NVC Campus Housing Study Packet Aug 2019

August 2019 Campus Housing Study Packet

CONTENTS

Presentations

 May 9, 2019 Presentation to Board of Trustees - Scion  July 11, 2019 Housing Update Board of Trustees  July 11, 2019 District and Campus Master Plan Update  August 8, 2019 Housing Update Board of Trustees  August 8, 2019 Space Utilization Study Board of Trustees

Resource Documents  Current NVC Board Policies Related to Housing NAPA VALLEY COLLEGE

Campus Housing Advancement May 9, 2019 THE SCION GROUP Campus housing – Only focus since 1999

. +5 billion of new/renovated student housing facilities has resulted from our advisory services

. Worked with 200+ campus markets throughout North America

. Benchmarks from ownership and management of over 54,000 student housing beds

. Proven collaborative processes

. Well-respected and trusted in the market

. Offices in Irvine, California; Chicago, Illinois; Dallas, Texas; & Toronto, Canada

2 ENGAGED PROCESS

. Campus-driven analyses to quantitatively and qualitatively assess demand for on-campus housing

. Listening & analytics includes: I’d love to live - Data Review on campus, - Campus Tour but it “all comes - Stakeholder Meetings - Student Survey down to cost.” - Faculty/Staff Survey - Focus Groups/Whiteboard Sessions - NVC Student - Off-Campus Rental Market Analysis - Demand Analysis

3 COLLEGE PARTICIPATION

. Executive Coordinator, Katherine Kittel . Students, Faculty and Staff

. Director of Facilities Services, Matt Christensen . President Ronald Kraft

. Athletic Director, Jerry Dunlap . Asst. Superintendent, Vice President of Academic Affairs, Erik Shearer . Instructor of Chemistry, Dr. Forest Quinlan . Asst. Superintendent, Vice President of Administrative Services. Robert Parker . Faculty Representatives (Christy, Eileen and Melinda)

. Asst. Superintendent, Vice President of Student . Academic Senate, Amanda Badgett and Faye Smyle Affairs, Oscar DeHaro . Public Information Officer, Holly Krassner Dawson . Executive Director of Human Resources, Charo Albarran

4 STRATEGIC OBJECTIVES STRATEGIC OBJECTIVES

. Provide an affordable, quality on-campus living experience

. Promote an even more engaged and diverse population

. Enhance campus engagement

. Support recruitment and retention of students, faculty and staff

. Extend campus integration with the community

6 WHY HOUSING – BENEFITS TO STUDENTS & FACULTY/STAFF

Recruiting and Retention Faculty, Staff Community Engagement

• 80% of students believe campus housing is • More involvement in campus activities important in recruiting and retaining students • Faculty-student interactions increase • 60% of faculty/staff believe workforce housing is important in attracting and retaining qualified • Opportunities to strengthen relationships with faculty and staff the community

Students in campus housing demonstrate higher: Students in campus housing enjoy other benefits, including: • Persistence and retention rates • Average GPAs • Improved peer interactions • Graduation rates • Increased diversity • Levels of academic and social engagement • More mentorship • More campus pride • Convenience • Lower costs than comparable market rate housing options • More community engagement and sense of belonging

7 STUDENT HOUSING AT COMMUNITY COLLEGES

As of 2017, approximately 28% of 11 California Community Colleges offer student housing, community colleges in the US offer housing th the 12 broke ground last fall

Source: American Association of Community Colleges, Data Points WHY HOUSING – HIGH COST OF LOCAL HOUSING

Housing Cost Overview

• California is the 3rd most expensive state for cost of living • No affordable choices in the nearby local rental market • Housing insecurity

• Vacancy rates in Napa at 1% per the latest annual vacancy survey conducted by the Planning Division in August, 2018. A healthy vacancy rate is 5%

• 53% of renters in City of Napa are estimated to be cost burdened – paying over 30% of their income for housing

• 23% of renters in the City of Napa are estimated to be extremely cost burdened – paying over 50% of their income for housing

• 6,340 people in Napa are estimated to be living in poverty

• Living wage calculator for Napa shows that households would need to earn significantly more than minimum wage to afford to live in Napa (the range varies depending on household size and composition): http://livingwage.mit.edu/counties/06055

9 IF WE BUILD IT, WILL THEY COME?

STUDENT HOUSING FACULTY/STAFF HOUSING

Scion determined there is sufficient demand (greater than 300 Scion determined that there is potential to reach sufficient beds) to potentially attract developer interest for student housing demand to potentially attract developer interest for faculty, and on or near the Napa Valley College campus. staff housing on or near the Napa Valley College campus.

