The University of Kentucky is planning the second phase of its ambitious dorm-replacement project, building five new residence halls with a private developer at a total cost of $118 million.
The UK Board of Trustees will hold a retreat in October to discuss the proposal, which would create 2,098 new beds, university officials said Monday.
The developer, Memphis-based Education Realty Trust, is already building the first dorm in the $500 million project — a 600-bed, $28 million hall on the old Haggin Field that is due to open next fall for honors students.
EdR is putting up all the equity for financing the construction, leaving UK with zero debt. EdR will then own the buildings under a long-term ground lease with UK, operating the buildings with its own employees and giving UK a cut in rent revenues.
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The five dorms in the plan's second phase would require some demolition.
One dorm would be built on the site of Haggin Hall, which is due to be demolished as soon as the first new dorm opens next fall. Two dorms would be built at the Cooperstown complex, taking the place of buildings D and E, which were built in 1956.
Two more halls would be put on the parking lot across from Blazer Hall on Martin Luther King Boulevard. Those two structures would require demolition of the old Wildcat Lodge. The new Wildcat Coal Lodge for basketball players opened this month next to Memorial Coliseum.
It's not yet clear how the beds for undergraduate students would be divided among the new buildings.
The General Assembly has given UK permission to spend $175 million on phase two of the plan.
UK officials held a news conference Monday to brag about the first new dorm's virtues: 500 new jobs created by the construction, along with $760,000 in state and local taxes. If phase two of the deal gets approved, they said, that number would jump to 2,900 jobs and $4 million in state and local taxes.
The entire scope of the plan is aimed at creating 9,000 modern beds on campus —about 3,000 more than there are now — at a cost of roughly $500 million.
President Eli Capilouto said the long-term plan to revitalize UK's aging residence halls was part of the Kentucky Promise, his plan to reinvigorate undergraduate education. Part of that is attracting the best and brightest students with up-to-date accommodations.
"At the same time," he said Monday, "it could pave the way to the creation of thousands of jobs and millions of dollars of investment in our community and state."
Capilouto sought out EdR early in his first year after it became clear that housing was a priority at the same time that declining state revenues made new dorms harder to pay for. Although many universities have employed firms like EdR to build campus housing, UK's is one of the most ambitious in the country.
On the first dorm, UK is to receive 10 percent of the gross revenue. After EdR starts to receive a 9 percent rate of return, UK is to get 25 percent of the net income. At the same time, EdR would get a 4 percent management fee from UK.
Living in the new dorm, which is supposed to house the honors program and other students, would cost $3,490 a semester. That rate could rise by 3 percent in 2014. Three years later, it could go up by 4 percent.
If the two parties eventually move forward on the second phase of the agreement, EdR's management fee on the first dorm would drop to 2 percent, and UK would get 12 percent of the net income.
Something that hasn't been worked out for either phase of the plan is whether EdR will pay property taxes. UK is trying to negotiate with Fayette Property Valuation Administrator David O'Neill to exempt the new dorms with the rest of UK's property. O'Neill has said that because they are being built and operated by a private company through a long-term ground lease, they should be subject to those taxes.
It's also not yet clear how much "green technology" will be used in the construction. The first residence hall is being built with geothermal technology, which uses the temperature below ground to help heat and cool buildings. Officials have said they hope it will receive a silver Leadership in Energy and Environmental Design certification.
So far, the board of trustees has been unanimous in its support of the EdR deal. Student Government President Stephen Bilas said the new dorm was "the first step forward in solving a problem that has been disregarded for far too long."