Template revised: August 2015 REPORT TO THE BOARD OF GOVERNORS Agenda Item #2.3 SUBJECT GAGE SOUTH STUDENT RESIDENCE MEETING DATE FEBRUARY 15, 2016 APPROVED FOR SUBMISSION Forwarded to the Board of Governors on the Recommendation of the President Martha C. Piper, Interim President and Vice-Chancellor DECISION REQUESTED IT IS HEREBY REQUESTED that the UBC Board of Governors grant BOARD 2 approval for the Gage South Student Residence project, with authorization to issue the development permit and a funding release of $1,000,000 to complete working drawings and tender documents. Revised Capital Budget $76,972,500 Operating Budget See report Schedule Revised Program Authorization to issue development permit Proceed to working drawings and tender Funding Release $1,000,000 Information Expenses to date $330,000 Funding released to date $1,000,000 Report Date January 13, 2016 Presented By Louise Cowin, Vice-President Students Andrew Simpson, Vice-President Finance Andrew Parr, Managing Director, Student Housing & Hospitality Services John Metras, Interim AVP Resources & Operations Michael White, Associate Vice-President, Campus & Community Planning Peter Smailes, Treasurer Al Poettcker, President & CEO, UBC Properties Trust EXECUTIVE SUMMARY As a key component of its growth plan to address significant demand for on-campus student housing, Student Housing & Hospitality Services (SHHS) propose to develop the Gage South Student Residence to provide expanded accommodation for upper-year students. The project will be integrated with the planned new Bus Between Board 1 (Jun 2015) and Board 2 (Feb 2016) the Gage South Student Residence bed count has increased from 630 to 651 and the capital budget has been increased from $69.7m to $77.0m. The capital budget increase is due to the addition of the 21 student residence beds ($2.3m), the requirement for an enhanced building envelope at this campus gateway location ($1.5m) and general cost escalation in the local construction market ($3.5m). If this item was previously presented to the Board, please provide a brief description of any major changes since that time.
Transcript
Template revised: August 2015
REPORT TO THE BOARD OF GOVERNORS Agenda Item #2.3
SUBJECT GAGE SOUTH STUDENT RESIDENCE
MEETING DATE FEBRUARY 15, 2016
APPROVED FOR SUBMISSION
Forwarded to the Board of Governors on the Recommendation of the President
Martha C. Piper, Interim President and Vice-Chancellor
DECISION REQUESTED IT IS HEREBY REQUESTED that the UBC Board of Governors grant
BOARD 2 approval for the Gage South Student Residence project, with
authorization to issue the development permit and a funding release
of $1,000,000 to complete working drawings and tender documents.
Revised Capital Budget $76,972,500 Operating Budget See report Schedule Revised Program Authorization to issue development permit Proceed to working drawings and tender
Funding Release $1,000,000
Information Expenses to date $330,000 Funding released to date $1,000,000
Report Date January 13, 2016
Presented By Louise Cowin, Vice-President Students Andrew Simpson, Vice-President Finance Andrew Parr, Managing Director, Student Housing & Hospitality Services John Metras, Interim AVP Resources & Operations Michael White, Associate Vice-President, Campus & Community Planning Peter Smailes, Treasurer Al Poettcker, President & CEO, UBC Properties Trust
EXECUTIVE SUMMARY
As a key component of its growth plan to address significant demand for on-campus student housing, Student Housing & Hospitality Services (SHHS) propose to develop the Gage South Student Residence to provide expanded accommodation for upper-year students. The project will be integrated with the planned new Bus
Between Board 1 (Jun 2015) and Board 2 (Feb 2016) the Gage South Student Residence
bed count has increased from 630 to 651 and the capital budget has been increased
from $69.7m to $77.0m. The capital budget increase is due to the addition of the 21
student residence beds ($2.3m), the requirement for an enhanced building envelope
at this campus gateway location ($1.5m) and general cost escalation in the local
construction market ($3.5m).
If this item was previously
presented to the Board,
please provide a brief
description of any major
changes since that time.