Survey sent to all students Survey sent to all faculty and staff

• 679 survey responses • 195 survey responses • 47% Part-time (1-11 units) • 41% would consider and another 41% might consider campus housing if it were offered • 53% Full-time (12+ units) • 60% believe offering housing is important in attracting and • 53% of single students and 73% of married/family students retaining faculty and staff in the future would consider campus housing if it were offered • Out of 314 part-time students, 41% would take 12+ units if they had on-campus housing • 80% believe campus housing is important in recruiting and retaining students

10 WHAT KIND OF HOUSING?

SAMPLE HOUSING

• Traditional Single/Double • Semi-suite • Studio Apartment • 1 Bedroom Apartment • 2 Bedroom Apartment

11 WHERE MIGHT HOUSING BE LOCATED ON CAMPUS? HOW WOULD THE PROJECT BE FINANCED?

. Will the College / community taxpayers be at risk?

. How much will this cost the College?

. Where are there risks?

. Where is control maintained?

. What are our options?

13 IMPLEMENTATION STRATEGIES

College Owned Traditional Model

Nonprofit/Foundation Owned Tax-Exempt Model

Developer Owned Taxable Model

14 IMPLEMENTATION STRATEGIES

College Owned Traditional Model

. College owns and controls 100% of the community . College retains 100% of economic benefit and risk . College issues tax-exempt bonds typically . College or third party manages project

Nonprofit/Foundation Owned Tax-Exempt Model Developer Owned Taxable Model

15 IMPLEMENTATION STRATEGIES

College Owned Traditional Model Nonprofit/Foundation Owned Tax-Exempt Model

. Nonprofit corporation owns community and issues tax-exempt revenue bonds . Developer earns development fee but has no ownership interest or interest in community’s annual net revenue . College or third party manages the community . College limits risk and debt capacity impact, but also some economic benefit and some control Developer Owned Taxable Model

16 IMPLEMENTATION STRATEGIES

College Owned Traditional Model Nonprofit/Foundation Owned Tax-Exempt Model (P3) Developer Owned Taxable Model

. Developer owns and finances the community with taxable debt/ equity . Developer has continued interest in the community’s revenues . Third party or college manages the community . College limits risk and debt capacity impact, but also economic benefit and control

17 PUBLIC-PRIVATE PARTNERSHIPS (P3)

. A P3 development partner primarily consists of a developer, architect, builder, financing entity.

. Ownership of the Project (campus housing improvements on the land) is transferred to a not-for- profit entity 501(c)(3) on a ground lease.

. A management entity or the College or a blend of both holds an agreement with the Owner to provide residential life programming and facilities management. This agreement is typically from 3 – 5 years.

. Upon repayment of the capital debt and expiration of the ground lease (approximately 30 – 40 years), ownership of the Project will be transferred to the College.

18 POTENTIAL PUBLIC-PRIVATE PARTNERSHIP

ORGANIZATIONAL CHART

19 CONTROL VS. RISK Balancing To Achieve Your Goals

Non-profit/Foundation Owned (Tax Exempt Model) Developer Owned (Taxable Model) Full control, risk and resources of institution Minimal institutional control, risk or resources

Factors . Planning / site selection . Residence life . Financing . Management . Construction management . Marketing / assignments . Property management . Learning communities

20 CONTROL VS. RISK Balancing To Achieve Your Goals

Sample Control Items: Institution Mission Alignment Program Design Construction Standards Schedule Operations – Program & Cash Flow

P3 RISK Example Risk Items:

Cost Impact Credit Impact Reputation Impact D e v e l o p e r

CONTROL

21 PUBLIC-PRIVATE PARTNERSHIPS

Conditions that determine credit impact: . Location . Project assistance (direct & in-kind) . Ground lease terms & conditions . Cash flow . Share of student residences . Construction risk . Targeted student market segment . Non-compete clause and first-fill agreements . Student services & residential life component . Application of financial aid . Rental rate determination . Room type / unit mix . Marketing and management . Guarantees and supports

Source: Moody’s Investors Service

22 IMPORTANT CONSIDERATIONS

FINANCIAL . No financial responsibility to Napa tax payers because of the P3 structure . Balances control and risk OPERATIONS . Security for students, the campus and the community . Housing/building operations by others in conjunction with the College . 24/7 operations DESIGN

. Held to the high standards of the College and the community . Must “fit” within the fabric of the community and the College . Developed with the College with important approvals and sign-offs

23 NAPA VALLEY COLLEGE POTENTIAL CAMPUS HOUSING STUDENT DEMAND FINDINGS

NVC Student Demand by Capture Rate NVC Unit Type Preferences

Capture Rate 2019 Unit Type Preference %

Traditional Double 20% 50% 311 $750/month Single Occupancy Semi-Suite 5% $1,050/month 60% 373 Double Occupancy Semi-Suite 8% $900/month Studio Apartment 22% 70% 435 $1,150/month One-Bedroom Apartment 12% $1,300/month Two-Bedroom Apartment 33% $900/month

25 FACULTY AND STAFF DEMAND FINDINGS

NVC Faculty and Staff Demand NVC Unit Type Preferences by Capture Rate

Capture Rate 2019 Unit Type Preference %

Studio Apartment 17% 50% 46 $1,200/month

One-Bedroom Apartment 35% 60% 55 $1,400/month

Two-Bedroom Apartment 35% 70% 64 $1,900/month

Three-Bedroom Apartment 12% $2,200/month

26 STUDENT HOUSING FINANCIAL ANALYSIS TESTED STUDENT HOUSING PROGRAMS

Traditional/Apartment Housing Program: Apartment-Style Housing Program: 373 Beds 373 Beds Beds / Total Percent Beds / Total Percent Description Qty Description Qty Unit Beds of Beds Unit Beds of Beds

