When Gov. Chris Christie came to Atlantic City for the official groundbreaking for the Gateway project, he talked about all the partnerships that had brought the $220 million project to fruition.

Next to him was a sign listing those partnerships, including Stockton University, South Jersey Gas, the Atlantic County Improvement Authority and the Atlantic City Development Corp.

Less than a decade ago, such public/private partnerships were not allowed, leading the state’s nine public colleges to borrow almost $4 billion to meet their construction needs, from new classrooms to student housing.

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Those costs were passed on to students as facilities fees, costing as much as $1,000 per year.

Today, private developers are picking up more of the cost and more of the responsibility. The result can be more complicated and may sometimes be more expensive. But college officials say they couldn’t do it any other way.

“There are more benefits than drawbacks,” said Stockton University President Harvey Kesselman of the Gateway project. “It is more complex. But we can’t bond anymore. Now we have more partners invested in its success. And in the end, it’s ours.”

A 2009 state law allowed public colleges to enter into public/private partnerships for projects built on college-owned land. To date, 10 projects are in the pipeline, five of them completed. Seven are primarily student housing, the largest and first being The Heights, a $211 million project at Montclair State University that has almost 2,000 beds, a dining facility and other amenities.

In 2012, voters approved the $750 million Building Our Future Bond Act to fund higher-education projects. Combined with other grants and matching funds, the bond has generated about $1.5 billion in public and private college construction of more than 100 projects statewide, according to state Higher Education data.

Rowan University has taken advantage of both programs, building Holly Point Commons housing in a public/private partnership and academic buildings with the bond funds.

Student housing is considered a good risk for private financing because it meets a demonstrated need. Partnering with colleges guarantees tenants.

“We had a master plan that called for housing but no financial strategy to do it,” said Donald Moore, Senior vice president for facilities and operations at Rowan University. “Public/private partnerships were an opportunity to move rapidly without using university funds.”

He said developers are interested in their bottom line, but the college is interested in keeping housing affordable, so compromises are reached. Building on college-owned land saves money.

“They want the next project, and they won’t get that pricing themselves out of the market,” Moore said of developers.

The increase in construction projects, and an improving economy, have raised prices.

Stockton revised the plans for its academic buildings in Galloway Township when bids came in high. In February, the board of trustees approved increasing the cost of the Atlantic City campus project by $15 million to $178 million due to increased costs, most of it for the student housing.

“We open bids every day, and I’m not liking what we see,” Antonio Calcado, executive vice president for strategic planning and operations and chief operating officer at Rutgers, said of the cost of materials. “It is a mighty struggle, but it’s the price of a good economy. There’s a lot of work out there now.”

Calcado said the decision to build on their own or with a private partner is made on a case-by-case basis. Private companies can sometimes access government grants and tax credits not available to nonprofit colleges.

Rutgers has worked with the New Brunswick Development Corporation, which is operated by the same people running the Atlantic City DevCo.

“Good partners will save you money because they know how to run these projects,” Calcado said. “If they want the next job, they have to give you a good product.”

He said the general contractor’s profit margin and developer fees are generally spelled out in the budgets at two or three percent of the project cost.

The developer’s fees for the Gateway project, about $5.77 million, represent about 3.2 percent of the cost.

At the Gateway ceremony, Christie said the new projects are expanding access and giving more New Jersey students the chance to stay in the state. The partnership option, he said, gives college boards flexibility.

“Maybe it can be more expensive,” he said. “But you have to balance the cost with not being able to do it at all.”


609-272-7241 DDamico@pressofac.com

Twitter @ACPressDamico


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