Gage South Student Residence – Board 2
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Exchange at the southwest corner of Wesbrook Mall and Student Union Boulevard, adjacent to the Student Recreation Centre and new Aquatic Centre in the Gage South precinct.
The new Gage South Student Residence will provide 651 beds for upper year students in suite style configuration with a diverse mix of unit types to meet varying demand (micro units, studios, 1, 2, and 4 bedroom units with kitchen). This is an increase from the 630 beds estimated at Board 1. The program includes some larger studios and 1 bedroom units that will generate higher rents and greater revenue and some small (140ft2) micro units to assist in addressing affordability issues for some students. Typical residence amenities will be provided including lobby, front desk, house lounge, meeting/study rooms, bike storage, fitness/games room, music practice rooms and laundry. A collegium for commuter students is also planned to be included.
The residence will include four towers, ranging in height from 5 – 12 storeys, and will be constructed on a 2-storey (equivalent) podium over top of the bus exchange layover facility. The addition of student housing in this location implements key aspects of both the Land Use Plan and Campus Plan for sustainable campus and community design by bringing learning, housing, jobs, recreation and transit closer together. The design of the residence will include mitigation of noise, light and exhaust emissions based on best practice throughout North America for motor vehicle parking beneath mixed use developments.
The revised capital budget for the project is $77.0 million. This is an increase from the preliminary estimate of $69.7 million at Board 1. This increase is due to the addition of 21 student residence beds to the program ($2.3m), the requirement for an enhanced building envelope at this campus gateway location ($1.5m) and general cost escalation in the local construction market ($3.5m). Bus exchange costs have been carefully separated from student residence costs, so are not part of this increase.
The project will be financed with a $77.0 million internal loan at 5.75% annual interest paid back over 30 years from housing rental revenue. Current projections indicate there will be sufficient liquidity to support this internal loan.
UBC Properties Trust is the project manager. The project architect is DIALOG. Board 1 approval was received in June 2015. Project construction will be undertaken in conjunction with the New Transit Terminal/Bus Exchange project and is targeted for completion in August 2019.
Campus and Community Planning confirm that the development review process for the project has been completed including reviews by the Advisory Urban Design Panel (Dec 3, 2015) and Development Review Committee (Nov 26, 2015) and a Public Open House (Dec 2, 2015). The project is ready for issuance of the Development Permit following Board 2 approval.
INSTITUTIONAL STRATEGIC PRIORITIES SUPPORTED
☐ Learning ☐ Research ☐ Innovation Engagement (Internal / External)
International
or Operational
DESCRIPTION & RATIONALE
Student Housing Growth Strategy: 2017 – 2020 Access to student housing is a key strategic initiative for UBC. The location of the UBC Vancouver campus on the Point Grey peninsula, adjacent to the most expensive housing in Canada, presents a significant challenge for students to find proximal and affordable housing. Despite growth in UBC’s housing stock from 2010 to 2016 of over 2,800 beds, wait lists and demand continue to grow, for the following reasons:
International student enrolment continues to exceed growth targets and, statistically, 92% of 1st year international students reside in student housing.
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62% of students (domestic and international) report that they wish to reside on campus for the duration of their studies, a significant increase from previous years.
The Vancouver rental marketplace is growing at a slower rate than demand, hence reducing availability of the rental stock. This results in higher rents and longer commute times for students renting off campus.
As the campus resident population grows so does the number and diversity of desired amenities, hence creating an enhanced community vibrancy. This, in turn, results in more students wishing to reside on campus.
Students living on campus experience greater academic and social benefits, partake more in extracurricular activities and have a stronger affinity to UBC as compared to students who commute.
