PROJECT PROFILE
Florida Atlantic University, Innovation Village Apartments Phase I
Boca Raton, FL
Services
Balfour Beatty Campus Solutions acted as the Co-Developer,
providing financing and project management turnkey services
Size
489,000 SF, 1,216 Beds
Value
$123 M
Completion Date
August 2011
Developer
Balfour Beatty Campus Solutions / Capstone Development
Architect
PGAL
Construction
Balfour Beatty Construction
Property and Operations Manager
Balfour Beatty Campus Solutions/Capstone Management
Reference
David Kian, Senior Vice President and General Counsel, Florida
Atlantic University, 561.297.3007, dkian@fau.edu
Project Description
The first phase of the Innovation Village Apartments project
was developed through a Public-Private Partnership that has
enabled Florida Atlantic University to accomplish its student life
expansion initiative by constructing and furnishing two student
housing buildings consisting of 1,216 beds within 489,000 SF of
space.
Each apartment contains a kitchen, two bathrooms, and either
two or four private bedrooms. The project includes amenities
for student activities such as a swimming pool, fitness center,
computer lab, meeting rooms and a large green space for
recreational activities.
Management of FAU’s existing 2,446 beds is also included in the
project which will generate significant cash proceeds that will
enable the University to accomplish other building projects.
Florida Atlantic University, Innovation Village Apartments Phase I
Boca Raton, FL
Services
Balfour Beatty Campus Solutions acted as the Co-Developer,
providing financing and project management turnkey services
Size
489,000 SF, 1,216 Beds
Value
$123 M
Completion Date
August 2011
Developer
Balfour Beatty Campus Solutions / Capstone Development
Architect
PGAL
Construction
Balfour Beatty Construction
Reference
David Kian, Senior Vice President and General Counsel, Florida
Atlantic University, 561.297.3007, dkian@fau.edu
Project Description
Balfour Beatty Campus Solutions’ work at Florida Atlanta
University proves that 1 + 1 often equals 3. Prior to coming on
board, the southeast Florida institution had been unable to close
on its two new residences, which would create more than 1,000
beds. Balfour Beatty’s ability to make an equity contribution
through a Public-Private Partnership with Balfour Beatty
Investments, in which Balfour Beatty Campus Solutions will
also manage and maintain the facility, allowed the university
to gain more favorable investment reviews. Not only was the
project bought to fruition under budget, it was completed ahead
of schedule. Given the company’s means of securing financing
for Phase 2 of the project, FAU was able to mobilize the up-front
payment of $11 million and seed the design and construction on
a football stadium renovation built by sister company Balfour
Beatty Construction.
Florida Atlantic University, Innovation Village Apartments Phase I
Boca Raton, FL
The Innovation Village Apartments Project (the Project),
completed in August of 2011, is the first phase of a multi-phase
mixed-use project known as Innovation Village. Innovation
Village is being undertaken in an effort to transform Florida
Atlantic University into a more traditional campus and
creating a center of campus activity by providing facilities
and opportunities for living, learning, dining, shopping, and
recreation that did not currently exist on the campus.
In 2009, FAU brought in Balfour Beatty Campus Solutions to find
a creative solution to move the project forward. Balfour Beatty
Campus Solutions assisted the University in establishing the
FAU Financing Corporation (the Direct Support Organization
or DSO) to construct, finance and manage capital projects for
the benefit of the University, including Innovation Village and
the Project. In order to get a more favorable project rating, the
University pledged its existing housing revenue to combine
with the new. While the existing housing system revenues are
pledged to enhance the credit rating of the new system, the
new system is projected to generate a stand-alone positive cash
flow after the Capitalized Interest period, and the University
has not planned nor anticipates increasing existing housing
rental rates to provide additional funding to the Project or the
new housing system in its financial projections. In addition,
the operations of both the University’s existing housing system
and Innovation Village are now jointly operated by both the
University and a joint-venture between Balfour Beatty and
Capstone Development. The University is responsible for all
residence life management and collects revenues on behalf of
the DSO, and the private entity is responsible for operations
and maintenance of both systems. To show our financial
commitment to the Project, the DSO sold a subordinate tranche
of the bonds to Balfour Beatty in order for us to share some
of the risk of the Project’s financial performance. The Series B
Bonds will not be transferable by Balfour Beatty until such time
as the term of the Management Agreement has expired or been
terminated by the University.
In addition, we arranged the financial structure to allow for an
up-front ground lease payment to the University of $12 million
that they used on infrastructure costs that will benefit not
only the first phase but all future phases of Innovation Village.
This included running the water, sewer and electric utility
improvements and new roads to the undeveloped portion of
campus where the housing, commercial retail, student life and
athletic facilities are located in and near Innovation Village,
as well as defraying the capital costs of the football stadium
(completed also in Fall 2011 by Balfour Beatty).
The project has met financial projections and the University
anticipates engaging Balfour Beatty to move forward with the
second phase of Innovation Village in 2015 for another 1,200
beds.
Florida Atlantic University, Innovation Village Apartments Phase I
Boca Raton, FL
Florida Atlantic University (FAU) conceived of Innovation
Village as a community to provide state-of-the-art residential,
recreational, and retail facilities to support the enrollment
growth and maturation of its Boca Raton campus. The project
is a major part of the University’s strategic plan to significantly
expand and enhance student residence life in order to recruit
and retain the best possible students.
