Universities with long histories often also have large cash endowments. The income produced by that endowment can be used to meet a long list of university needs, from construction projects to student scholarships.
Cal State Monterey Bay doesn’t have a long history. Neither does it have a large cash endowment. What it does have, however, are 1,253 housing units located east of its main campus that were transferred to the new university as part of the conversion of Fort Ord.
Managed by the University Corporation, a nonproft 501(c)(3) public benefit corporation established in July 1994, those rental units produce income used for improvements and purchases benefitting the university.
"Money from the corporation is not the same as the General Fund taxpayer money the university is given through the State budget process. It is important for people to understand that," said Kevin Saunders, CSUMB’s vice president for finance and administration and executive director of the University Corporation. "It (corporation revenue) is really to provide funding for programs that the state doesn’t support."
The corporation’s role has drawn more attention in the past year as a result of two real estate purchases.
In March, the corporation purchased the former headquarters of the Monterey Herald in Ryan Ranch in Monterey for $5.7 million. The Herald’s owners had put the property on the market as they sought a smaller office space. Saunders brought the opportunity to the attention of President Eduardo Ochoa and other university leaders. The corporation Board of Directors, which is headed by President Ochoa and includes a faculty, staff, student and community representative, gave Saunders the go-ahead to negotiate the purchase, then approved the sale.
Saunders said the 62,500-square foot building was attractive because it provided much-needed space close to campus at a relatively low price. (While it is somewhat of an "apples to oranges" comparison, the Business and Information Technology (BIT) building, currently under construction, will have similar square footage at a cost of $43 million.)
He said enrollment growth and ongoing demolition of outdated military buildings, a few of which are still partially occupied, are adding to a space shortage on campus. This new space will provide some flexibility during the transitions, as the university moves programs and offices.
The Herald remained in its old headquarters through August. CSUMB took over occupancy in September and began to make repairs. Saunders said the university hopes to move programs into the building – perhaps marine science research, some administrative offces and space for professional development or outreach classes – early in 2015.
The corporation is also in negotiations to acquire the National Steinbeck Center. CSUMB has not made a final determination about how it will use the space, but the center will be the anchor for programs offered in Salinas.
The purchases are only the latest of the corporation’s investments in the university. Overall, the corporation has transferred more than $29 million to support university projects.
The corporation provided $6 million to help fund the Tanimura and Antle Family Memorial Library in 2008 and provided another $3 million to finish the third floor in 2011. It is currently paying debt service on bonds that funded construction of North Quad housing, campus wet labs, the renovations of all of the main campus residence halls and the Black Box Cabaret. Corporation funds also supported renovations of the Dining Commons, the Otter Express, and Monte’s Restaurant in the University Center.
The corporation also provided up-front construction funding for the Chapman Science Academic Center, which has since been paid back through fundraising. Corporation funds were used to build both the Library Cafe (commonly known on campus as Peet’s) as well as the Starbucks at the Student Center.
Corporation support includes the lease of the former Golden Gate University buildings for classroom space, an annual unrestricted contribution to the university, and fiscal and administrative oversight for the Foundation of CSUMB, the university’s philanthropic arm.
Saunders said by far the largest source of corporation revenue is the rental of the corporation-owned apartments to faculty, staff and the employees of educational partners. Rents on those apartments are set below the market rate, but they still generate considerable income because the corporation acquired them free and clear as part of the base transition. The corporation also manages a number of for-sale houses, where CSUMB employees can purchase a home, while the corporation retains a ground lease.
The corporation also oversees student housing, both on campus and in East Campus. The revenues from the student housing provide funding for the residential life offce and the intent is to have revenues and expenses break-even. The corporation’s 2014-15 budget projects a $2.43 million subsidy from the corporation for student housing.
The corporation also administers the financial functions – including payroll, accounting, and audits – for university grants and contracts, and oversees conferences and events, auxiliary services, including the university bookstore, KAZU public radio, and dining services.
"We generate net revenue, but it goes right back into supporting those programs and facilities," Saunders said.
As the university enrollment continues to grow, the corporation expects to focus on student housing, which was in short supply at the beginning of this academic year. The Promontory, a 600-bed student housing complex, is currently being built by a private developer on the north side of campus. It is slated to open in fall 2015. Saunders said the corporation has an option to purchase that building when it is completed.
While the Promontory will provide immediate relief to the housing crunch on campus, it will not be sufficient for long at current rates of enrollment growth. So additional student housing will likely be needed.
"State general fund money cannot be used for student housing. So no taxpayer money will be used for that. It is all coming from the corporation," Saunders said.