The summer 2015 student housing wait list numbers, at its peak, were as follows:
Year Round Residence for start date of May 1, 2015 – 1,240 students
Year Round Residence for start date between June 1 and Sep 1, 2015 – 2,350 students
Winter Session Residence Application Process (RAP) waitlist – 2,690 students
The combined waitlist number of approximately 6,300 represents the largest waitlist ever recorded Despite Ponderosa Commons and Orchard Commons opening prior to September 2016 it is anticipated this waitlist number will not drop significantly with growing international student population coming from Vantage College and direct admissions. To address this demand, SHHS created a 2017-2020 growth plan to add an additional 2,250 beds, as described in the chart below:
Project/Residence Type Beds Original Plan
Beds Current
Cost Est. Current
Completion
Totem Park Residence In-Fill / first year dormitory style
350 354 $30.2 M Aug 2017
Brock Commons Tall Wood / upper year, suite style
400 404 $47.1 M Aug 2017
Gage South* / upper year, graduate suite style
500 651 $77.0 M Aug 2019
Old Armoury Commons / unit type TBD
1,000 1,000 $100.0 M TBD
Total 2,250 2,409 $254.3M
*Project integrated with Bus Exchange (Transit Terminal) project
Gage South Student Residence
The new Gage South Student Residence will be integrated with the reconfigured TransLink Bus Exchange at the southwest corner of Wesbrook Mall and Student Union Boulevard, adjacent to the Student Recreation Centre and new Aquatic Centre in the Gage South precinct (see Site Map in Attachment 1).
The residence will include four towers (3 along Wesbrook Mall, 1 along Student Union Blvd), ranging in height from 5 to 12 storeys above a 2-storey (equivalent) podium over top of the new Bus Exchange. TransLink supports the
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reconfiguration of the Bus Exchange to replace the originally planned below-grade bus layover facility with a more easily accessible at-grade facility integrated at the base of the student residence. This reconfiguration was proposed as a land efficient solution to avoid anticipated cost overruns with the below-grade facility. The design of the residence will include mitigation of noise, light and exhaust emissions based on best practice throughout North America for motor vehicle parking beneath mixed use developments.
The addition of student housing in this location implements key aspects of both the Land Use Plan and Campus Plan for sustainable campus and community design by bringing learning, housing, jobs, recreation and transit closer together. Originally designated as a site for faculty and staff housing, the plans were amended in 2012 to enable student housing to expand in this part of campus, building on the close proximity to Gage Towers.
The Gage South Student Residence will provide 651 beds for upper year students. This exceeds both the Board 1 estimate of 630 beds as well as the original SHHS growth plan estimate of 500 beds and is based on final schematic design which sought to achieve the maximum density appropriate for the location. The residence will have suite style accommodation comprised of micro units, studios, 1, 2 and 4 bedroom units with kitchen. Consideration is being given to creating larger studios and 1 bedroom units to provide a different living environment within the overall inventory mix and generating higher rents / revenue as a result. Micro units are currently programmed at 140ft2 and are being developed to address affordability issues for some students. Rents are expected to be in the $690 per month range. These units will also act a test for marketplace acceptance for this style and size of living environment.
Revised Residence Program
Space Type Total Area
(SM) Total Area
(SF)
VP STUDENTS (3% of tot net area)
Collegium 485.0 5,221
STUDENT HOUSING & HOSPITALITY SERVICES (97% of tot net area)
# Beds # Units Avg Unit Area (sm)
Housing Units 651 362 15,706.7 169,066
Micro 70 70 13.0 802.9 8,642
Studio 80 80 21.1 1,852.4 19,939
1 Bedroom 89 89 35.6 2,989.8 32,182
2 Bedroom 40 20 53.5 962.8 10,363
4 Bedroom 332 83 96.4 8,099.4 87,181
Townhouses 40 20 55.5 999.4 10,757
Student Housing Shared Space 826.1 8,892
Main Lobby 127.4 1,371
Recreation Amenities 189.1 2,035
Music Practice Rooms 54.7 589
Resident Lounges 162.5 1,750
Meeting Rooms 39.1 421
Laundry 57.0 614
Front Desk 235.4 2,534
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TOTAL NET AREA 17,017.8 183,178
TOTAL GROSS AREA 26,837.3 288,874
Gross-up (includes bike stor) 1.58
Area per Bed 41.5 446
Typical residence amenities will be provided including lobby, front desk, house lounges, meeting/study rooms, bike storage, fitness/games room, music practice rooms and laundry. A collegium for commuter students is also being planned. This is viewed as a good location for commuter students in terms of proximity to transit.
