A new state law allowing private-sector investment to fund academic construction projects at New Jersey colleges will entice more development and stimulate employment growth, a developer said.
“Colleges in the state today — given their tax situation and funding situation — don’t have the ability to take money and throw it into improvements for the college. They need to be careful with whatever funds they have,” said Greg Lentine, vice president of West Long Branch-based PRC Group, which is developing a housing and retail center at The College of New Jersey through a public-private partnership. “Before, they would either have to use bonds or come up with the money themselves, and that would take away from other projects they needed to get done. This partnership allows companies like ours to go in and take on the financial risk for them.”
Under the law, institutions of higher education can sign lease agreements for dormitories or other revenue-producing facilities with private-sector companies, giving them access to the buildings’ revenue streams in exchange for the financing to construct classrooms, laboratories or other academic projects. At the end of the lease, the management, operation and maintenance responsibility for the facility — as well as any subsequent revenue it generates — reverts to the college.
While TCNJ, Montclair State University and Ramapo College are the only universities that have formed partnerships for revenue-generating projects under the state New Jersey Economic Stimulus Act of 2009, Lentine said he has been contacted by other colleges to develop more residence halls and retail centers through the program. But Lentine said he hasn’t “seen too many colleges asking for academic buildings,” since a law to form a partnership for non-revenue-generating projects did not exist until Wednesday.
“Right now, colleges put out a wish list that says they want 500 beds and a learning center within the building for some classroom space,” Lentine said. “We haven’t had anybody come in and say, ‘Build us a science center,’ because there was no way for us to get any income from it.”
But with PRC Group’s $50 million Campus Town project at TCNJ projected to create 475 jobs in areas like construction and retail, Lentine said “if we can get more projects like this — revenue-generating or not — it will really help employment in New Jersey.”
In a statement, state Sen. Thomas Kean Jr. (R-Westfield) said the public-private partnership law “is an innovative solution to meeting our infrastructure needs at public institutions during a time of limited resources.”
“New Jersey’s future economic growth, particularly in the technology and pharmaceutical industries, is dependent upon a world-class public higher education network,” Kean said in a statement. “We cannot achieve the quality that is necessary at these institutions to facilitate that economic growth if they do not offer the very best facilities for research and instruction.”
At a higher education construction conference in June, Montclair President Susan Cole attributed the college’s slow enrollment growth to the lack of space on campus, noting the need for public-private partnerships to build academic centers.
“Students in New Jersey want to study science, and I am completely out of lab space, so I’m turning away qualified New Jersey students,” Cole said at the conference. “We need to build.”
But Lentine said repayment for academic projects from colleges’ revenue streams can take up to 50 years, which is giving firms financing the projects pause.
“A private company has to sit and say, ‘Over 30 to 50 years, how will these colleges change?’ ” Lentine said. “We’re already seeing more online courses and virtual courses, so how will that affect enrollment, and then where will the revenue come from?”
Still, Lentine said student housing at most of the state’s colleges is currently in high demand, which creates a solid revenue stream for companies financing academic projects up front and seeking reimbursement in the long term.
“If these public-private partnerships work like they already do for student housing — as long as there’s a way for a private company to see a reasonable return — it will work,” Lentine said.