Unit Mix Breakdown Unit Mix Breakdown

Studio Apartment Studio Apartment 1 61 61 16% (Single) (Single) 1 85 85 21% Semi-Suite (Single 1 BR - 1 BA Apartment 2 66 132 35% Occupancy) (Single) 1 70 70 18% Traditional Room 2 BR - 1 BA Apartment 2 66 132 35% (Double Occupancy) (Single) 2 114 228 61% Semi-Suite (Double 4 12 48 13% Occupancy)

205 373 259 373 Total Total RENTAL RATE COMPARISON

Local Rental Rates* Tested Rental Rates New student housing assumed to have the following . One Bedroom Average: $1,722 rental rates: • Studio Apartment: $1,150 /bed/month . Two Bedroom Average: $2,142 / • Traditional Room Double: $750 /bed/month $1,071 per person • Semi-Suite Single: $1,050 /bed/month • Semi-Suite Double: $900 /bed/month . Examples of Representative Apartments • 1 BR Apartment (Single): $1,300 /bed/month - Saratoga Downs, Napa • 2 BR Apartment (Single): $900 /bed/month

- Canyon Ridge, American Canyon / Vallejo • Rates include furnished unit and utilities

- Waterscape, Fairfield / Suisun City

*Survey of 35+ apartment buildings in Napa, Sonoma, American Canyon, Vallejo, Fairfield, Suisun City

29 KEY ASSUMPTIONS

Occupancy Revenue (Overall) Operating Expenses

New student housing assumed to operate at Revenue assumed to escalate by 3% YOY Operating expenses informed by Scion 92% effective occupancy benchmarks (over 54,000 beds), industry 12-month leases trends, and experience in similar markets • Vacancy tested at 5% • Non-revenue/RA beds tested at 3% of 1% Ancillary revenue • Operating expenses assumed to total capacity escalate by 2% YOY

Rental Rates Building Area Project Costs

New student housing assumed to have the New student housing project square footage Hard construction costs assumed to be $313 following rental rates: informed by industry trends and experience per square foot (escalated) on over 200 campuses • Studio Apartment: $1,150 /bed/month • Soft costs assumed to be approximately • Traditional Room Double: $750 • 373 Bed Traditional Student Housing 19.5% of total project costs /bed/month Program: 104,650 GSF • Financing and pre-development fees • Semi-Suite Single: $1,050 /bed/month - 281 GSF / bed assumed to be approximately 19% of • Semi-Suite Double: $900 /bed/month total project costs • 1 BR Apartment (Single): $1,300 • 373 Bed Apartment-Style Student • Debt service schedule assumes 40 year /bed/month Housing Program: 166,060 GSF term with 5.00% interest rate • 2 BR Apartment (Single): $900 - 445 GSF / bed /bed/month • Rates include utilities FINANCIAL ANALYSIS SUMMARY Traditional / Apartment Student Housing Program Net Operating Income versus Debt Service Obligations

4,500,000

4,000,000

3,500,000

3,000,000

2,500,000

2,000,000

1,500,000

1,000,000

500,000

- 1 2 3 4 5 6 7 8 9 10 Net Operating Income Net Debt Service Debt Service Coverage Ratio

P3 Developers typically require a Project Year 1 2 3 4 5 6 7 8 9 10 debt service coverage ratio of at Debt Service 1.15 1.19 1.23 1.27 1.32 1.36 1.41 1.45 1.50 1.55 least 1.20 Coverage Ratio FINANCIAL ANALYSIS SUMMARY Apartment-Style Student Housing Program Net Operating Income versus Debt Service Obligations

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

- 1 2 3 4 5 6 7 8 9 10

Net Operating Income Net Debt Service

Debt Service Coverage Ratio

P3 Developers typically require a Project Year 1 2 3 4 5 6 7 8 9 10 debt service coverage ratio of at Debt Service 0.87 0.90 0.93 0.96 0.99 1.02 1.05 1.09 1.12 1.16 least 1.20 Coverage Ratio FINANCIAL ANALYSIS SUMMARY Apartment-Style Student Housing Levers the College may utilize to formulate a viable P3 project: • Rental Rate increase (Hypothetical): • Studio: $1,553 per mo/ per bed • 1-BR Apartment: $1,722 per mo/ per bed (In-line with market rate) • 2-BR Apartment: $1,089 per mo/ per bed (In-line with market rate) • Building size and efficiency • Building cost and level of finish

• Hard PSF construction costs • Expense subordination • College contribution to project costs • Combination of factors listed above

