Editor’s Note: This story has been corrected to reflect that rents students pay to live at Nicholson Gateway will pay down the development project’s debt.
A Baton Rouge nonprofit has established a nationwide footprint in helping universities partner with private firms to finance and develop student housing, an endeavor that is becoming more attractive to schools squeezed by their budgets.
Steve Hicks, chairman and CEO of Baton Rouge-based Provident Resources Group, has been traveling throughout the country, securing financing for local governments, hospitals and universities to develop housing and other projects. He says governments and publicly backed institutions are choosing more and more to transfer the risk and debt of these projects to private companies.
For colleges and universities, the public-private model has become more tempting in the last decade-plus, Hicks says, though it has existed for longer.
States throughout the country have pulled back on giving tax dollars for higher education, including a drastic reduction in state support in Louisiana, where tuitions have sharply increased in recent years. Hicks’ organization has helped deploy the model for the Nicholson Gateway development on the south end of LSU’s campus.
Hicks says his group gives colleges like LSU a chance to focus more of its financing capacity on education, instead of paying debt service on student housing.
“With declining funding (colleges) receive from the state, this allows them to deploy the state funding they do receive to their core mission of educating students,” Hicks says.
The model has worked at a wide array of schools, Hicks says—from a 2,300-student small college in Georgia to flagship universities like LSU and the University of Oklahoma.
Sara Whittaker, the LSU Foundation’s senior director of communications and marketing, says LSU and the LSU Property Foundation selected RISE as the private developer for the project, and RISE selected Provident as its nonprofit partner to assist with financing and other aspects of Nicholson Gateway. The dollars students pay for rent will pay down the debt for the project.
The student housing market in Baton Rouge has boomed in recent years, developed mostly by large out-of-state firms. Experts expect the market to tighten with the influx of beds from Nicholson Gateway next year, along with uncertainty surrounding the impact of a cut to the TOPS scholarship on enrollment.
Provident has around 15,000 beds of student housing throughout the country in its portfolio, Hicks says, and has several projects in the works, including a 383-bed student housing project at Kean University in New Jersey.
“By turning these projects over to the private sector, we’re able to execute the financing structure in a much more efficient manner,” Hicks says.