Rochester%20Institute%20of%20Technology

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Rochester Institute of Technology

• College Town
• Project

James Fisher Assistant VP for Finance
Administration
IPED Conference June 28, 2007
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Brief RIT Profile

• Founded in 1829 as Rochester Anthenaeum
• Coeducational, privately endowed university
• Enrolls over 15,500 full-time part-time
  students in eight colleges
• Career-oriented education leader in cooperative
  education since 1912 offering A.S., B.S, M.S,
  Ph.d
• Over 100,000 RIT alumni in all 50 states
• Operating budget of approximately 430M
• Situated on a 1,300 acre campus in suburban
  Rochester

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RIT Campus
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RIT Campus
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College Town Project Genesis

• Suburban campus location
• 65 of students housed on campus
• Over 2,500 students in off-campus apartments
• Limited transportation entertainment
  opportunities
• Recognition of increasing importance of student
  experience outside of classroom to competitive
  position student retention

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First Steps

• Internal discussions with various constituent
  groups on campus.
• Discussions with the Board of Trustees for
  endorsement of concept.
• Market study by external group 2001-02 with
  following objectives
• Create mixed-use development while achieving
  financial viability
• Expand linkages between RIT community
• Offer convenient value-oriented retail
  service offerings
• Create a non-institutionalized on-campus
  development while enhancing wetlands
• Meet RIT student housing needs

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Conclusions of Study

• Dissatisfaction with RIT almost always focused on
  perception of quality of life on campus.
• Students, faculty staff expressed overwhelming
  support for the College Town concept.
• Accessibility to the campus was identified as a
  key component.

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Conclusions (cont)

• Study estimated that students, faculty staff
  spent approximately 51M annually on consumer
  items not available on campus, with over 16M
  potential for capture by College Town retail.
• Off-campus housing market was thriving with a
  small vacancy rate. (2.3)
• A deficit of approximately 450 apartment beds
  existed over 50 of students surveyed indicated
  preference for living in College Town apartments
  over other choices.

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Conclusions (cont)

• Top businesses facilities identified
• Stores bookstore, clothing shoe stores
• Food 24-hr diner, deli, pizza, market
• Services bank, post office, copy shop
• Entertainment movie theater, music club, bowling
  alley, sports bar
• Outdoor Public Spaces outdoor plazas, recreation
  fields, walkways to RIT

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Next Steps

• Internal Prioritization other significant
  capital projects addressed. 2002-2003
• Request for Proposal for Mixed-Use Project
• Sent to over 20 developers in March 2004.
• Envisioned the use of approximately 90 acres of
  the campus front door for project.
• Intended to retain ownership of l provide a
  ground lease to developer for either 25 or 40
  years.

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Next Steps (cont)

• RFP (cont)
• Anticipated two-phase project with retail in
  first phase no guarantee of second phase.
• Desired timeline called for first phase to be
  completed by January 2007.

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Next Steps (cont)

• Results of RFP
• Two developers identified as finalists, one was a
  university trustee.
• Both proposals identified need for commitment for
  both phases to be financially viable.
• Extensive evaluation of both proposals by
  cross-university committee of students, faculty
  staff.
• Trustee firm proposal selected award made in
  October 2004.

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Path to Development

• Negotiation Considerations
• Target property offered severe issues with regard
  to wetland disturbance. Developer estimated it
  would take one year to obtain all necessary
  permits.
• Trustee relationship added special requirements
  to demonstrate arms-length transaction.
• University had limited experience with commercial
  retail development. Hired an experienced
  consulting firm to review proposal terms in
  early 2005.

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Path to Development

• Negotiation Progress
• Consultant verified terms to be reasonable
  relative to the market.
• Concern about changes in financial treatment for
  third-party development keeping project debt
  off the university books.
• Ground lease draft prepared delivered to
  Developer, June 2005.

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Path to Development (cont)

• Change of Direction
• Developer proposed outright purchase of land to
  address wetland permitting process university
  concerns over accounting treatment. Sept. 2005
• Nature of parcel made appraisal extremely
  difficult.
• First appraisal obtained on 90 acre parcel taking
  into account estimated mitigation costs. Initial
  purchase offer refused.
• Agreement reached with Developer to reduce
  project parcel to 60 acres to reduce amount of
  included wetlands.

