Modernizing Existing Facilities

5 Trends Influencing Campus Project Financing | FY 16-17

“Campus space growth has outpaced enrollment growth.1

State of Sustainability in Higher Education Report by Sightlines & The University of New Hampshire, Sustainability Institute

The Challenge:

As competition for new students and faculty grows, schools feel the pressure to invest in their aging campuses. However, maintaining the physical appearance and functionality of a school campus is easier said than done. As schools try to attract new students, often times new construction seems more appealing since the growing list of deferred maintenance can appear to be never-ending. 

However, within the last few years, schools have over spent on new construction at a rate that has outpaced enrollment growth1, still leaving behind a large backlog of deferred maintenance needs. For many schools, this has added to the campus infrastructure problem instead of solving it.
 

Deferred Maintenance Backlog: 

Despite years of knowing the deferred maintenance backlog is growing, many schools have no choice but to defer. Many schools measure the percentage of their facilities that need to be repaired in order to evaluate their backlog and then prioritize projects based on necessity. However, campuses range from needing a small amount of upgrades to some which are in desperate need of repair:

The Solution: 

Proactively investing in campus improvements not only decreases the backlog of projects, but it also significantly reduces the amount of money needed for long-term repairs. 

According to a 2014 Report by Sightlines every $1 spent on maintenance avoids $3 in capital reinvestment2, meaning business officers should evaluate the full opportunity costs associated with deferring critical campus upgrades. For schools that don’t have capital budgeted, strategic financing solutions can be a good economic alternative when factoring in the opportunity costs incurred by deferring. Using interest-only payments during the installation with simple, fixed rate financing, campus leaders can address their growing backlog of projects in a way that is fiscally responsible for the school. 

Source1: State of Sustainability in Higher Education Report by Sightlines & The University of New Hampshire, Sustainability Institute
Source2: 2014 Sightlines Annual Report, The State of Facilities in Higher Education: 2014 Benchmarks, Best Practices and Trends

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