CU Foundation funds new student housing

BOULDER — This year signaled the beginning of a new era for the University of Colorado and the University of Colorado Foundation Inc., its private fund-raising arm.

In an unprecedented arrangement at CU, the Board of Regents unanimously approved a 40-year ground lease agreement with Bear Creek I LLC, formed by the CU Foundation in May. Then in July, the foundation sold $69 million in tax-exempt bonds to fund design and construction of student housing at CU’s Williams Village.

Construction on the first half of the project — 496 beds — already has begun and is on schedule for completion by August 2003. The second half, which will provide an additional 490 beds, should be finished in 2004. Apartment rental fees are expected to cover operating expenses and debt service.

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“This represents a new era for CU and the CU Foundation in working together to advance the university. This is truly a partnership,´ said Michael Byram, CU Foundation president. ?Housing is always a critical need at all universities, and CU is not unique here. Boulder has been looking to expand for a number of years.?

Derrick Watson, assistant to the vice chancellor of administration at CU-Boulder, said a feasibility study conducted in 2000 to assess the university’s financial and marketing capability for a project of this magnitude revealed that approximately 2,600 students would be interested in living in such a development.

Williams Village was a land donation to CU in the early 1960s. The 64-acre site has two high-rise residence hall complexes: Stearns East and West, and Darley North and South; a multipurpose facility; Darley Commons; two soccer fields, four tennis courts and other recreational facilities.

At present the site provides housing for approximately 1,500 students. Yet, much of this relatively flat site has remained underdeveloped.

?The stars were finally in alignment with an agreement between the students, the city and the university about how to best develop this property,? said Watson, who added it has been a long-term challenge to gain consensus among all parties.

Watson and Byram believe the foundation was chosen to lead the charge with financing the project for numerous reasons, including its strong history of proper asset management.

?The foundation was used for its financial strength. We’ve proven to be a sound investment over a sustained period,? Byram said. Standard & Poor’s rated the bonds AA-, and Moody’s Investors Service gave the debt its A1 rating. ?We also have the ability to respond quickly. We’re expeditious while still being prudent. We’re not encumbered with state requirements to go through a bidding process so we’re able to act more quickly.?

Watson, who serves as the university representative to the project, said they needed to go through a 501(c)(3) organization. Tax-exempt bonds, which CU wanted to secure, tend to offer a lower interest rate.

?The foundation is a 501(c)(3) so we didn’t have to look very far,? said Watson. ?(The foundation) also already has real estate experience, we didn’t even consider anyone else.?

The CU Foundation was established in 1967 to help raise and manage private funds. It is a privately governed non-profit corporation whose mission is to support CU by building partnerships, raising and managing resources, and providing other services.

Although the state of Colorado ensures that CU provides a basic level of education, state funds provided only 17 percent of CU’s 2000-2001 operating budget for the four-campus system. Meanwhile, tuition and fees contributed 22 percent and contracts, grants and gifts supplied 36 percent of the university’s total operating budget.

The CU Foundation’s budget was $21.4 million in 2001. That year, CU’s total giving was $161.4 million, 27 percent of which came in the form of planned gifts. To secure such a large percentage of giving, the foundation used more than $18 million for support services such as administration and development. The foundation’s development staff plays a key role in maintaining a culture of giving among alumni and the community, Byram said.

?Gifts improve and enhance the university,? said Byram, explaining that gifts are tied to people, and the strong financial support helps the university attract and retain the best and brightest teachers and students.

According to Betsey Jay, vice president, CU Foundation communications department, another important way the foundation keeps continued awareness about giving is to have people who are donors talk about their gifts. ?We want to keep their stories out there and keep the donors talking about it,? Jay said.

Recent commitments have included Bill and Claudia Coleman’s $250 million for the University of Colorado Coleman Institute for Cognitive Disabilities, $55 million from The Anschutz Foundation for the Anschutz Centers for Advanced Medicine at Fitzsimons, and $35 million from the Leeds family to name the business school at CU-Boulder. Additionally, a $5 million gift in February from 1997 CU graduate Tom Marsico will support the work of the university’s Nobel Prize winners.

CU President Betsy Hoffman has christened the final phase of CU’s fund-raising campaign to reach the $1 billion mark in 2003 as ?Beyond Boundaries.? Additionally, Hoffman has proposed an aggressive $5 billion endowment level spanning the next eight years with an annual fund-raising level of $500 million.

Yet, these goals may need revision due to how the 2-year-old stock market slump may affect current and future donations. So far, it hasn’t, Byram said, but this could shift.

?What we’ve seen is a consistent level of support. That hasn’t changed,? Byram said. However, changes in the stock markets and jobs have affected the level of donations, and commitments have been placed in longer-term settings, he added.

As of June 30, the foundation has $803 million under assets and is on track to reach its $1 billion goal, Byram said. ?We’ll take another look at the economy as it shakes out in the next three to six months to better understand how realistic this goal is, but I still think it’s attainable.?