The University of North Carolina Board of Governors voted to approve several items this week that will solidify improvement and development plans for Appalachian State University.
“Appalachian is the premier, public undergraduate institution in the state of North Carolina and a national leader in higher education,” said Appalachian’s chancellor, Dr. Sheri Everts. “To continue providing the highest quality educational setting, we must ensure a sound foundation — both in physical infrastructure and human potential. We appreciate the continued support of the Board of Governors in these goals.”
Five key items were presented to the Board of Governors:
Millenial Campus Expansion
The Board of Governors approved Appalachian’s request to designate the following properties as having Millennial Campus status:
- The “Appalachian 105” property, which is the former site of Watauga High School, consisting of approximately 75 acres.
- The site of the Legends building, in particular, the adjacent parking lots, consisting of approximately 2.1 acres.
- Approximately 0.6 acres on Howard Street next to the Reich College of Education building, acquired by the university in 2014.
- The site of Appalachian Panhellenic Hall, located north of the intersection of the Highway 105 extension and Highway 321, consisting of approximately 5.5 acres.
Additionally, the Board of Governors approved the university’s request to expand the existing Millennial Campus designation of the University Hall property from 2.3 acres designated in 2002 to a total of 6.7 acres.
Millennial Campus designation facilitates relationships with private sector partnerships by allowing the university to:
- secure financing for development of properties through bonds;
- lease properties to private sector partners for development; and
- retain revenues earned by such leases.
“Properties designated by the Board of Governors as having Millennial Campus status, which often involve repurposing decommissioned property and re-envisioning inactive building sites, are allowing us to think strategically and creatively about how we can operate as a campus and meet the needs of our region in the long term,” Everts said.
“These millennial status-designated projects present us with opportunities to think and act more creatively, quickly and nimbly in ways that further our research, teaching and service mission while also enhancing the economic development of the region we serve.”
Public-private partnership ground lease
Earlier this year, through a competitive procurement process, Appalachian selected RISE: A Real Estate Company (RISE) to develop on-campus housing in a public-private partnership (P3). Current plans call for approximately 2,100 beds, a parking deck with approximately 470 spaces, and preserving and improving around 340 existing surface parking spaces.
This major housing project will renovate or replace seven residence halls: Bowie, Coltrane, Eggers, Gardner, Winkler, Justice and East, and provide a mix of unit types within each building.
Vice Chancellor for Student Affairs J.J. Brown emphasized the importance of facilitating a strong living-learning environment through multipurpose support spaces. “Students’ social interaction and satisfaction with their college experience can be tied to living on campus,” said Brown, noting a correlation between living on campus and higher retention and graduation rates.
The estimated project cost of $191 million includes development and financing for the project, which is planned in three phases with completion dates of fall 2020, fall 2021 and fall 2022. The project will be financed using both private funds and existing university bond funds.
“This is a major project for the university,” Vice Chancellor for Business Affairs Paul Forte said, “and I am very pleased to say we are able to do this at a price that is 20 percent lower than the original bid to develop the Winkler property and without using any general operating funds.”
The P3 Student Housing project team consists of the following:
- Asset manager: Beyond Owners Group (Beyond).
- Developer: RISE: A Real Estate Company (RISE).
- Architect: Niles Bolton Associates.
- Design consultant: Jenkins-Peer Architects (J-PA).
- General contractor: Choate Construction.
- Underwriter: RBC Capital Markets.
Approximately 330 beds will be constructed by RISE and purchased and owned by Appalachian using proceeds from its General Revenue Bonds, Series 2016C to replace the former Winkler Hall. Approximately 1,770 beds and the parking deck will be financed and owned by Beyond Owners Group (Beyond) through tax-exempt debt. Forte noted these numbers are approximate, and the number of beds could total between 2,100 and 2,200.
Appalachian sought and received authorization from the Board of Governors to enter into a ground lease agreement with Beyond. The ground lease will serve as the foundation for related agreements on the development and management of the 1,770-bed and parking deck portion of the project.
