Portland State University’s Broadway Housing

Creative Financing Speeds up Process

by Sheila Bacon

The University of Portland used a unique financing method to build the Broadway Housing student apartment complex. Rendering courtesy of Otak

Portland State University is using a unique financing method to shave months off the schedule for its new $47 million Broadway Housing complex.

The arrangement will allow the university to occupy the new 384-unit student housing complex in September 2004 – a target date that undoubtedly would have been missed had the university used conventional financing methods.

Traditionally, universities need legislative approval for funding of capital projects such as new dormitories, classrooms or administrative buildings. The involvement of state government often means the entire process – from concept to completion – moves much slower than in a private developer scenario.

Here, the Broadway Housing project is owned by the Portland State University Foundation, a 501(c)(3) corporation separate from the university. It is being built to the university’s specifications, but will be leased to the school by the foundation upon its completion.

The foundation secured Portland’s Gerding/Edlen as its developer, who brought architecture/engineering firm Otak and general contractor Hoffman, both of Portland, on board. Key Bank was chosen to sell the bonds. Because bids were solicited by the foundation, not the school, use of the traditional low-bid process was not necessary. And since the university is leasing the property, not purchasing it, the Legislature’s involvement was not required.

The result is an expedited procedure that will bring the sizable project from concept to completion in just 23 months. Under traditional methods, the entire process would have likely taken at least three years, said Jay Kenton, PSU’s vice president of finance and administration.

The university decided to use this alternative method of developing the project precisely because it would be more expeditious, Kenton added. Universities can only bring capital items to the Legislature’s table at certain times. The land for this project was up for sale and the foundation was able to move quickly. An existing rapport between the developer and the contractor resulted in a quick assembly of a project crew.

“Most private developers in town said they couldn’t do it as fast as we were doing it,” Kenton said.

The procedure also allows the foundation to own an asset, ramps up its balance sheet and provides an outlet for it to show its support for the university, Kenton added.

LEEDing the Way

The Broadway Housing complex at S.W. Jackson and S.W. Broadway is a 10-story, approximately 220,000-sq.-ft. building offering eight floors of student housing, one floor of academic space and ground-level retail space. Although no retail leases are yet signed, the university is considering locating a drugstore and a restaurant or coffee shop in the space, Kenton said.

The project is seeking a Silver LEED rating by the U.S. Green Building Council and will feature a large eco-roof that reduces stormwater runoff. Other energy-saving features include increased wall insulation, a condensing water heater, toilet exhaust recovery, low-flow fixtures and condenser water pumping. Low-flow fixtures and other investments will reduce water usage in the building by 20 percent.

One-fourth of the building’s construction materials are locally produced. Construction of Broadway Housing is on track to be completed in August 2004, and students will be able to move in the following month. Hitting that completion date is critical, said Kenton.

He added that if the school had not used this quicker development process, it’s unlikely the facility would be ready in late summer, when the majority of students are making housing decisions, and the university would have had to put the project off another year, thus losing money on room leases.

PSU: On the Horizon