What is Student Housing For?

At their meeting this week, the UBC Board of Governors will be publicly discussing the university’s plan to increase winter session residence rents by 20%. In a demonstration of its commitment to transparency and accountability, the Board actually already met to talk about the rent increases last week, but did so behind closed doors. The real discussion and decision-making having taken place already, the Board has invited students (the AMS and RHA) to the meeting this week for some “accountability theatre”. In the lead-up to the board meeting, we’ll be publishing some old and new content about the student housing model used by UBC.

Part 1: What does it mean for UBC Student Housing to be “cost recovery”?

Part 2: How student rents end up paying for new construction projects.

Part 3: Student housing growth pays dividends for UBC.

So, the Board meeting is tomorrow. The AMS and RHA have made their joint submission. There will be a presentation. There will be lots of Governors thanking them for their Very Important Presentation, making sure they’re on record with their public displays of sympathy. Arvind will probably ramble on for a little while about something, and talk about how rents are definitely at or below market rates; UBC Public Affairs said that was the case, so it must be true. Substantive questions will be deftly avoided, and no follow-ups will be allowed. Maybe there will be a handful of student protesters? Then it will be over, and the board will move on to the next item of business. If that’s all that happens, it’ll be a real shame because SHHS is at a bit of a crossroads and this would be a great time for the Board to show some strategic vision, which is supposedly why they’re there.

While residents of Ponderosa Commons may disagree, I would say that UBC has very well-managed student housing. They have a ton of talented people working there who really give a shit about their jobs and want the best for students. But the demands of the Board of Governors have them perpetually stuck between a rock and a hard place. Take UBC’s Housing Action Plan (HAP), the Board-approved plan that aims to ensure a modicum of housing affordability on campus. Here’s what the HAP says about student housing:

To help address housing affordability concerns for students, the University will increase on-campus dedicated student housing supply, will continue to limit rental rates based on a self-supporting, fully cost-recovery basis, and will operate in a fiscally responsible fashion to ensure rates are maintained at or below market rental rates.

SHHS is in the midst of an aggressive 4500-bed expansion over the next 4 years, and has plenty of ideas for how to add thousands of more spaces. They have taken up that challenge with gusto. But the rest? It’s abundantly clear that affordability concerns are not being addressed, rental rates are not being limited, housing does not operate on a cost-recovery basis, and rents are not being maintained at or below market rates. Part of that is due to the fact that expansion of student housing costs a lot of money and is somewhat at odds with keeping prices down. But those two aims are not mutually exclusive, and I believe that SHHS could do a great job of balancing them if given the freedom to.

Rather than giving them that freedom, the Board instead tends to instead impose constraints. SHHS has to limit rent increases, while also ensuring enough cashflow to support the debt payments not only for its own capital projects, but for other projects like new labs. SHHS must operate on a cost-recovery basis, and also pay out a bigger dividend. SHHS has to set rents at or below market rates but must pay interest rates higher than what’s on the open market.

It’s rather unhelpful for everyone involved when the Administration and Board try to maintain the fiction that SHHS is in the affordable housing business while setting conditions which make rent increases unavoidable. (It should be noted that these are the types of constraints they should be very familiar with: frozen or decreasing government funding coupled with capped tuition increases, while also needing to maintain quality facilities and programs. It’s even more unhelpful for everyone involved when the government does that.) The way Arvind addressed it during his Twitter town hall (“UBC housing rates are and will continue to be at or below market comparators.”) was totally useless and symptomatic of that.

The university’s Administration and Board should be able to clearly articulate an answer to the question: What is Student Housing at UBC for?

Is it to provide lots of affordable accommodation for students? If so, they could stop requiring a dividend, refinance SHHS’s loans at a more reasonable interest rate, and allow SHHS and students to find the balance between housing capacity and prices that everyone feels comfortable with. Or is it to generate revenue, still making lots of housing available but also helping shore up the bottom line? In that case, just start using supply and demand to guide rents, extract revenue from the students rich enough to pay, and spread the wealth around in the form of new projects or services.

Each path has its pros and cons and neither is the unquestionable “right” choice. Obviously this is not a strict dichotomy either and there’s a huge amount of space in which to find a middle way, but hopefully it illustrates how much a consistent vision might help everyone get on the same page. Saying you’re on one path while taking the other just leaves everyone lost and confused.