A ground lease is an agreement in which a tenant is permitted to develop a piece of property during the lease period, after which the land and all improvements are turned over to the property owner. The agreement between the university and Beyond will allow Beyond to obtain project financing. Beyond will have a leasehold interest in the project site, and will be obligated to develop the project and own the privately financed improvements for the duration of the ground lease. Appalachian will have the right to approve plans and specifications for the project.
In his presentation to the Board, Forte outlined three related projects, which further explain the financial relationships among the parties:
- A development agreement between Beyond and RISE, which will obligate RISE for the on-time and on-budget delivery of the project and enable RISE to engage the general contractor, leading to a guaranteed maximum price, to be established as the project details are finalized. In the event of late delivery, RISE will be responsible for providing temporary housing and related services. Appalachian will not be a signatory to this agreement, but will retain oversight of design and construction through the ground lease agreement, and will not be at risk for cost overruns during construction.
- A management agreement between Beyond and Appalachian, which will obligate Appalachian to manage the project on behalf of Beyond to the university’s housing standards, including maintenance, custodial, residence life and administrative services; obligate Beyond to provide for capital reinvestment and long-term asset management of the project; provide for reimbursement to the university for its services as an operating expense to the project; and set annual budgeting and capital improvement planning procedures.
- A parking facility lease, under which Beyond will lease the parking deck to Appalachian through a 10-year, triple net lease, making the university responsible for ongoing expenses of the property, including maintenance and utilities. The lease revenue to Beyond will repay the debt service on the financing for the parking deck. Under the terms of the lease agreement, Appalachian will have exclusive access to the parking deck, will operate and manage the parking deck and will retain all revenues generated.
Kidd Brewer Stadium north end zone facility
The Kidd Brewer Stadium north end zone project, which was approved for planning earlier this year, was approved for financing and construction. The facility will include 80,000–100,000 square feet of space and will accommodate various athletics and academic uses, including athletic training and nutrition science, as well as conference and continuing education training space, an orthopedic clinic, dining facilities, a team store, hydrotherapy, approximately 1,000 premium (club) seats, and offices for coaches and athletics staff.
The end zone facility will replace the 45-year-old Owens Field House, which is approximately 34,500 square feet. DPR Construction is the construction manager at risk and was awarded the pre-construction services contract.
“An enhanced experience for student-athletes and fans can go a long way in recruiting new students,” Director of Athletics Doug Gillin said. He noted the success of student-athletes helps attract more fans and donors, which generates revenue that supports scholarships.
The project budget is $45 million and will be funded through donations to Appalachian Athletics, club seat revenue, Food Services revenue and debt through Millennial Campus designation, which will be repaid using tenant lease revenue.
The facility plans include a schedule to open for the fall 2020 football season.
Conceptual designs for Appalachian 105
The Board approved the university’s request to move forward with the conceptual design process in order to begin developing competition and training facilities for the university’s track and field, tennis and softball programs.
Some of the facilities require relocation because of the Kidd Brewer Stadium north end zone project; others will be enhanced to improve facilities for student-athletes.
The project timeline is yet to be determined. Forte said basic plans have been developed, but planning is not complete. Once planning is complete, Forte indicated the project will be submitted for approval for full authorization.
The project is expected to cost $11.8 million and will be funded by donations. A timeline for the project is still to be determined. Building plans will be phased in as fundraising progresses.
Forte emphasized this project will develop only a small portion of the Appalachian 105 property. “Other ideas under consideration for the future include facilities to meet the university’s needs for collaborative academic spaces, event space, parking, residence halls and additional recreation accommodations for students,” he said.
Stadium parking lot steam utility improvement
The Board also approved a resolution for endorsement of a steam utility improvement project that will deliver concentrated steam used to provide hot water and heat to campus buildings, including the Quinn Center, Kidd Brewer Stadium north end zone project and the university’s residence hall renovation/replacement project.
The project is expected to cost $3.5 million and will be funded through trust fund revenue that will be recovered from steam rates charged to auxiliaries, including housing revenues.
Photos, renderings and more information on the university’s ongoing projects may be found here: https://appstate.edu/appalachians-future.