During late-2008 to early-2009, the project stalled for two
primary reasons (1) the originally appointed student housing
developer was unable to close the transaction and (2) the
financial crisis made it difficult to procure the funds necessary
to precede with the project. In April 2009, a team led by Balfour
Beatty Capital (Now Balfour Beatty Investments) was invited to
participate as developer of the project.
The collaboration between FAU and the Balfour Beatty team
was exceptional. Comprehensive biweekly meetings throughout
the 2½-year project included FAU’s Divisions of Student Affairs
and Housing, Facilities, Finance, and Legal Affairs. Considerable
attention was devoted to remaining sufficiently flexible to craft
an ownership and financing plan that balanced the needs,
interests and policies of FAU, the Florida Board of Governors,
and the Florida Division of Bond Finance.
Ownership of the housing built on ground leased from FAU
was vested in FAU Finance Corporation, a direct support
organization of the University. This ownership structure allowed
the project to be creatively financed using a $124 million series
of bonds that included $112 million of Build America Bonds and
$3.4 million of subordinate, tax-exempt bonds purchased by
Balfour Beatty Capital. The financial structure also provided a
meaningful ground lease payment to FAU at financial closing.
Balfour Beatty Construction served as general contractor
and was involved throughout the design phase to give
constructability advice and real-time cost estimating. They did
an excellent job exceeding the quality, sustainability, schedule
and budget requirements of both the developer and the
University.
The Balfour Beatty team delivered Innovation Village
Apartments ahead of schedule and under budget, and
the project opened to great acclaim in August 2011. The
collaborative operation of Innovation Village Apartments
and FAU’s other on-campus housing has been smooth and
successful. This P3 produced an exemplary housing community
that will serve the University and its students for decades.
This partnership of FAU and the Balfour Beatty team is an
example of what can be accomplished when public and private
partners bring their resources, experience and talent to a
common objective and work synergistically to plan, finance,
construct and operate an exceptional residential community.
Florida Atlantic University, Innovation Village Apartments Phase I
Boca Raton, FL
FAU conceived of Innovation Village as a community to provide
state-of-the-art residential, recreational, and retail facilities to
support the enrollment growth and maturation of its Boca Raton
campus. The project is a major part of the University’s strategic
plan to significantly expand and enhance student residence life
and to recruit and retain the best students. In April 2009, Balfour
Beatty and Capstone were invited to participate in the project.
The decision to engage Capstone On-Campus Management
to co-manage with FAU not only the Innovation Village
Apartments, but also the University’s existing 2,400-bed housing
inventory, facilitated a net revenue pledge from the University’s
Housing Enterprise Fund that improved bond ratings and
financing terms for the new housing, at a low blended cost of
capital.
FAU and the Balfour-Capstone team worked through an
expedited due diligence and feasibility evaluation process that
included tours of similar PPP university projects developed
and operated by Capstone. Through these visits, FAU leaders
learned valuable lessons from their peers and gained confidence
in the concept of developing and operating campus housing in
collaboration with a private partner.
FAU’s housing and facilities management representatives
focused with the development team on design and
construction details to assure the project met or exceeded their
programming, quality and sustainability goals. The architect,
PGAL, delivered an efficient yet exciting design that fits the
architectural vernacular of the campus and the South Florida
region. The two mid-rise buildings contain four-bedroom and
two-bedroom apartments, and considerable program and
live-learn space, including a computer center and conference
and multi-purpose rooms. The buildings frame a landscaped
courtyard with ample green space, beautiful pool, volleyball
court, and grills. The project was designed to a LEED Silver
standard, but has achieved LEED Gold certification.
With feasibility confirmed in June 2009, the partnership
proceeded with planning and programming the new residential
community. Key project goals were to enhance FAU’s student
recruitment and retention, and support the academic and social
development of upper-division undergraduate and graduate
students desiring to remain on campus.
The collaboration between FAU and Balfour-Capstone was
exceptional. Comprehensive biweekly meetings throughout the
2½ year project included FAU’s Divisions of Student Affairs and
Housing, Facilities, Finance, and Legal Affairs. Considerable
attention was devoted to remaining sufficiently flexible to craft
an ownership and financing plan that balanced the needs,
interests and policies of FAU, the Florida Board of Governors,
and the Florida Division of Bond Finance.
Balfour Beatty Construction served as general contractor
and was involved throughout the design phase to give
constructability advice and real-time cost estimating. They
did an excellent job exceeding the quality, sustainability,
schedule and budget requirements of both the developer and
the University. The developer provided on-site construction
management through Capstone’s CollegeTown Construction.
The Balfour-Capstone team delivered Innovation Village
Apartments ahead of schedule and under budget, and
Ownership of the housing built on ground leased from FAU was the project opened to great acclaim in August 2011. The
vested in FAU Finance Corporation, a direct support organization collaborative operation of Innovation Village Apartments
of the University. This ownership structure allowed the project
and FAU’s other on-campus housing has been smooth and
to be creatively financed using a $124mm series of bonds
successful. This PPP produced an exemplary housing community
that included $112mm of Build America Bonds and $3.4mm of
which will serve the University and its students for decades.
subordinate, tax-exempt bonds purchased by Balfour Beatty
This partnership of FAU, Balfour Beatty and Capstone has
Capital. The financial structure also provided a meaningful
been highly successful and gratifying for all involved, and has
ground lease payment to FAU at financial closing.
furthered FAU’s growth into a leading university in the state. It
is an example of what can be accomplished when public and
private partners bring their resources, experience and talent to
a common objective and work synergistically to plan, finance,
construct and operate an exceptional residential community.