Introduction, Impediments to Student Housing
Colleges and schools are building housing to address a growing affordability crisis in the Bay Area and elsewhere on the West Coast. High housing costs directly impact these institutions’ ability to attract and retain staff, and the resulting attrition comes with steep financial consequences. For instance, attrition has been estimated to cost school districts in San Francisco and Oakland over $11 million and $12 million annually, respectively (1).
However, financing new housing remains a significant obstacle for many colleges and schools because they do not have the internal capacity to function as developers and landlords. Moreover, increasing reliance on debt to finance new housing can raise long-term sustainability concerns. Rising construction costs further complicate matters, even as new state laws streamline the entitlement process.
Yet, high occupancy rates and long waitlists signal that demand for affordable housing is higher than ever, particularly in high-cost areas. For instance, staff housing built by Santa Clara Unified School District has been occupied at near full capacity — with an extensive waiting list — since its construction in 2002, particularly for much sought-after two-bedroom units (2). This is also true for student housing. Despite opening a new housing project in 2023, students at Santa Rosa Junior College are encouraged to apply early because limited supply is prioritized for low-income students before being allocated on a first-come, first-serve basis (3). In response, schools are adopting innovative financing strategies to build housing. From public-private partnerships (P3s) that leverage the tax-exempt status and bond funding available to institutions to donor-driven campaigns and grant funding opportunities, developing and operating housing often requires a uniquely complex combination of funding and collaboration. Partnerships with public and private entities are becoming increasingly critical because they bring expertise and resources that schools may lack (4).
Schools are adopting innovative financing strategies to build housing. From public-private partnerships (P3s) that leverage the tax-exempt status and bond funding available to institutions to donor-driven campaigns and grant funding opportunities, developing and operating housing often requires a uniquely complex combination of funding and collaboration.
The following examples from the Bay Area and other parts of the West Coast illustrate how schools are being resourceful in addressing challenges tied to developing staff and student housing.
Public-Private-Partnerships using Low-Interest Bonds – Santa Rosa Junior College
A public-private partnership (P3) is a collaboration between public institutions and private developers to help finance and manage projects. These partnerships have become a leading strategy for financing campus housing because they allow schools to consolidate resources and risks with outside parties (5). Schools avoid the full financial and operational burden of housing projects, while developers gain stable, long-term investment opportunities. This happened at Santa Rosa Junior College (SRJC), who partnered with a non-profit developer, National Campus and Community Development Corporation (NCCD), to build on-campus housing.
Opened in the Fall of 2023 at a cost of $75 million, Polly O’Meara Doyle Hall houses 330 students in dormitories with shared amenities. Aligned interests between the school and developer were pivotal to the project’s success. Rather than directly financing the project, SRJC made their land available while NCCD secured tax-exempt bonds through the California School Finance Authority (6). Low interest rates (4.5%-5.5%) over the 40-year life of the bond — paired with high-demand for housing offer NCCD low-risk investment while they retain ownership of the project. Once the bonds are fully repaid, ownership transfers to the college. A model that NCCD has replicated at Orange Coast College, Napa Valley College, and California College of the Arts (7).
For SRJC, this partnership provides facility and operational savings from leveraging NCCD’s expertise, while bond provisions ensure the college maintains control over programming that is aligned with its academic mission.
Polly O’Meara Doyle Hall at Santa Rosa Junior College – Photo Credit: HPI Architecture
Tax-Exempt Land Leases – San Mateo County Community College District
Public-private partnerships are also being used to build housing for school faculty and staff, particularly in high-cost areas. Schools are taking advantage of their tax-exempt status to provide affordable rents to employees (8). Tax exemptions available to public schools and private colleges eliminate liabilities that often inflate project costs. By leasing their land to developers, both parties avoid the tax risk associated with traditional housing projects. This reduces hard costs and enables substantially lower rents.
By leasing their land to developers, both parties avoid the tax risk associated with traditional housing projects. This reduces hard costs and enables substantially lower rents.
This is exemplified by the Employee Housing Program offered by the San Mateo County Community College District (SMCCD), which successfully developed affordable housing on the Cañada College, Skyline College, and College of San Mateo campuses. Apartments built on previously underutilized SMCCD land offer rents that are nearly half the local market rate (8). The projects are tax exempt under California’s Welfare Exemption because they directly support the educational objective of the district (9). Because the project was developed at a much lower cost than what is typical of traditional housing, the rents are still able to cover operating costs, reserves, and debt without relying on the district’s general funds. Inspired by similar efforts in the Santa Clara Unified School District, this type of public-private partnership is becoming a common strategy for developing both staff and student housing in high-cost areas (10).
