Colleges pushed not to limit their dorm capacities

Student housing company’s business imperiled by virus

As universities anticipate beginning classes in the fall amid the coronavirus pandemic, a private student housing company pushed contracted colleges to maintain dorm capacity, according to communications uncovered via a public record request by a student.

Corvias Property Management, a real estate company specializing in military and student housing, wrote to the University System of Georgia and Detroit’s Wayne State University in late May to remind the public school officials of their financial and legal burdens, saying that reducing the privatized college dorms’ capacity would hurt the bottom line of the partnership, according to letters reviewed by The Washington Post.

The letter to the University System of Georgia, which was first shared on Twitter and reported on by Inside Higher Ed, has drawn the anger of students and faculty at Georgia colleges who question if their schools’ decisions to reopen were financially driven.

The correspondence from Corvias representatives reminded the schools of the legal implications of breaking their contracts, which establish decadeslong agreements — called public-private partnerships — that allow the private company to take on the public universities’ debt, renovate or build housing and lease it to students.

In the letters, executives suggested that restricting the number of roommates per dorm would not curb the spread of the coronavirus on campuses.

“While the CDC may be of the belief that reducing density in student housing may lower the possibility of infection, we do not believe that requires a reduction in the number of roommates that would typically be permitted in the student housing or the number of students that can be housed in a given building,” according to the letters, which instead suggested schools limit occupancy of public areas such as elevators.

The Rhode Island-based company also argues that capping occupancy “will not ultimately benefit students or the University community” because displaced students would be forced to incur more expensive rent and be deprived of “the benefit of the same level of health-conscious operations” of on-campus housing.

A representative for Corvias did not respond to requests for comment from The Post. The company’s Twitter was set to private as of Friday.

SCHOOLS DEFEND THEMSELVES

The Georgia university system, Georgia State University and Wayne State University said the company’s recommendations had no bearing on their decisions to reopen.

“I didn’t take it as a threat or anything,” Tim Michael, Wayne State’s chief housing officer, told The Post. “There was no thought that whether housing buildings were going to be full or not would impact the form of instruction.”

A spokesperson for the University System of Georgia told The Post and Inside Higher Ed that the decision to reopen was up to individual institutions.

“At no point did any campus indicate the decisions they made regarding housing capacity were influenced by the concerns raised by Corvias,” spokesperson Aaron Diamant told Inside Higher Ed.

But a public agenda for a University System of Georgia Board of Regents’ June 10 call details how the board’s “decision to reduce room capacity or rate” would be at its own “legal and financial risk, and likely invite a Corvias dispute and legal challenge.”

The agenda also shares how Georgia State University suggested it would allow for 75 percent occupancy of its

Corvias housing, costing $3.1 million in lost revenue for the 2021 financial year.

Georgia State spokesperson Don Hale said the university reviewed the Corvias contract to try to determine its financial obligations.

“Those considerations, however, did not influence our planning — the health and safety of students was our priority,” Hale wrote in a statement. “Furthermore, in the end we did not implement the plan because attrition made it a moot point.”

Students have increasingly opted for online classes or living off-campus, as many colleges have offered accommodations to those who are concerned about campuses becoming breeding grounds for the highly infectious coronavirus. As the virus has surged in hot spots, universities have cautiously announced they will hold remote classes, including the California State University System, the nation’s largest four-year university system.

Although both are forging ahead with in-person instruction this fall, Georgia State and Wayne State reported drops in demand for on-campus housing.

Less than half of the available dorms at Wayne State are claimed, but interest in student housing has wavered with the tumult of pandemic updates, Michael said.

Wayne State would not bear a financial burden for failing to fill dorm rooms and doesn’t require its students to register for housing, Michael said. However, the company’s letter argued that the school “does not have the unilateral right” to institute a policy that would limit student housing occupancy.

Responding to Corvias, Michael wrote to the company that the administration was prepared to arrange a meeting with its lenders and Corvias executives.

“Given the emphasis in your letter about the security of loans and payments obtained by the partnership, WSU staff remains available to communicate jointly with you to the CCL-WSU, LLC lenders,” Michael wrote in a June 9 letter.

BUSINESS MODEL IN DOUBT

Corvias’s partnerships with schools are part of an increasing trend on college campuses to privatize student services with the aim of relieving schools’ debts. By leasing the revenue stream of students’ rent to companies, colleges can bypass the expense of managing housing.

But due to the pandemic, the profit margins of these companies are under threat. S&P Global Ratings in March projected a negative outlook for all U.S. higher education privatized student housing projects.

Corvias took on $548 million in debt to build and renovate housing at nine Georgia universities and agreed to void more than $311 million in debt by the University System of Georgia, according to the letter that its regents received, while the company has $307 million in debt to take care of $120 million in debt at Wayne State.

Corvias’s website advertises that it manages 26,000 beds at 12 universities, including the University of Notre Dame and Purdue. Administration officials at Howard University, North Carolina Central University and Alabama College of Osteopathic Medicine, which have contracts with Corvias, told Inside Higher Ed that the schools didn’t receive letters from the company.

Corvias also provides housing to the Department of Defense and other government agencies. The company has faced allegations that its management made it financially difficult for military family tenants to leave neglected and defunct housing, as Corvias founder John Picerne had acquired hundreds of millions in fees and equity returns, a Reuters investigation found.