Campus

College Town Project GenesisCollege Town Project Genesis

Suburban campus locationSuburban campus location65% of students housed on campus65% of students housed on campusOver 2,500 students in off-campus Over 2,500 students in off-campus apartmentsapartmentsLimited transportation & entertainment Limited transportation & entertainment opportunitiesopportunitiesRecognition of increasing importance of Recognition of increasing importance of student experience outside of classroom student experience outside of classroom to competitive position & student retention to competitive position & student retention

First StepsFirst Steps

Internal discussions with various constituent groups on Internal discussions with various constituent groups on campus.campus.Discussions with the Board of Trustees for endorsement Discussions with the Board of Trustees for endorsement of concept.of concept.Market study by external group 2001-02 with following Market study by external group 2001-02 with following objectives:objectives:– Create mixed-use development while achieving financial Create mixed-use development while achieving financial

viabilityviability– Expand linkages between RIT & communityExpand linkages between RIT & community– Offer convenient & value-oriented retail & service offeringsOffer convenient & value-oriented retail & service offerings– Create a “non-institutionalized” on-campus development while Create a “non-institutionalized” on-campus development while

enhancing wetlandsenhancing wetlands– Meet RIT student housing needsMeet RIT student housing needs

Conclusions of StudyConclusions of Study

Dissatisfaction with RIT almost always Dissatisfaction with RIT almost always focused on perception of quality of life on focused on perception of quality of life on campus.campus.

Students, faculty & staff expressed Students, faculty & staff expressed overwhelming support for the College overwhelming support for the College Town concept.Town concept.

Accessibility to the campus was identified Accessibility to the campus was identified as a key component.as a key component.

Conclusions (con’t)Conclusions (con’t)

Study estimated that students, faculty & staff Study estimated that students, faculty & staff spent approximately $51M annually on spent approximately $51M annually on consumer items not available on campus, with consumer items not available on campus, with over $16M potential for capture by College Town over $16M potential for capture by College Town retail.retail.Off-campus housing market was thriving with a Off-campus housing market was thriving with a small vacancy rate. (2.3%)small vacancy rate. (2.3%)A deficit of approximately 450 apartment beds A deficit of approximately 450 apartment beds existed & over 50% of students surveyed existed & over 50% of students surveyed indicated preference for living in College Town indicated preference for living in College Town apartments over other choices.apartments over other choices.

Conclusions (con’t)Conclusions (con’t)

Top businesses & facilities identified:Top businesses & facilities identified:– Stores: bookstore, clothing & shoe storesStores: bookstore, clothing & shoe stores– Food: 24-hr diner, deli, pizza, marketFood: 24-hr diner, deli, pizza, market– Services: bank, post office, copy shopServices: bank, post office, copy shop– Entertainment: movie theater, music club, Entertainment: movie theater, music club,

bowling alley, sports barbowling alley, sports bar– Outdoor Public Spaces: outdoor plazas, Outdoor Public Spaces: outdoor plazas,

recreation fields, walkways to RITrecreation fields, walkways to RIT

Next StepsNext Steps

Internal Prioritization – other significant Internal Prioritization – other significant capital projects addressed. 2002-2003capital projects addressed. 2002-2003

Request for Proposal for Mixed-Use Project:Request for Proposal for Mixed-Use Project:– Sent to over 20 developers in March 2004.Sent to over 20 developers in March 2004.– Envisioned the use of approximately 90 acres of Envisioned the use of approximately 90 acres of

the campus “front door” for project.the campus “front door” for project.– Intended to retain ownership of l& & provide a Intended to retain ownership of l& & provide a

ground lease to developer for either 25 or 40 ground lease to developer for either 25 or 40 years.years.

Next Steps (con’t)Next Steps (con’t)

RFP (con’t):RFP (con’t):– Anticipated two-phase project with retail in Anticipated two-phase project with retail in

first phase & no guarantee of second phase.first phase & no guarantee of second phase.– Desired timeline called for first phase to be Desired timeline called for first phase to be

completed by January 2007.completed by January 2007.

Next Steps (con’t)Next Steps (con’t)

Results of RFP:Results of RFP:– Two developers identified as finalists, one was a Two developers identified as finalists, one was a

university trustee.university trustee.– Both proposals identified need for commitment for Both proposals identified need for commitment for

both phases to be financially viable.both phases to be financially viable.– Extensive evaluation of both proposals by cross-Extensive evaluation of both proposals by cross-

university committee of students, faculty & staff.university committee of students, faculty & staff.– Trustee firm proposal selected & award made in Trustee firm proposal selected & award made in

October 2004.October 2004.