• Evaluate control and risk • The final pro forma must produce a project that is aligned with the College’s mission and achieves its most important objectives FACULTY, STAFF, FAMILY STUDENT FINANCIAL ANALYSIS TESTED FACULTY, STAFF, AND STUDENTS WITH FAMILIES HOUSING PROGRAM

Housing Program : 213 Units NVC Faculty, Staff, Students with Families Demand Beds / Percent of Description Units Beds Unit Units by Capture Rate

Unit Mix Breakdown Capture Rate 2019

Studio Apartment 1 55 55 26% Faculty & Staff 50% 46

1 BR Apartment 1 83 83 39% Family Students 50% 167 2 BR - 1 BA Apartment 2 75 150 35% Total 213 Units Total 213 288 KEY ASSUMPTIONS

Occupancy Revenue (Overall) Operating Expenses

• New housing for faculty, staff and students • Operating expenses informed by Scion with families assumed to operate at 94% • Revenue assumed to escalate by 3% YOY benchmarks (over 54,000 beds), industry effective occupancy • 12-month leases trends, and experience in similar markets • Vacancy tested at 5% • Non-revenue/RA beds tested at 1% of • 1% Ancillary revenue • Operating expenses assumed to total capacity escalate by 2% YOY

Rental Rates Building Area Project Costs

• New housing for faculty, staff and students • New housing for faculty, staff and students • Hard construction costs assumed to be $315 with families assumed to have the following with families project square footage informed per square foot (escalated) rental rates: by industry trends and experience on over 200 • Soft costs assumed to be approximately campuses 19% of total project costs • Studio Apartment: $1,200 /unit/month • 213 Unit Program: 135,309 GSF • Financing and pre-development fees assumed to be approximately 19% of • 1 BR Apartment: $1,400 /unit/month • 470 GSF / bed total project costs • Debt service schedule assumes 40 • 2 BR Apartment: $1,900 /unit/month year term with 5.00% interest rate SUMMARY CASH FLOW – Faculty, Staff, Students with Families Housing Program Net Operating Income versus Debt Service Obligations

5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 - 1 2 3 4 5 6 7 8 9 10

Net Operating Income Net Debt Service

Debt Service Coverage Ratio

P3 Developers typically require a Project Year 1 2 3 4 5 6 7 8 9 10 debt service coverage ratio of at Debt Service 0.96 0.99 1.02 1.05 1.09 1.12 1.16 1.19 1.23 1.27 least 1.20 Coverage Ratio FINANCIAL ANALYSIS SUMMARY Faculty, Staff, Students with Families Housing Levers the College may utilize to formulate a viable P3 project: • Rental rate increase (Hypothetical): • Studio: $1,440 per mo/ per unit • 1-BR Apartment: $1,680 per mo/ per unit (Less than market rate) • 2-BR Apartment: $2,185 per mo/ per unit (In-line with market rate) • Building size and efficiency • Building cost and level of finish

• Hard PSF construction costs • Expense subordination • College contribution to project costs • Combination of factors listed above

• Evaluate control and risk • The final pro forma must produce a project that is aligned with the College’s mission and achieves its most important objectives ADVANCEMENT NEXT STEPS

NAPA VALLEY COLLEGE . 5/9 Board of Trustees working session on Report: Market and Demand and Financial Analysis . 6/1 College President establishes campus housing community workgroup . 6/13 Board of Trustees considers potential next steps • Selection of an advisory firm • Approval of a selected development partner . 8/8 Board of Trustees considers predevelopment agreement with the P3 partner

40 FORWARD A Residential Campus Experience

. Aspirational state for Napa Valley College?

- Campus housing by 2022?

- Desired mix of housing?

. Ongoing Management & Campus Residential Life THANK YOU STRUCTURE COMPARISON

Project Feature Self-Finance P3 – 501(c)3 Owned Tax Exempt Financing P3 – Developer Owned Taxable Financing

Project Control 100% College Shared with College maintaining control over major project Primarily developer decisions Cost of Funds Lowest Mid-range Highest for taxable debt and/or equity

Project Security College enterprise revenue Project revenue Project revenue

Project Term N/A 30-40 years (ground lease) 30-60 years (ground lease or concession agreement, longer for equity) Access to Residual Cash Flow College College Developer/investors (taxable structure can convey up- front or ongoing lease revenue to College)

Construction Period Liability College Developer Developer

Operational Liability College Developer (residual cash flow at risk to performance) Developer (prioritized cash flow at less risk during operations) Balance Sheet Impact 100% College Minimal depending on project specific guarantees None

Credit Impact Dependent on project performance and mission enhancement

Delivery and Operational Project assumes overall portfolio level Stand-along operations with College participation in major Highest efficiency but in service to Developer and Efficiency efficiency decision making enhances efficiency lenders/investors with minimal College control

Project Recapitalization Project competes against other portfolio Project funded and directed, although typical funding Project funds 100% of CAPEX needs CAPEX requirements requirements are light compared to system replacement needs

