More Colleges Seen Seeking P3 Alternatives
PROVIDENCE, R.I - With more colleges facing fiscal challenges issuing debt for new projects, many higher education institutions are exploring alternative forms of financing, according to the co-head of Public Financial Management Inc.'s public-private partnership practice.
Colleges are more receptive to a P3 model because of risks associated with borrowing and a lack of flexibility to raise tuition, said Tom Morsch, managing director at The PFM Group's Chicago office, speaking Tuesday at The Bond Buyer's Healthcare and Higher Education Conference. Schools have teamed with the private sector to solve problems with parking, academic facilities, student housing, energy and neighborhood development, Morsch said.
"In higher education we have seen a lot more demand for alternatives," he said during a panel discussion.
Morsch highlighted Ohio State University's decision to team up with QIC Global Infrastructure in 2012 for a $483 million plan to lease and operate all campus parking facilities for 50 years.
Drexel University in Philadelphia is also working toward a neighborhood development P3 project where a master developer will create offices, laboratories, classroom space, residential housing and retail businesses on endowment-owned land to enhance the area around the school.
"Universities are complicated, vertically integrated operations that are looking to sort through that and bundle or unbundle where there may be pockets of opportunity to add value or create value," said Morsch. "There is a ton of opportunity and there is a ton of assets."