U of M seeks to revive multiuse site

Privatized housing and retail venture awakened after delays

NASHVILLE — The long-delayed Highland Row project near the University of Memphis may finally start construction this fall, as a result of a new affiliation agreement U of M is proposing with a private nonprofit developer for the residential space in the upper floors of the multiuse center.

The university asked the State Building Com- mission on Thursday to fast-track approval of an agreement with Alabamabased Collegiate Housing Foundation that will help arrange financing.

Under the agreement, rental of the apartments will be limited to U of M students, faculty and staff and the University of Memphis name will be affixed to the privately owned and managed facil- ity. It will be built on vacant land on the west side of Highland between Midland and the Junior League of Memphis’ property.

Memphis-based Poag & McEwen Lifestyle Centers announced the $65 million Highland Row in 2008 but was unable to obtain financing when the recession deepened. It will have retail space on its ground floor, anchored by a 40,000-square-foot fullservice Barnes & Noble bookstore that will serve as the university’s official bookstore. Apartments were always planned for the upper three floors, but the affiliation agreement is new, putting the U of M brand on it as “affiliated housing” and limiting occupancy to about 550 students and employees.

As a nonprofit organiza- tion, Collegiate Housing Foundation of Fairhope, Ala., can arrange tax-exempt financing and work with for-profit developers to build the project. David Zettergren, U of M vice president for business and finance, said the university won’t own or manage it.

“It will be managed by a management group still to

It will be managed by a management group still to be determined. But it will be solely used by students, faculty and staff, and they will deal directly with the management firm.” David Zettergren, University of Memphis vice president for business and finance

be determined. But it will be solely used by students, faculty and staff, and they will deal directly with the management firm, not university housing,” Zettergren said.

Tennessee Board of Regents vice chancellor David Gregory briefly outlined the proposal to the State Building Commission on Thursday, but details are still being worked out. The commission sent the project to its subcommittee for further review but with authority to approve it, possibly by next month.

“We are attempting to move as quickly as we can. … They would like to begin construction as early as this fall,” Gregory said.

Commission members appeared receptive to the concept, but said they want more details, particularly on financing.

“This is a complicated transaction,” state Comptroller Justin Wilson told Gregory. “There’s also a fairly substantial policy decision as to the extent we have the university involved in off-campus housing and the extent the university’s name is used with this. We want to make sure we know what we’re doing. We’re also talking about debt that we’re not sure where it goes or who does what, and we need to fully understand that.”

State Treasurer David Lillard Jr., also a Building Commission member, also pressed for details.

“I can understand the university’s interest in the transaction because I assume this is probably debt that’s going to be issued by a private entity through the Industrial Development Board or through the housing, education and health board in Shelby County,” he said.

“But ... what kind of covenants are the university going to have vis-à-vis the income stream or whatever’s going to support the debt service on the bonds?”

Collegiate Housing Foundation works with colleges and universities to develop residence halls on and off campuses. Memphis-based EdR is also in the same business, with more than 30 privatized housing communities across the country, but not as a nonprofit venture.

“Unfortunately, we’re not involved” with the Highland project, EdR executive vice president and chief investment officer Tom Trubiana said. “Typically, when a school is looking to do tax-exempt financing, there’s usually someone else facilitating that. CHF gives them the option of doing that. It’s a good company.”

A summary presented to the commission says the agreement includes provisions for the housing to be transferred to the university when its construction debt is paid off or the university can assume ownership and debt if the owner cannot meet obligations.

CHF executives did not return calls Thursday, but the CHF website lists 40 completed projects at public and private schools across the country from 1998 through last year, including a $5 million project with 36 units at Christian Brothers University completed in 1999.