July 13, 2024

Housing Finance Development

It's Your Housing Finance Development

Colleges dabble in development as high-priced housing markets squeeze their employees

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About 20% of faculty and staff at Middlebury College, in Vermont, commute in from New York state.

The Vermont side of Lake Champlain is just too expensive for many people, said David Provost, executive vice president of finance and administration at the college. That’s having an effect on the private liberal arts college’s ability to attract and retain faculty and staff.

Now, Middlebury College is working with a developer to build affordable, workforce and market-rate housing on a property that is walkable to both downtown and campus. Though the apartments won’t be limited to people who work at the college, Provost said the institution is still likely to benefit.

“We as the largest employer believe just by the law of averages we will end up with most or a lot of the housing, because we have all the people,” Provost said. “We can’t build these soon enough. We think they’ll go very quickly.”

Middlebury is just one of many colleges across the country getting creative with how to grow affordable housing in their regions. As the U.S. sees both the housing and rental markets boom, living in a college town is becoming more expensive, with impacts on students, faculty and staff.

Provost said the lack of affordability in Vermont is in part a supply issue. The region is well-stocked with second homes and was also a destination for people leaving dense cities at the beginning of the pandemic.

“The general supply issue that Vermont was facing before the pandemic is just magnified, but I don’t think it goes away until we add tens of thousands of units across the state,” he said.

The development project will yield about 100 housing units, with both income-limited housing — which receives state subsidies — and market-rate housing available. To make it possible, Middlebury College spent $1.5 million to buy 35 acres.

“We can’t build these soon enough.”

David Provost

Executive vice president of finance and administration, Middlebury College

The land was on the market for several years, Provost said, before the college provided institutional leverage to make a deal go through. Middlebury College will only be a temporary owner, selling the land to the developer, which will then sell to homeowners as it finishes construction.

In addition to helping the college itself with staffing, the development will also demonstrate that it operates in service to the area.

“There’s a reliance on the college to help with the economic vitality that goes beyond good-paying jobs and good benefits,” Provost said. “And the college takes that responsibility and role seriously.”

Middlebury College is participating in the development deal even as it’s rethinking the part it plays in the area’s existing housing stock.

Currently, the college owns more than 70 single- and multifamily homes in the area that it’s acquired in various ways, including through gifts. Faculty can live in them, Provost said. But maintaining those houses isn’t part of the college’s core business, and others would probably do a better job of it, he said.

“The board is shifting to, ‘We don’t have to own everything, and let’s focus our efforts on educating the 18-24 year olds,'” Provost said.

Anchor institutions need affordable housing

Several pressures are aligning to prompt colleges — often called anchor institutions because of their major role in local communities — to examine local housing markets. The development goes beyond residential colleges’ traditional focus on providing housing for their students and is spurring some commuter institutions to think about housing in ways they haven’t before.

Jim Hundrieser, vice president for consulting and business development at the National Association of College and University Business Officers, said he expects more and more colleges to begin dabbling in affordable housing.

“When I’m talking with leaders on the campuses, certainly they’re talking more about how the Great Resignation, or whatever we want to call this, is leading to shortages in staffing,” he said. “Those that are in expensive urban areas are certainly struggling to find good talent, and then when they find good talent, there is the affordability piece.”