43 Update: NVC Campus Housing Project

Update for Board of Trustees July 11, 2019

1 WHY HOUSING? HIGH COST OF LOCAL HOUSING  California is the 3rd most expensive state for cost of living  No affordable choices in the nearby local rental market  Housing insecurity

• Vacancy rates in Napa at 1% per the latest annual vacancy survey conducted by the Planning Division in August, 2018. A healthy vacancy rate is 5%

• 53% of renters in City of Napa are estimated to be cost burdened – paying over 30% of their income for housing

• 23% of renters in the City of Napa are estimated to be extremely cost burdened – paying over 50% of their income for housing

• 6,340 people in Napa are estimated to be living in poverty

2 NVC Housing Priorities • Provide affordable, quality, on-campus living • Support recruitment and retention • Promote a more diverse population • Enhance campus engagement • Increase campus integration with the community

3 Housing and the NVC Mission The trustees on the 2010 board affirmed its position that use of the “North Corner” property should align with and serve the college mission.

Napa Valley College prepares students for evolving roles in a diverse, dynamic, and interdependent world. The college is an accredited open-access, degree- and certificate-granting institution that is committed to student achievement through high-quality programs and services that are continuously evaluated and improved. The college serves students and the community in the following areas: transfer courses, career- technical education and training, basic skills, and self-supporting contract education and community education classes.

4 Housing and the NVC Mission • Secure, supportive, and comfortable community of diverse students designed to contribute to the personal and academic growth of each residential student. • Comfortable, clean, high-quality, and well-maintained living space that is a walk or bike ride away from classrooms • Opportunities for students to develop life and leadership skills, while fostering diversity, civility, global citizenship and social responsibility • Healthy life/play/work balance for students and employees • Easy access to programs and services offered by the college

5 Student Housing

6 Students in campus housing experience improved:

• Persistence and retention rates • Grades • Graduation rates • Levels of academic and social engagement • Peer interactions • Diversity • Campus pride • Community engagement and sense of belonging

7 STUDENT HOUSING AT COMMUNITY COLLEGES

As of 2019, approximately Santa Rosa Junior College 28% of 11 California Community Colleges community colleges in the US offer offer housing student housing, th the 12 broke Source: American Association of Community Colleges, Data Points ground last fall

8 Other campuses on track for housing construction: Orange Coast College

9 Other campuses on track for housing:

Santa Rosa Junior College • 230 units • 360 beds • Total: 42,405 sq ft • Study rooms • Mail room • Social lounge • Laundry room

10 STUDENT SURVEY

Our Demand Analysis determined there is sufficient demand (greater than 300 beds) to attract developer interest for student housing on or near the Napa Valley College campus.

679 survey responses (Part-time and Full-time students)

• 53% of single students and 73% of married/family students would consider campus housing if it were offered

• Out of 314 part-time students, 41% would take 12+ units if they had on- campus housing

• 80% believe campus housing is important in recruiting and retaining students

11 Campus Village for Educators

12 Faculty/Staff campus housing benefits:

• Decreased traffic • Decreased commuting costs • New, high quality housing at lower cost option • Desirable location • Recruitment • Community engagement • Opportunity to live in Napa Valley

13 FACULTY/STAFF SURVEY

Our Demand Analysis determined that there is potential to reach sufficient demand among NVC Faculty and Staff to attract developer interest for housing on or near the Napa Valley College campus.

195 NVC survey responses • 41% would consider and another 41% might consider campus housing if it were offered

• 60% believe offering housing is important in attracting and retaining faculty and staff in the future

14 NVUSD Survey Then we surveyed staff and teachers of NVUSD for their level of interest:

Total responses: 562 of 1142* Of non-home owners: Full time teacher: 58% 58% said “yes” they would consider living in Part time teacher 3% new rental housing on or near the NVC campus. Full time staff 27% 32% said “maybe” Part time staff 12% 90% said “yes” or “maybe”

Of all respondents: 75% said it is difficult to find an affordable place to live within an acceptable distance from campus

Of all respondents: 89% said faculty/staff housing options will be important to attracting and retaining NVUSD faculty/staff in the future

15 Faculty/Staff Housing Parameters Common factors for prioritization might include:

• Educators (NVC faculty and staff; NVUSD teachers) o Non-owners of residential property o Transitional: Limited period of tenancy

16 Other Colleges with Faculty Housing College Vista, located on the College of San Mateo campus, is a two and three-story complex with 44 units built on a 2-acre site with stunning views of the South Bay.

Cañada Vista, located at Cañada College, consists of two three-story residential buildings with 60 units on 3.3 acres overlooking mountain views.

Skyline Vista is in the planning and development stages and will be located at Skyline College. This development will have 30 units and is tentatively scheduled to open in Spring 2020.

Cabrillo and Santa Barbara are working on faculty housing.