Path to DevelopmentPath to Development

Negotiation Considerations:Negotiation Considerations:– Target property offered severe issues with regard to Target property offered severe issues with regard to

wetland disturbance. Developer estimated it would wetland disturbance. Developer estimated it would take one year to obtain all necessary permits.take one year to obtain all necessary permits.

– Trustee relationship added special requirements to Trustee relationship added special requirements to demonstrate arms-length transaction.demonstrate arms-length transaction.

– University had limited experience with commercial University had limited experience with commercial retail development. Hired an experienced consulting retail development. Hired an experienced consulting firm to review proposal & terms in early 2005. firm to review proposal & terms in early 2005.

Path to DevelopmentPath to Development

Negotiation Progress:Negotiation Progress:– Consultant verified terms to be reasonable Consultant verified terms to be reasonable

relative to the market.relative to the market.– Concern about changes in financial treatment Concern about changes in financial treatment

for third-party development & keeping project for third-party development & keeping project debt off the university books.debt off the university books.

– Ground lease draft prepared & delivered to Ground lease draft prepared & delivered to Developer, June 2005.Developer, June 2005.

Path to Development (con’t)Path to Development (con’t)

Change of Direction:Change of Direction:– Developer proposed outright purchase of land to Developer proposed outright purchase of land to

address wetland permitting process & university address wetland permitting process & university concerns over accounting treatment. Sept. 2005concerns over accounting treatment. Sept. 2005

– Nature of parcel made appraisal extremely difficult.Nature of parcel made appraisal extremely difficult.– First appraisal obtained on 90 acre parcel taking into First appraisal obtained on 90 acre parcel taking into

account estimated mitigation costs. Initial purchase account estimated mitigation costs. Initial purchase offer refused.offer refused.

– Agreement reached with Developer to reduce project Agreement reached with Developer to reduce project parcel to 60 acres to reduce amount of included parcel to 60 acres to reduce amount of included wetlands.wetlands.

““Challenged” PropertyChallenged” Property


Developer Negotiation:Developer Negotiation:– Second, mutually agreeable appraiser Second, mutually agreeable appraiser

identified & appraisal done on 60 acre parcel identified & appraisal done on 60 acre parcel excluding cost of mitigation. February 2006excluding cost of mitigation. February 2006

– Adjustment for mitigation costs & required Adjustment for mitigation costs & required buffer areas applied & purchase price agreed buffer areas applied & purchase price agreed to by university & Developer. April 2006to by university & Developer. April 2006

– Sale agreement negotiation begins in earnest.Sale agreement negotiation begins in earnest.


Developer Negotiation (con’t):Developer Negotiation (con’t):– University desires to retain certain restrictions on use University desires to retain certain restrictions on use

of property that were reflected in ground lease. of property that were reflected in ground lease. Requires drafting Requires drafting Restrictive Covenant AgreementRestrictive Covenant Agreement..

– Additional 15 acres of university land needed for Additional 15 acres of university land needed for wetland mitigation of disturbed wetlands. Permitting wetland mitigation of disturbed wetlands. Permitting agencies require a formal agencies require a formal Conservation EasementConservation Easement be drafted and recorded. be drafted and recorded.

– RIT wishes to retain ownership of the mitigation land RIT wishes to retain ownership of the mitigation land but desires compensation for the permanent but desires compensation for the permanent encumbrance required by the Conservation encumbrance required by the Conservation Easement. Requires drafting of a Easement. Requires drafting of a License and License and Management AgreementManagement Agreement..


Developer Negotiation (con’t):Developer Negotiation (con’t):– Developer makes sale contingent upon Developer makes sale contingent upon

university becoming anchor tenant by university becoming anchor tenant by relocating it’s bookstore to College Town and relocating it’s bookstore to College Town and transition to a Barnes & Noble managed store.transition to a Barnes & Noble managed store.

Necessitated successful negotiation of a Necessitated successful negotiation of a Management ContractManagement Contract between RIT and Barnes between RIT and Barnes & Noble Collegiate Booksellers.& Noble Collegiate Booksellers.

Necessitated successful negotiation of a Necessitated successful negotiation of a Lease Lease AgreementAgreement between RIT and Developer. between RIT and Developer.


