Penn State is moving forward with a ground lease for a 1,500 bed housing project on its University Park campus as it looks to increase its enrollment in the coming years.
The proposed real estate transaction was discussed during a Penn State board of trustees’ committee meeting Thursday and by the full board on Friday. The development, which was first made public in April, will have 1,500 beds intended for non-first year students at University Drive and College Avenue. The board approved it with one vote in opposition, Trustee Barry Fenchak.
Sara Thorndike, senior vice president for finance and business/treasurer for the university, told the committee Thursday that they want to accommodate growth and knew they’d need more housing for students that is affordable.
“If we’re putting more first year students on campus, we want an affordable option for the rest of the students to go to. When we evaluated whether we wanted to use our own housing revenues and reserves for this project, or whether we wanted to think about other options, what was really critical to us is to continue to use our own resources to renovate our current housing inventory, which is critical for our success,” Thorndike said, which led them to explore a public-private partnership.
Penn State sent out a request for qualifications to 19 firms, received six responses, and evaluated four of those submissions. From there, the university narrowed the list to two. With the board’s approval on Friday, they approved selecting Graystar Development East as the lead developer of the project and to lease the property, among other items.
The terms for the ground lease, including how long it would last or how much the lease costs, were not disclosed. On Thursday, Thorndike said it is a more than $20 million deal for Penn State.
Fenchak said he voted against it, not because of any project specifics, but because of where it fits into the university’s mission. He said it is not in the university’s best interest to increase enrollment at University Park due to broader issues Penn State is facing internally like finances and the need for out-of-state tuition revenues, and externally, like students picking alternatives to higher education.
“If we put ourselves in a position where we have to increase enrollment, that’s only going to exacerbate those concerns, and I don’t think they’re in the best interest of the university’s overall missions at this time,” he said.
Rent affordability was an important piece to the university, as well as receiving economic benefits since it’s still on the university’s land, she said. The university will maintain ownership and long-term control of the property.