BENEFITS Learning, Research,
Financial, Sustainability &
Reputational
The project will add new upper year residence beds to address significant demand for on-campus student housing. The project is targeting LEED Gold certification with a specific energy use intensity target in order to reduce life cycle costs and impact on the campus electrical grid. By adding more on campus student housing to the UBC Vancouver campus the project will contribute to reduction in commuter volume to and from campus. From a social sustainability perspective, more on campus student housing allows for more students to realize an enhanced social and academic experience while studying at UBC, adds vibrancy to the overall campus community and supports a greater retail presence.
RISKS Financial, Operational
& Reputational
Risk Mitigation
Integration with the Bus Exchange – Provision of easy pedestrian access and mitigation of noise, vibration, light and bus exhaust emissions are key factors in the design of the residence facility but readily addressable given best practice throughout North America for integration of motor vehicle parking beneath mixed use developments. The same architect (DIALOG) is being used for both the Gage South Student Residence project and New Transit Terminal/Bus Exchange project to ensure an effectively integrated design.
Project schedule – Construction of the Gage South Student Residence and New Transit Terminal/Bus Exchange cannot commence until the adjacent Aquatic Centre project is completed in November 2016. The Aquatic Centre project is currently on target for this completion date.
Capital cost – Further construction cost risks have been mitigated through provision of contingency and cost allowances as well as coverage under the Retained Risk policy, though current market conditions still contain risk until the construction trades contracts are finally fixed.
Operating – Operating risks associated with this project are limited as demand for student housing is well in excess of current supply.
Financing Capacity – Internal liquidity is constrained due to confirmed and anticipated commitments, although current projections indicate there will be sufficient liquidity to undertake this project.
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COSTS Capital &
Lifecycle Operating
Preliminary Capital Budget
The revised capital budget for the project is $77.0 million. This is an increase from the preliminary estimate of $69.7 million at Board 1. This increase is due to the addition of 21 student residence beds to the program ($2.3m), the requirement for an enhanced building envelope at this campus gateway location ($1.5m) and general cost escalation in the local construction market ($3.5m). The project budget includes $500,000 for fit-out of the proposed collegium. Bus exchange costs have been carefully separated from student residence costs, so are not part of this increase.
Component Board 1 Board 2 $/gsf $/bed
Construction (incl. General Conditions and CM fee)
Construction Period Financing $2,000,000 $2,000,000
STUDENT HOUSING TOTAL $69,200,000 $76,472,500 $265 $117,469
Collegia Fit-Out $500,000 $500,000
PROJECT TOTAL $69,700,000 $76,972,500 $266
Gross Area (ft2) 280,000 288,874
Bed Count 630 651
1 – Cost included in Design Consultants line at Board 2.
Preliminary Operating Budget
Operating and maintenance costs will be covered by SHHS through student housing rental revenue. The SHHS preliminary operating budget for the Gage South Student Residence, including debt servicing, is provided in Attachment 4 and shows positive cash flow starting in Year 5 of operation (2023/24).
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FINANCIAL Funding Sources,
Impact on Liquidity
The project will be financed with a $77.0 million internal loan at 5.75% annual interest paid back over 30 years from housing rental revenue. Current projections indicate there will be sufficient liquidity to support this internal loan. Work is ongoing with the Province and the credit rating agencies to permit the University to secure additional externally sourced debt. Financing of this project does not depend on a successful outcome of those discussions.
SCHEDULE Implementation
Timeline
Preliminary Schedule
The Gage South Student Residence project schedule will be coordinated with the New Transit Terminal/Bus Exchange schedule. Board 3 approvals for each project will be scheduled to coincide if feasible.
Board 1 approval for the project was received in June 2015. The use and location are consistent with the UBC Vancouver Campus Plan and the Land Use Plan.
Prior to Board 1 the project was presented to the public and stakeholders as part of the University Boulevard precinct planning process. This involved a two phase consultation and testing process (January – May 2015), which included conversations with various faculty, staff, and student committees, the University Neighbourhoods Association (UNA) and University Endowment Lands (UEL), two public open houses, online consultation, and several workshops with senior administrative staff, external design experts, students, faculty and community members.