17 Benefits to the Community

18 NVC Housing Project – Benefits to Community • Reduced pressure on housing stock • Mitigated traffic • Increased economic impact – Already more than $255 million to Napa County economy. • Sustainability • Live, Work/Learn, Shop – Quality of life • Community connections o Kennedy Park o Kennedy Golf Course o Imola Retail Area o Vine Trail to Downtown

19 WHERE WOULD HOUSING BE LOCATED? Educators Student

From 2015 Campus Master Plan 20 21 Nonprofit/Foundation Owned Tax-Exempt Model

. Nonprofit corporation 501 (c) 3 owns development and issues tax- exempt revenue bonds . Developer earns development fee but has no ownership interest or interest in community’s annual net revenue . College or third party manages the property . College limits risk and debt capacity impact, but also gives up some economic benefit and some control

22 501 (c) 3 Funding Structure

23 Benefits of a 501(c)3 Funding Structure  Housing is designed and constructed according to the college’s wishes  Cost of entire project paid for by the 501(c)3 -- no cost to local taxpayers  College receives all surplus cash flow generated by the project after paying debt service and operating expenses  College retains control and oversight over the management and operations of the project  Outright ownership of the project returns to college at the end of the financing

24 Burden Assumed by 501(c)3 Funding Structure

 Arranges for and oversees the financing, construction and operation

 Monitors and maintains compliance with covenants required by financing

 Directs investment of project-related funds

 Oversees the project construction account and close-out after completion

 Oversees the project’s annual budget and audit

 Maintains all required insurance on the project

 Oversees the filing of all disclosures and tax filings

 Responds to any claims or lawsuits related to the project

 Handles any casualties incurred by the project

25 Project 501(c)3 Financing Structure  The College leases the land to a 501(c)(3) Borrower  501(c)(3) organization serves as owner of the project and borrower of the bond proceeds from the issuer of the bonds. This can be a 501(c)(3) affiliated with the College, or a national 501(c)(3) that will set up a special purpose LLC to own the housing.  501(c)(3) borrows money (this eliminates the legal liability of the College to pay the debt service on the bonds.)  Tax-exempt bonds are issued to finance the design and construction of the student housing facilities (the “Project”). Under the tax-exempt structure, the bonds will provide all of the funds needed for the project, including hard costs, soft costs, financing costs and needed reserves. There is typically not an equity or loan-to- value requirement.  Taxable bonds are issued for costs not eligible for tax-exempt financing (such as issuance costs in excess of 2% of the principal amount of the tax-exempt bonds and perhaps the costs of certain private activity space within the facility).

26 A pre-development agreement creates a legal contract from which the developer can effectively move forward with all aspects of design development and project planning, including financing arrangements.

The agreement stipulates collaboration between the district and developer in the selection of design, engineering, construction and other professionals necessary for the planning, design, permitting, financing, construction and overall development of the project.

A pre-development agreement also outlines the distribution of the shared financial risk to the developer and to Napa Valley College if the project does not move forward to construction.

28 29 • August 8 – Presentation on financing and other key points

• August 12 – Distribution of study packet

• August 20 & 21 - Campus forums

• August 22 – Special Meeting: Pre-agreement with developer

30 31 District and Campuses Master Plan Board of Trustees 7/11/19 Board of Trustees District and Campuses Master Plan 7/11/19

• Long term – 2020-2030 • Provides a comprehensive framework for decisions • Sets planning and design principles for property development • A flexible, living document

The Plan A series of narrative, visual illustrations and land use maps A comprehensive webpage with information and resources A final document (draws upon previous documents) Campus and Community Engagement Governance : Board of Trustees and Real Property Subcommittee Council of Presidents Planning and Budget Committee DCMP Coordinating Workgroup: Facilities Committee Ex Coordinator to the President College Stakeholder Groups Cabinet Members Sr. Dean, Research and Planning (RPIE) Community Advisory Group DCMP Path and Anticipated Timeline

Summer 2019 Fall 2019 Spring 2020 Research and Preliminary Comprehensive Late Spring compilation of Draft for report for final 2020 all existing constituent/ review external Adoption by materials governance /internal Board review review Q & A Update: NVC Campus Housing Project

Update for Board of Trustees August 8, 2019

1 NVC Housing Priorities • Provide affordable, quality, on-campus living • Support recruitment and retention • Promote a more diverse population • Enhance campus engagement • Increase campus integration with the community

2 Demand Surveys

• Student Demand Analysis determined there is sufficient demand (greater than 300 beds) to attract developer interest for student housing on or near the Napa Valley College campus

• NVC Faculty/Staff Demand Analysis determined that there is potential to reach sufficient demand among NVC Faculty and Staff to attract developer interest for housing on or near the Napa Valley College campus

• NVUSD Faculty/Staff survey determined that a majority of non- homeowners said they would consider living in new rental housing on or near the NVC campus

3 IMPLEMENTATION STRATEGIES

College Owned Traditional Model

Nonprofit/Foundation Owned Tax-Exempt Model

Developer Owned Taxable Model

4 IMPLEMENTATION STRATEGIES

College Owned Traditional Model

. College owns and controls 100% of the community . College retains 100% of economic benefit and risk . College issues tax-exempt bonds typically . College or third party manages project