Developer Negotiation (con’t):Developer Negotiation (con’t):– Due to the location of the development, Due to the location of the development,

access to sanitary sewer facilities required access to sanitary sewer facilities required lines to be laid across land, parking lots and lines to be laid across land, parking lots and driveways associated with a university-owned driveways associated with a university-owned student apartment complex. student apartment complex.

This necessitated drafting and recording a This necessitated drafting and recording a Sanitary Sewer EasementSanitary Sewer Easement between the university between the university and the Town.and the Town.


Developer Negotiation (con’t):Developer Negotiation (con’t):– University was in the midst of a major capital University was in the midst of a major capital

campaign & President secured the gifting of campaign & President secured the gifting of the entire parcel & improvements from the the entire parcel & improvements from the Trustee at the end of 40 years.Trustee at the end of 40 years.

The pledge is unenforceable & revocable but the The pledge is unenforceable & revocable but the university wishes to ensure that property reverts to university wishes to ensure that property reverts to RIT. This necessitated the drafting of both a RIT. This necessitated the drafting of both a Right Right of First Refusal Agreementof First Refusal Agreement & & Option to Option to Purchase AgreementPurchase Agreement between RIT & Developer. between RIT & Developer.


Meanwhile…the permitting process was Meanwhile…the permitting process was stalled with the Army Corp. of Engineers.stalled with the Army Corp. of Engineers.– First initiated process with both DEC and ACE First initiated process with both DEC and ACE

in October 2004.in October 2004.– First target date for obtaining final permits was First target date for obtaining final permits was

October 2005.October 2005.– Second target date was June 2006.Second target date was June 2006.– Third target date was October 2006.Third target date was October 2006.– Actual delivery of approved permits was April Actual delivery of approved permits was April

2007.2007.


In order to meet construction timelines In order to meet construction timelines Developer needed to begin construction Developer needed to begin construction immediately upon receipt of wetland permits.immediately upon receipt of wetland permits.

A number of the contractual documents were still A number of the contractual documents were still having minor revisions incorporated.having minor revisions incorporated.

To facilitate progress, a To facilitate progress, a License, License, Indemnification and Insurance AgreementIndemnification and Insurance Agreement negotiated and signed between RIT and negotiated and signed between RIT and Developer providing access to the site.Developer providing access to the site.

University ProcessUniversity Process

Sale Agreement and Lease Agreement Sale Agreement and Lease Agreement required the following:required the following:– Review and recommendation to approve by Review and recommendation to approve by

Board of Trustees Buildings & Grounds Board of Trustees Buildings & Grounds Committee. September 2006 & May 2007Committee. September 2006 & May 2007

– Review and approval of Sale and Lease Review and approval of Sale and Lease Resolutions by Board of Trustees Finance Resolutions by Board of Trustees Finance Committee. April 2007 & May 2007Committee. April 2007 & May 2007

Where Are We Now?Where Are We Now?

Developer began construction at site on Developer began construction at site on April 26, 2007.April 26, 2007.All contractual documents were executed All contractual documents were executed and closing occurred mid-June 2007.and closing occurred mid-June 2007.Project “groundbreaking” ceremony Project “groundbreaking” ceremony occurred on June 22, 2007.occurred on June 22, 2007.Transition of campus bookstore from self-Transition of campus bookstore from self-op to Barnes & Noble management will op to Barnes & Noble management will occur on July 1, 2007.occur on July 1, 2007.

Where Are We Going?Where Are We Going?

Project renamed Park Point and website Project renamed Park Point and website under development by Developer.under development by Developer.Apartment leases planned to begin to be Apartment leases planned to begin to be taken in Fall 2007 for September 2008 taken in Fall 2007 for September 2008 move-in.move-in.Bookstore to be delivered for final fit-out Bookstore to be delivered for final fit-out by June 1, 2008.by June 1, 2008.Project to be completed and open by Project to be completed and open by September 2008.September 2008.

Contact InformationContact Information

James FisherJames FisherAssistant VP for Finance & AdministrationAssistant VP for Finance & Administration

Rochester Institute of TechnologyRochester Institute of Technology11 Lomb Memorial Drive11 Lomb Memorial Drive

Rochester, NY 14623Rochester, NY 14623585.475.6020585.475.6020

[email protected]@mail.rit.edu

Rochester Institute of Technology College Town Project James Fisher Assistant VP for Finance &...

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