That said, complications sometimes arise in meeting eligibility requirements. In high-cost areas, staff incomes may exceed the thresholds needed to qualify for very low-income and low-income housing funds. For instance, teachers in San Francisco have faced difficulties accessing housing intended for them because their incomes exceed 30 and 60 percent of the area’s median income (1,11).
In addition, some jurisdictions may request payment in-lieu of taxes (PILOT) to help offset lost property tax revenue. In California, properties qualifying for the Educational or the Welfare Exemption are exempt from property taxes. Local governments may negotiate PILOT agreements with property owners to compensate for lost tax revenue needed to cover city services. These agreements are not mandated by state law, but they are permissible and may be necessary in some low-income areas that struggle to fund services (12).
Faculty Housing at Skyline College in San Mateo County – Photo Credit: Haley Lan
Donor-Driven Financing – Jesuit Housing at Gonzaga University
Smaller private schools may not have access to the same public funding available to public schools. Instead, some private institutions are drawing on donors to fund housing — particularly when the new buildings are meant to serve a specific purpose.
At Gonzaga University in Spokane, Washington, the school launched an unprecedented fundraising effort to fund several university initiatives. This included the construction of the Della Strada Jesuit Community, a facility that provides housing for priests serving the university, its preparatory school, and other local ministries. Located near the center of campus, it connects students and faculty to the spiritual mission of the university.
Opened in 2017 at a cost of about $13 million, the 36,074-square-foot facility has 22 living quarters and includes offices, a chapel, and supportive spaces for the Jesuit priests (13). The funding for Della Strada was made possible by a significant contribution from an alumnus, inspired by his own experiences learning from the Jesuit community.
The donation came as a part of 'Gonzaga Will,' conceived seven years prior as the largest fundraising campaign in the school’s history. Ultimately, the fundraising effort greatly surpassed expectations of an already ambitious goal — $250 million — raising over $355 million from more than 40,000 donors (14).
Private schools, though exempt from property taxes, may not have access to the same funding mechanisms as public schools and may find it effective if they can tap into their donor networks to support housing initiatives.
Private schools, though exempt from property taxes, may not have access to the same funding mechanisms as public schools and may find it effective if they can tap into their donor networks to support housing initiatives.
Della Strada Jesuit Community at Gonzaga University in Spokane, Washington – Photo Credit: BAR Architects & Interiors
Grant Funded Housing – Project Homekey at Imperial Valley College
When partnerships and donations fall short, grant funding can help fill the gap — particularly to address acute housing needs of disadvantaged students. Grants are highly competitive, but shovel-ready projects can help institutions act quickly when funds become available. Imperial Valley College (IVC) in Imperial, California, successfully applied for State Project Homekey funds to address the urgent needs of students experiencing housing insecurity.
Grants are highly competitive, but shovel-ready projects can help institutions act quickly when funds become available.
Project Homekey was established by the state in June of 2020, dedicating $846 million to convert vacant hotels and other properties to housing to combat homelessness (15). In partnership with the City of El Centro, IVC used these funds to develop Lotus Living Tiny Homes, a 26-unit community for students experiencing housing insecurity built on an acre of vacant land near the IVC campus provided by the city (16).
Securing funding did not come without challenges. IVC applied for a local Homeless Emergency Aid Program (HEAP) grant but was initially unsuccessful. Soon after, the City of El Centro informed IVC of available Project Homekey funds, however the application needed a quick turnaround. With only three days to complete the application, IVC drew from their HEAP application, with much of the necessary information already prepared and ready to submit.
This also expedited construction and reduced costs once funds were secured. Less than three months after the city filed the Homekey application, an interdisciplinary team of city officials, technical experts, and IVC leadership quickly brought the project to fruition (17).
Lotus Living Tiny Homes near Imperial Valley College in El Centro, California – Photo Credit: Back Porch Tiny Homes
Conclusions
Every school faces unique circumstances in securing the funds to build housing. Public schools can leverage their tax-exempt status in partnership with developers and draw on a wide range of funding mechanisms available at the state level. Private schools can also leverage tax-exemptions but may not qualify for the same funding as public schools — to bridge the gap, they can draw on strong donor networks to support their mission.