Nonprofit/Foundation Owned Tax-Exempt Model Developer Owned Taxable Model

5 IMPLEMENTATION STRATEGIES

College Owned Traditional Model Nonprofit/Foundation Owned Tax-Exempt Model (P3) Developer Owned Taxable Model

6 IMPLEMENTATION STRATEGIES

College Owned Traditional Model Nonprofit/Foundation Owned Tax-Exempt Model

7 Benefits of a 501(c)(3) Funding Structure  Housing is designed and constructed according to the college’s wishes  Cost of entire project paid for by the 501(c)(3) -- no cost to local taxpayers  College receives all surplus cash flow generated by the project after paying debt service and operating expenses  Outright ownership of the project returns to college at the end of the financing

8 Burden Assumed by 501(c)(3) Funding Structure

 Arranges for and oversees the financing, construction and operation

 Monitors and maintains compliance with covenants required by financing

 Directs investment of project-related funds

 Oversees the project construction account and close-out after completion

 Oversees the project’s annual budget and audit

 Maintains all required insurance on the project

 Oversees the filing of all disclosures and tax filings

 Responds to any claims or lawsuits related to the project

 Handles any casualties incurred by the project

9 POTENTIAL PUBLIC-PRIVATE PARTNERSHIP

ORGANIZATIONAL CHART

10 Project 501(c)3 Financing Structure  The College leases the land to a 501(c)(3) Borrower  501(c)(3) organization serves as owner of the project and borrower of the bond proceeds from the issuer of the bonds. This can be a 501(c)(3) affiliated with the College, or a national 501(c)(3) that will set up a special purpose LLC to own the housing.  501(c)(3) borrows money (this eliminates the legal liability of the College to pay the debt service on the bonds.)  Tax-exempt bonds are issued to finance the design and construction of the student housing facilities (the “Project”). Under the tax-exempt structure, the bonds will provide all of the funds needed for the project, including hard costs, soft costs, financing costs and needed reserves. There is typically not an equity or loan-to- value requirement.  Taxable bonds are issued for costs not eligible for tax-exempt financing (such as issuance costs in excess of 2% of the principal amount of the tax-exempt bonds and perhaps the costs of certain private activity space within the facility).

11 Potential Partners for Student Housing Projects  Provident Resources Group • Incorporated in 1999 • National 501(c)(3) • Over 19 states and District of Columbia – accessed in excess of $3.0 billion in capital

 Collegiate Housing Foundation • Established in 1996 • National 501(c)(3) • To date, has undertaken to own, finance, construct and operate 60 student housing facilities in 24 different states – total project costs exceeding $3.1 billion

12 • August 8 – Presentation on financing and other key points

• August 12 – Distribution of study packet

• August 20 & 21 - Campus forums

• August 22 – Special Meeting: Pre-agreement with developer

13 14 Space Utilization Study

Update for Board of Trustees August 8, 2019

1 Why conduct a Space Utilization Study?

• Limited state resources for new facilities and major renovations require an integrated planning effort • Obtaining an understanding of how current space is utilized provides the means to evaluate alternatives

2 Goals of a Space Utilization Study • Determine current utilization for selected campus buildings and space types and make written recommendations to optimize space use • Recommend policies and space assignment standards to increase utilization • Provide recommendations regarding any renovations or alterations required to change the utilization of spaces on campus

3 Space Utilization Study Timeline • Request for Proposals (RFP) for Space Utilization Study released January 31, 2019 • RFP responses due February 21, 2019 – one response received • RFP response deadline extended to March 15, 2019 – additional vendors solicited • No additional responses received following extension of deadline

4 Space Utilization Study Timeline (continued) • President and Facilities Director reviewed response to proposal April 2, 2019 – determined firm lacked experience with California institutions and did not provide new insights or ideas for the process • Facilities Committee discussed starting an “in-house” utilization review at April 4, 2019 meeting – identifies spaces and areas to be reviewed to gather information to be used by third-party consultant (to be identified)

5 Space Utilization Study Timeline (continued) • Facilities Director and Vice President of Administrative Services met April 9 and April 16, 2019 to review launch of study • Facilities Committee begins internal space utilization study at April 25, 2019 meeting – a work group of the Facilities Committee is identified to gather usage information and campus input

6 Space Utilization Study Timeline (continued) • Initial areas reviewed: – Community Room, PAC Lobby, Student Activities Center and other large gathering spaces – Conference Rooms – Board Room – Offices – LLRC and Little Theater Building – Modular Buildings – Gym and Mat Room – Café and Bookstore – Upper Valley Campus • Other areas reviewed previously or to be included in Phase II

7 Space Utilization Study Timeline (continued) • Meetings conducted late May through early July with stakeholders representing areas to be reviewed – Facilities Committee Work Group members include: – Faculty representatives – Bonnie Moore and Stephanie Burns – Classified representatives – Heidi Jacks and Kayla Alexander – Facilities Director – Matt Christensen – Facilities Department representative – Samantha Maddox