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Challenged Property
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Path to Development (cont)

• Developer Negotiation
• Second, mutually agreeable appraiser identified
  appraisal done on 60 acre parcel excluding cost
  of mitigation. February 2006
• Adjustment for mitigation costs required buffer
  areas applied purchase price agreed to by
  university Developer. April 2006
• Sale agreement negotiation begins in earnest.

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Path to Development (cont)

• Developer Negotiation (cont)
• University desires to retain certain restrictions
  on use of property that were reflected in ground
  lease. Requires drafting Restrictive Covenant
  Agreement.
• Additional 15 acres of university land needed for
  wetland mitigation of disturbed wetlands.
  Permitting agencies require a formal Conservation
  Easement be drafted and recorded.
• RIT wishes to retain ownership of the mitigation
  land but desires compensation for the permanent
  encumbrance required by the Conservation
  Easement. Requires drafting of a License and
  Management Agreement.

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Path to Development (cont)

• Developer Negotiation (cont)
• Developer makes sale contingent upon university
  becoming anchor tenant by relocating its
  bookstore to College Town and transition to a
  Barnes Noble managed store.
• Necessitated successful negotiation of a
  Management Contract between RIT and Barnes
  Noble Collegiate Booksellers.
• Necessitated successful negotiation of a Lease
  Agreement between RIT and Developer.

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Path to Development (cont)

• Developer Negotiation (cont)
• Due to the location of the development, access to
  sanitary sewer facilities required lines to be
  laid across land, parking lots and driveways
  associated with a university-owned student
  apartment complex.
• This necessitated drafting and recording a
  Sanitary Sewer Easement between the university
  and the Town.

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Path to Development (cont)

• Developer Negotiation (cont)
• University was in the midst of a major capital
  campaign President secured the gifting of the
  entire parcel improvements from the Trustee at
  the end of 40 years.
• The pledge is unenforceable revocable but the
  university wishes to ensure that property reverts
  to RIT. This necessitated the drafting of both a
  Right of First Refusal Agreement Option to
  Purchase Agreement between RIT Developer.

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Path to Development (cont)

• Meanwhilethe permitting process was stalled with
  the Army Corp. of Engineers.
• First initiated process with both DEC and ACE in
  October 2004.
• First target date for obtaining final permits was
  October 2005.
• Second target date was June 2006.
• Third target date was October 2006.
• Actual delivery of approved permits was April
  2007.

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Path to Development (cont)

• In order to meet construction timelines Developer
  needed to begin construction immediately upon
  receipt of wetland permits.
• A number of the contractual documents were still
  having minor revisions incorporated.
• To facilitate progress, a License,
  Indemnification and Insurance Agreement
  negotiated and signed between RIT and Developer
  providing access to the site.

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University Process

• Sale Agreement and Lease Agreement required the
  following
• Review and recommendation to approve by Board of
  Trustees Buildings Grounds Committee.
  September 2006 May 2007
• Review and approval of Sale and Lease Resolutions
  by Board of Trustees Finance Committee. April
  2007 May 2007

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Where Are We Now?

• Developer began construction at site on April 26,
  2007.
• All contractual documents were executed and
  closing occurred mid-June 2007.
• Project groundbreaking ceremony occurred on
  June 22, 2007.
• Transition of campus bookstore from self-op to
  Barnes Noble management will occur on July 1,
  2007.

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Where Are We Going?

• Project renamed Park Point and website under
  development by Developer.
• Apartment leases planned to begin to be taken in
  Fall 2007 for September 2008 move-in.
• Bookstore to be delivered for final fit-out by
  June 1, 2008.
• Project to be completed and open by September
  2008.

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Contact Information

• James Fisher
• Assistant VP for Finance Administration
• Rochester Institute of Technology
• 11 Lomb Memorial Drive
• Rochester, NY 14623
• 585.475.6020
• jfisher_at_mail.rit.edu