ࡱ> ?A>[ bjbj )>jjbl 8 ,$ <l l ( RTTTTTT$  Xx xl 4lll R  Rl Rll66 ` @ʃ/2K .66<6a Xa6lAgenda Board of Regents Emergency Meeting of the Full Board Wednesday, July 16, 2003; 11:00 a.m. 12:00 noon VIA AUDIOCONFERENCE In Fairbanks: 474-8050 All Others: 1-877-751-8040 PASSCODE: 921588 I. Call to Order II. Adoption of Agenda MOTION "The Board of Regents adopts the agenda as presented. I. Call to Order II. Adoption of Agenda III. Approval of Acquisition of Florina Street Property in Anchorage, ɫƵ IV. Adjourn This motion is effective July 16, 2003." III. Approval of Acquisition of Florina Street Property in Anchorage, ɫƵ BACKGROUND Shortly before the June 2003 Board of Regents' meeting, the University of ɫƵ was made aware of a 24-unit (32-bed) residential apartment multiplex available on 4131 Florina Street (Lot 2A is 32,000 square feet) for sale at $1.2M. This property is directly adjacent to the southern parcel of the existing West Hall housing complex (see Reference 1). UAAs housing auxiliary advanced a $9M request on the 6-year capital plan for a new 186-bed residence hall north of Sharon Gagnon Lane. The Florina Street opportunity does not meet the needs that a new residence hall would provide. However, it is complementary to a high priority campus housing need, and the potential land acquisition allows for further future expansion southwest of Sharon Gagnon Lane and buttresses up to Residential Drive and West Hall (see Reference One). The administration has entered into a purchase agreement at $1.125M, slightly above the 2002 assessed value. The earnest money is fully refundable if, prior to July 24, the university finds the results of its due diligence reports unacceptable. The contract is assignable. For reasons outlined below, the administration believes the condition of the property is unacceptable for conventional acquisition and remodel, but recommends that the property be purchased if certain conditions can be satisfied. THE INSPECTION AND FINANCIAL ANALYSIS SUMMARY Based on feedback provided by the board at the June meeting, an option agreement was exercised to allow for a full due-diligence of the multiplex. UAA contracted with H. Lee Pederson & Associates to assist with the review. An environmental assessment study was done by Shannon & Wilson. There are no environmental impacts of concern on the parcel of land. The findings of the inspection report indicate there are substantial tenant improvements necessary to restore the facility to minimal standards acceptable to UAA. Tenant Improvements would range up to $1,024,000. Total Acquisition Price $1.125M Miscellaneous/Closing 0.025M Tenant Improvements 1.024M Total Purchase Price $2.174M Total Cost Per Unit $92,6640,583 Total Cost Per Bed $67,940 If conventional acquisition remodel processes were followed, the units would be in like new condition, but not of an institutional quality such as the units recently constructed at a cost of $57,700 per bed, excluding land costs. An internal assessment by the auxiliary operation to fully fund the debt services, operating costs and management of the facility would cause a net loss of approximately $124,000 annually. With existing annual debt for Templewood of approximately $160K and the New Residence Halls of $1.7M the auxiliary would be unable to fully service the debt on this facility. The University believes this acquisition is critically important for the long-term needs of UAA campus housing. Eventually when debt associated with Templewood apartments is retired and with summer revenues continuing to trend upwards, UAA will be in the financial position to assume additional debt to restore or rebuild a multiplex facility by FY09. The university believes this acquisition is important for the long-term needs of UAA campus housing. RECOMMENDED ACTIONAlternatives The traditional use and condition of the facility and its location leads the university to believe that its interests would be best served if the land were owned by the university and the facility improvements be privately owned, redeveloped and managed over a limited period ground lease. Ideally, a developer/manager would purchase the improvements and tThe university would acquire the land at a closing in which the university simultaneously executes enter into a real property land lease with the developer/manager, or to split the fee estate into improvements and land selling the improvements and entering into a land lease, with sufficient terms, conditions and duration to satisfy financing and amortization requirements, including provisions for future redevelopments or removal of improvements, and potentially setting aside some individual or a certain percentage of units for leasing to full time UAA students. The university is aware of at least two parties who would be interested in this such an investmenttransaction. The cost for the university to enter into the land purchase University acquisition of the parcel is estimated at $100,000 (the simple fee value of the land at $3.00 per foot) to - $250,000 depending on the number of student apartments that the university would want to be set aside for studentsguarantee. UAA would pay this amount out of its FY04 unrestricted funds. Because a student set-aside potentially removes the unit from immediate leasing in the event of a summer or mid-semester vacancy, it would be perceived as adding risk for higher than market vacancy rate. Initial review indicates the Housing Auxiliary would propose negotiations that would minimally guarantee set aside (six apartments for its existing WWAMI students, and four apartments for married students, or families or graduate students. These numbers may fluctuate depending on student enrollment projections and the quality of the facilities. However tThe actual final numbers would be negotiated with the successful developer, and provisions would be made so that the numbers could fluctuate over the term of the land lease depending on student enrollment projections and the quality of the facilities. Proposed Timelines: July 16: Emergency Board Meeting July 22: Comments from parties interested in property development. July 24: Due Diligence Deadline, earnest money becomes non-refundable ($10,000). August 15: Potential Closing Date The President recommends that: MOTION "Notwithstanding Regents' Policy 05.11.05, the Board of Regents authorizes the administration to acquire all or a portion of the property known as 4131 Florina Street and described as Lot 2A, Block 4, Green Acres Subdivision, Anchorage Recording District, and to lease all or a portion of the acquired property to other parties for purposes of residential housing units/apartments, some of which full time UAA students may have priority set-aside access to, all at terms and conditions approved by the university president, and authorizes the University of ɫƵ Land Management Office to execute any and all documents necessary to acquire and subsequently lease the property. This motion is effective July 16, 2003." IV. 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