8 Space Utilization Study Timeline (continued) • Meetings conducted with the following individuals: – Erik Shearer, Asst. Superintendent/V.P., Academic Affairs – Carollee Cattolica, Director, Office of Institutional Adv. & College Fdns. – Bob Harris, Senior Dean, Health & Safety – Jerry Dunlap, Associate Dean, Kinesiology, Athletics & Dance – Dana Hagge and James Ontiveros (Barnes and Noble) – Mechele Manno, Dean, Centers & Community Education – Bob Van Der Velde, Senior Dean, Arts & Sciences – Ben Quesada, Manager, Student Life – Maria Villagomez, Senior Dean, Language Arts, Library & Social Sciences – Faye Smyle, Interim Asst. Superintendent/V.P., Academic Affairs

9 Space Utilization Study Timeline (continued) • Work Group debriefed and reviewed meeting notes at July 22, 2019 meeting • Review by full Facilities Committee at the August 15, 2019 meeting

10 Space Utilization Study – Next Steps • Engage third-party consultant (architect) to review information gathered • Share information gathered and work of consultant with constituent groups on campus • Implement suggestions/recommendations beginning late Fall 2019 - early Spring 2020

11 12

BP 6340

Board Policy Chapter 6 – Business & Fiscal Affairs

BP 6340 BIDS AND CONTRACTS

References: Education Code Sections 81641 et seq.; Public Contract Code Sections 20650 et seq.; Government Code Section 53060 ACCJC Accreditation Standard III.D.16

The Board delegates to the Superintendent/President, or to such persons as the Superintendent/President may designate, the power to negotiate and execute for the District in the name of the District any contract, whether or not requiring the expenditure of District funds, whether or not involving the purchase of goods or services, and whether or not of a continuing nature, subject only to the following limitations:

 Contracts are not enforceable obligations until they are ratified by the Board.  Contracts for work to be done, services to be performed or for goods, equipment or supplies to be furnished or sold to the District that exceed the amounts specified in Public Contract Code Section 20651 shall require prior approval by the Board.  When bids are required according to Public Contract Code Section 20651, the Board shall award each such contract to the lowest responsible bidder who meets the specifications published by the District and who shall give such security as the Board requires, or reject all bids. If the Superintendent/President concludes that the best interests of the District will be served by pre-qualification of bidders in accordance with Public Contract Code Section 20651.5, pre-qualification may be conducted in accordance with procedures that provide for a uniform system of rating on the basis of a questionnaire and financial statements.

If the best interests of the District will be served by a contract, lease, requisition or purchase order through any other public corporation or agency in accordance with Public Contract Code Section 20652, the Superintendent/President is authorized to proceed with a contract.

See Administrative Procedure AP 6340 (pending)

Adopted: 02/24/04 Revised: 01/15/15, errata 05/2015

BP 6500

Board Policy Chapter 6 – Business & Fiscal Affairs

BP 6500 PROPERTY MANAGEMENT

References: Education Code Sections 81300 et seq.

The Superintendent/President is delegated the authority to act as the Board’s negotiator regarding all property management matters that are necessary for the benefit of the District. No transaction regarding the lease, sale, use, or exchange of real property by the District shall be enforceable until acted on by the Board of Trustees itself.

The Superintendent/President shall establish such procedures as may be necessary to assure compliance with all applicable laws relating to the sale, lease, use, or exchange of real property by the District.

Adopted: 3/12/15 Reviewed: 6/12/18 (errata corrections)

(Replaces BP 6500)

BP 6600

Board Policy Chapter 6 – Business & Fiscal Affairs

BP 6600 CAPITAL CONSTRUCTION

References: Education Code Sections 81005 and 81820; Title 5 Sections 57150 et seq.

The Superintendent/President is responsible for planning and administrative oversight of the District’s capital outlay and construction program.

District construction projects shall be overseen by the Superintendent/President. The Chief Business Officer shall monitor the progress of all construction work including inspection of workmanship, completion of work to meet specifications, and the suitability of proposed changes to the scope and original design of the work. The Chief Business Officer shall assure compliance with laws related to use of state funds to acquire and convert existing buildings.

The Chief Business Officer is authorized to process change orders that do not exceed five percent of the construction contract or $80,000, subject to subsequent ratification by the Board of Trustees. Change orders in excess of this amount must have prior Board approval.

The Board of Trustees shall approve and submit to the Board of Governors a five year capital construction plan as required by law. The Superintendent/President shall annually update the plan and present it to the Board of Trustees for approval. The plan shall address, but is not limited to, the criteria contained in law.

Adopted: 2/24/04 Reviewed: 6/12/18 (errata corrections)

(Replaces BP 6600)

BP 6910

Board Policy Chapter 6 – Business & Fiscal Affairs

BP 6910 HOUSING

References: Education Code Sections 94100 et seq.

The Superintendent/President is delegated the authority to enter into agreements with nonprofit entities to finance the cost of constructing student, faculty, and staff housing near the campus(es) of the District. All agreements are subject to ratification by the Board of Trustees.

Adopted: 3/12/15 Reviewed: 06/01/18