Overall, there was a broad level of support for the proposed planning and design concepts for the Gage South student housing and integrated Bus Exchange facility. Feedback received from both public and stakeholders largely focused on:
Convenient access to Gage South student housing.
The need to mitigate environmental impacts (noise, vibrations and emissions), particularly as part of the design of the Gage South student residences but also for the adjacent residents in the UEL.
Both of these themes from the consultation were reflected in the update to the precinct Design Guidelines, which were approved by the Board in June 2015.
The Gage South Student Residence project, as well as the Bus Terminal project, is being managed by UBC Properties Trust. The design consultant for both projects is DIALOG. The schematic design for these integrated projects has been completed and reviewed through the Development Permit approval process. A
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single Development Permit (DP) application was submitted and reviewed for both projects.
The procedures for DP 15035 have included reviews by the Advisory Urban Design Panel (Dec 3, 2015) and Development Review Committee (Nov 26, 2015) and the public open house (Dec 2, 2015) which was very well attended. In addition to the 33 people who signed in, there were another 20 people who visited the display. The open house generated 10 feedback forms while 8 people responded during the online comment period ending December 9, 2015. All comments and feedback received are posted on the C+CP webpages in keeping with the community engagement commitments of the department. In summary the feedback from the campus community was generally supportive with some concerns related to construction noise and shadows on neighbouring buildings. There is a positive response to the housing units and the new micro-sided unit designs. C+CP has provided responses to these community concerns on the DP application webpages. C+CP has informed the neighbouring UEL administration about the project and C+CP attended a meeting of the UEL Advisory Planning Committee to explain the project to this neighbouring community.
Campus and Community Planning confirm that the development review process has been completed. The Development Permit can be issued following Board 2 approval.
UBCPT COMMENTS Complete for all reports that include a property
component
Date of Review: Jan 13, 2016 Signed off by: Al Poettcker
UBC Properties Trust is very supportive of this project.
Previous Report Date June 9, 2015
Decision Board 1 approval with a funding release of $1,000,000.
Action / Follow Up Undertake and complete schematic design.
Attachments 1) Site Map 2) Schematic Design: Building Elevations 3) Schematic Design: Floor Plan Layouts 4) Schematic Design: Renderings 5) Revised Operating Proforma 6) Capital Project Accountability - Scope & Planning 7) Capital Project Accountability - Budget & Financing
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Attachment 1 - Site Map
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Attachment 2 – Schematic Design: Building Elevations
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Attachment 3 – Schematic Design: Floor Plan Layouts
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Attachment 4 – Schematic Design: Renderings
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Attachment 5 – Revised Operating Proforma
Gage South Student Housing
$000's 2019/2
0 2020/2
1 2021/2
2 2022/2
3 2023/2
4
Cashflow Positive
Rental Revenue 1 7,852 8,087 8,330 8,580 8,837
Less Rental Vacancy 2 (157) (162) (167) (172) (177)
Less Public/Other Operating Costs 5 (63) (64) (66) (67) (68)
(2,811) (2,895) (2,981) (3,070) (3,161)
Net Operating Income 4,884 5,031 5,182 5,338 5,499
Less Debt Service 6 (5,390) (5,390) (5,390) (5,390) (5,390)
Add Interest Earnings Discount 6 0 0 0 0 0
Cash Flow (507) (360) (208) (52) 109
Cash Flow NPV: $20,943
IRR: 7.68%
1 - Comparing current rates and current unit sizes, with a Rental Inflation factor applied.
New unit types are priced relative to existing units.
2 - Contemplates vacancy rates of 1% in Winter Academic term and 4% in Summer Academic term.
3 - No lease revenue contemplated.
4 - Current operating costs are 35% based on Marine Drive and Ponderosa Residences operating figures.
5 - Public and other area operating costs are $14 per Square foot per annum, derived from Building Operations. 6 - Assumes financing at a rate of 5.75% amortized over 30 years, borrowing from Student Housing Financing Endowment (SHFE)
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Attachment 6 – Capital Project Accountability – Scope & Planning
