The first leg of our fact-finding mission went through NYU and Columbia University. And what a treat it was to watch the eye-popping experience that my non-academic tour companions were going through. They simply had no idea of the level of competitiveness that these prestigious universities are capable of, nor of the tools they are ready to deploy in order to recruit and retain their prized scholars. We also heard about past visionary provosts, who literally safeguarded the future of their universities by making momentous decisions and exploiting unique opportunities to purchase neighboring real estate in order to house their faculty, but also to create university communities. The kind of stories you wish the entire Board of Governors (not to mention the one of UBC Property Trust) was there to hear.
Both NYU and Columbia were unequivocal about their priority to shelter their faculty, and hence their own competitive edge, from the prohibitive Manhattan housing prices. To do so, they either use their own real estate assets, buy new ones, or provide substantial cash subsidies to their faculty. Their delivery mechanisms are not perfect but their resolve in dealing with the problem is completely embedded in their university culture.
What stands out about our visits to NYU, Columbia and Harvard (see future posts) is the embedded pride that these universities project at all levels in the support they provide to their faculty. They have dedicated departments with the sole purpose of assisting deans and department heads in either sealing a recruitment deal, or in preventing a defection through a competitive retention package. Not only with hugely subsidized housing and interest-free loans, but also through assistance with kids schooling, child care, spousal placement, financial planning, etc. Even the purchase of a graveyard plot for a faculty member can be eligible to a university subsidy.
New York University primary support for faculty housing comes through heavily subsidized rental housing. Rental housing stock at New York University is home to approximately half of the university’s full-time faculty. The university owns and manages a portfolio of 2100 apartments of which 1,700 are rented by university affiliates. For historical reasons, the rest of the apartments are occupied by rent regulated tenants who are not affiliated to NYU. This contribution to public social housing very likely helps the university argue for a non-taxable status of the corresponding benefit to their own faculty.
Highest priority for housing is given to tenured and tenure track faculty, as well as a few senior administrators and staff. Within the tenured and tenure-track faculty top priority is given to new faculty who will be joining NYU and do not have housing in the Metropolitan area as well as those faculty who are of high retention importance as determined by Deans of each School.
What was surprising is that no staff is eligible for such a benefit. We also understood that even administrators who are residing in university apartments for historical reasons are being moved out so as to make room for NYU’s prized faculty.
NYU has also a Home Ownership Program. The Hop‐2 program is designed to assist current residents of NYU housing who are interested in purchasing their own homes within commuting distance of NYU. Under this program the university offers ‘Eligible Persons’ Lifetime Affordable Mortgage Program (LAMP) loans, which are secured, non‐amortizing mortgage loans. Eligible persons include employees and retirees currently living in NYU-owned rental housing as well as Law School and Medical faculty in dedicated School apartments with approval from their Dean.
The value of the loan is 30% of a property’s purchase price up to a total amount of $275,000. Current interest or principle payments are not required during the loan term, except after retirement where an interest rate of 0.5% will be applied to comply with social security requirements. While loan recipients are not responsible for current interest or principle payments, ‘contingent interest’ –which is computed according to a well defined formula– is due at the time of sale and is payable to NYU from a portion of the proceeds of the sale of the home. Due to high demand and limited funds, LAMP loans are offered until all funds have been committed.
Some time ago, NYU also purchased 58 units from a residential development on Roosevelt Island for the purpose of reselling them to eligible affiliates at a discount from their market value. All full‐time NYU employees are eligible to purchase condominiums at Riverwalk landing, however only those affiliates currently living in NYU housing are eligible for subsidized financing through the Riverwalk Affordable Loan Program (RAMP), which consists of a zero current interest, shared appreciation loan for up to 30% of the purchase price. For a limited time, eligible affiliates can also access the ‘HOP‐2’ program in conjunction with RAMP. If the owner decides to sell or transfer the unit NYU reserves the right to re‐purchase the unit at its then Fair Market Value.
It was clear that this project had fallen short of expectations, mostly because of its location outside of Manhattan. Though not more than half an hour away from NYU, it does suffer from the notorious “bridge and tunnel syndrome” that often afflicts Manhattan workers. The perceived lack of proximity of the Riverwalk complex to NYU was a major factor in its lackluster performance.
“I have spent more time working on faculty housing than almost any other issue I have encountered during my tenure as provost, and I recognize the vital importance of this task”.
That was Columbia University Provost Claude M. Steele in 2008, announcing the extension of the University’s pilot housing assistance program (see below). Indeed, of all the universities we visited, none had been more affected by housing issues that Columbia. Actually, the University’s renaissance in the 1980′s as one of the top Ivy league institutions has been credited to opportunistic housing purchases around campus which allowed the university to substantially improve and revitalize its own Manhattan neighborhood by pursuing a transformational faculty and staff housing assistance policy.
Columbia currently owns nearly 6400 units, of which about 30% are reserved for eligible faculty and staff, 10% for non-affiliated tenants and the rest are allocated to graduate students. Most Columbia University apartments are located in the Morningside Heights neighborhood, within walking distance of the Columbia campus. All University owned buildings are managed and operated by University employees.
The demand for apartments greatly exceeds available supply and as such eligibility for housing is restricted to ‘full‐time compensated officers of instruction, research, the libraries, and administration.’ Faculty whom departments are recruiting and wish to retain receive highest priority for housing, followed by individuals newly promoted to tenure from the junior faculty. Other faculty and staff who meet basic eligibility requirements receive lower priority, especially if they already own a private apartment or home in New York city/suburbs.
The price of apartment rentals are set by the university and are way below market rates. This is sufficient to achieve the objective of delivering affordable housing to faculty and staff while also generating income to cover the operating costs as well as the costs of financing capital yielding a modest return on its investment in residential properties.
Those who have been renting since before 1989 can stay in their apartments “forever”, while the rest can stay up to 3 years after retirement. Those who rented before 2009 have however the option to stay on campus after retirement provided they downsize to smaller units.
Recognizing that the allocation in their rental program was close to 100%, and with a very low turnover, Columbia University created in 2008 the Columbia Housing Assistance to help professorial‐rank faculty purchase homes in the New York metropolitan area. This unparalleled Pilot program has since been extended for an additional two years and will likely remain if it continues to be successful. Professorial rank faculty who are eligible for University rental housing are also eligible for the Housing Assistance Program. Three forms of assistance are provided to faculty participating in the program:
1) An annual housing supplement: $40,000/yr for tenured faculty, and 22,000/yr for non‐tenured faculty.
2) Assistance acquiring a favorable mortgage: Columbia will help participating faculty access loans at favorable rates offered through two commercial loan providers.
3) A one‐time supplement to assist with purchase: A one‐time payment of $40,000 is provided to each participant in the mortgage program to help with various expenses associated with a mortgage (including a down payment).
Also take a look at this memo by Provost Jonathan R. Cole announcing the creation of the K-8 Columbia University School for children.
“The central reason for creating the School for children is to maximize our ability to recruit and retain the most able faculty in the world. It has become critical to the University’s mission that we be able to provide both excellent housing and schooling at affordable prices so as to recruit the most talented younger faculty, many of whom are building families. A second reason is to help create a more integrated local community of Columbia scholars and others through the social patterns that develop among children and their parents during the K-8 years.”
The Harvard housing assistance programs will be described in a future post.