Schools in economically disadvantaged areas can capitalize on grant opportunities by being prepared with shovel-ready projects when funding becomes available. While every project is unique, success often depends on a combination of creativity, collaboration, and strategic planning to overcome financial hurdles.
By Lorrin French, Assistant Urban Designer
Sources
1. Christopher, Ben. “To Attract Teachers, Pricey School Districts Are Becoming Their Landlords.” CalMatters, 1 Mar. 2017, http://calmatters.org/education/2017/03/to-attract-teachers-pricey-school-districts-are-becoming-their-landlords/.
2. Creating Workforce Housing: Kemp Models of Excellence. Urban Land Institute, 2012, https://uli.org/wp-content/uploads/2012/06/One-Pager-Casa-del-Maestro.pdf
3. On Campus Housing | Housing. https://housing.santarosa.edu/campus-housing.
4. Jones, Carolyn. “California Is Giving Schools More Homework: Build Housing for Teachers.” CalMatters, 13 Aug. 2024, http://calmatters.org/education/k-12-education/2024/08/affordable-housing/.
5. HGA. “Creating Campus Value Through Developer-Led Student Housing.” HGA, 19 Nov. 2021, https://hga.com/creating-campus-value-through-developer-led-student-housing/.
6. Staff Summary - Sonoma County Junior College District Project. California School Finance Authority, 2020, https://www.treasurer.ca.gov/csfa/meeting/2020/20200924/staff/4.pdf.
7. National Campus and Community Development Corporation. https://nccdevelopment.org/. Accessed 27 Nov. 2024.
8. Teacher Housing in California – Education Housing Partners, Inc. – Thompson Dorfman LLC. https://www.thompsondorfman.com/teacher-staff-housing/. Accessed 2 Dec. 2024.
9. Welfare Exemption for Low Income Rental Housing and Supplemental Clearance Certificate Requirements for Limited Partnerships. https://www.boe.ca.gov/proptaxes/welfarelowinc.htm. Accessed 2 Dec. 2024.
10. HGA. “Creating Campus Value Through Developer-Led Student Housing.” HGA, 19 Nov. 2021, https://hga.com/creating-campus-value-through-developer-led-student-housing/.
11. 2024 Maximum Income by Household Size. San Francisco Mayor’s Office of Housing and Community Development, 30 Apr. 2024, 2024 AMI-IncomeLimits-HMFA_0.pdf.
12. PILOT Agreements and Their Potential Impact on a Low-Income Housing Development’s Welfare Exemption. California State Assembly Committee on Housing and Community Development, 30 Jan. 2014, https://ahcd.assembly.ca.gov/sites/ahcd.assembly.ca.gov/files/Draft%20White%20Paper%28v10%29.pdf.
13. New Housing Built for Jesuits at Gonzaga, Gonzaga Prep | The Spokesman-Review. https://www.spokesman.com/stories/2017/sep/30/new-housing-built-for-jesuits-at-gonzaga-gonzaga-p/. Accessed 2 Dec. 2024.
14. Martin, Arcelia. “The Della Strada Jesuit Community Becomes a New Home for 20 Jesuits.” The Gonzaga Bulletin, 29 Nov. 2017, https://www.gonzagabulletin.com/news/the-della-strada-jesuit-community-becomes-a-new-home-for-20-jesuits/article_3ddf73f0-d57e-11e7-b428-230b36b9bbe2.html.
15. Homekey: California’s Statewide Hotels-to-Housing Initiative. National Alliance to End Homelessness, 19 July 2021, https://endhomelessness.org/wp-content/uploads/2021/07/CA-H2H-Case-Study_7-19-21.pdf.
16. Lotus Living Tiny Homes. Enterprise Community Partners, https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/homekey/Homekey-COVID-Response-EL-CENTRO.pdf.
17. Kirby, Kayla. “Tiny Home Project Completed, 26 Homeless Students to Receive Keys and Move in Soon.” The Desert Review, 7 May 2021, https://www.thedesertreview.com/education/tiny-home-project-completed-26-homeless-students-to-receive-keys-and-move-in-soon/article_1a244042-af98-11eb-afa2-7397f28a33f2.html.