UBC Hospitality Trust

Students cheering.

The University of British Columbia Board of Governors is considering a proposal from UBC for the creation of a new government business enterprise (GBE) to address unprecedented demand for on-campus student housing in Vancouver and Kelowna.

UBC students on both campuses are increasingly challenged by the high cost of off-campus housing and long commute times. Demand for on-campus student housing continues to outstrip supply by a wide margin. Despite growth of over 3,500 beds since 2011, each summer there are about 6,200 students waitlisted for on-campus housing. UBC faces an urgent need to fund additional supply to meet growing demand. It aims to add at least 6,300 new beds in the next ten years, for a total of 20,000 by 2028.

As a public-sector organization, UBC’s ability to borrow is restricted due to constrained government debt capacity. The B.C. government and UBC have explored alternate student housing borrowing options for more than 10 years to facilitate growth. The UBC Board of Governors is considering a proposal from UBC for the creation of a new Government Business Enterprise (GBE), named UBC Hospitality Trust (HOST), to enable borrowing at more favourable rates and accelerate student residence construction. To be clear, UBC would not be outsourcing or privatizing its student housing operations. HOST would be owned by UBC, deliver service solely to UBC, and would act on behalf of UBC. It would take on responsibility for the management of operations, assets and existing/future debts in Student Housing, Food Services, and Conferences & Accommodation at both UBC Vancouver and Okanagan campuses. These entities qualify collectively as a GBE because they are university-owned enterprises that are financially self-sustaining from non-government sources.

In addition to greater borrowing flexibility, key benefits would include freeing up borrowing capacity for other UBC priorities on both campuses, and enhancing governance through the expertise of a HOST Board of Directors. Pricing principles for on-campus student housing would continue to include providing rents at or below rental housing market prices.

HOST would aim to continuously improve student academic and social success by promoting safe and secure communities where diversity and wellbeing are explicitly valued. It would practice prudent fiscal and asset management while also maintaining high standards and attaining future growth. It is hoped that the proposal can return to the Board of Governors in the fall of 2018 for final approval, with potential establishment of the GBE in April of 2019.

“We know the off-campus housing market is challenging in Vancouver and in Kelowna. High costs and long commutes are an unfortunate reality. On-campus housing improves the student experience so we’re excited to be exploring this unique method of providing more student housing.” —Louise Cowin, Vice President of Students, UBC

“We anticipate that the growth in residence spaces under HOST will lead to the creation of hundreds of new jobs, including Residence Life positions for students. We also anticipate that additional on-campus housing will help to ease some of the pressure on the off-campus rental market.” —Andrew Parr, Managing Director, Student Housing and Hospitality Services

“There is an overwhelming need for additional student housing. This proposal not only allows UBC to build additional student housing, but to also provide greater value to residents by reinvesting more directly back into the student experience.” —Kevin Doering, UBC Board of Governors, AMS Board of Directors, fourth-year UBC honours Economics student

 

A HOST of Potential Benefits

  1. Enhanced student experience:
  2. Improved financing for future student residences.
  3. Enhanced governance appropriate to the size and importance of the business.
  4. Separation of core academic and non-academic operations.
  5. Improved clarity of financial reporting.
  6. Improved UBC financial borrowing capacity.
  7. Less pressure on off-campus market housing.
  8. Job growth and opportunities.

 

Presentation to UBC’s Board of Governors

On Friday, April 13, 2018, UBC presented the HOST GBE proposal to UBC’s Board of Governors.

View the Presentation Slides

 

Frequently Asked Questions

What is a GBE?
GBE stands for Government Business Enterprise. In B.C., this designation applies to publicly owned enterprises that are financially self-sustaining, based on non-government revenue sources. In other words, GBEs have greater flexibility in borrowing for financially self-sustaining development projects, but can’t rely on revenue from government sources for a majority of their revenue. The working name for this GBE is UBC Hospitality Services Trust (HOST).
Why does UBC want to create a GBE for Student Housing, Conferences and Accommodation, and Food Services?
  • Although UBC has more on-campus students housing than any university in Canada (11,796 beds in Vancouver and 1,680 in Kelowna), demand is growing with an average summer waitlist of 6,200 and an average commute time of 40 minutes for students living off-campus.
  • The off-campus housing markets in both Vancouver and Kelowna are challenging. UBC wants to provide more residence spaces to improve the student experience.
  • UBC requires additional financing capacity to achieve its ambitious student housing growth plan (at least 6,300 new beds over the next 10 years, for a total of approximately 20,000 by 2028). UBC’s ability to borrow is currently restricted due to constrained government debt capacity.
  • A GBE would allow UBC to borrow externally. UBC’s current borrowing capacity would then be available for other opportunities on both campuses.
  • The broader rental market benefits because on-campus student housing frees up rental units for others.
  • Conference and Accommodation and Food Services are very closely integrated with Student Housing from capital, asset and operational perspectives. Keeping them together would allow for continued coordinated service and operation delivery, as well as beneficial oversight from a dedicated Board of Directors, and avoids asset allocation difficulties.
Is UBC privatizing its housing assets?
No. HOST, while a separate operating entity, would be owned by UBC. HOST would oversee service to UBC students, faculty, staff and visitors and act solely on behalf of UBC.
How would SHHS staff be impacted?
  • SHHS staff would remain employees of UBC with no change to any aspect of their employment relationship including pensions and benefits. There would be a small number of mainly senior staff that may move from UBC to the GBE with no other impacts.
  • For unionized employees, the respective collective agreements in place with UBC would continue in full force and effect.
  • Student employees would not be impacted in any way.
  • There would be no staff reductions as a result of the establishment of HOST, and the increase in housing capacity would lead to growth in the number of staff within SHHS.
Would this mean job losses at SHHS?
On the contrary, we anticipate an increase in the number of positions available as we build additional housing. All of the new students living on campus will require food, unit maintenance and all of the other services we offer.
How would UBC students be impacted?
  • UBC already has more on campus student housing than any university in Canada and the number of beds available will increase to meet growing demand.
  • At least 6,300 new beds would be built over the next 10 years, for a total of approximately 20,000 beds at both campuses by 2028. This level of growth cannot occur under the current business model due to debt capacity limitations.
  • Hundreds of new jobs in all areas of business will be created as growth occurs, including jobs for students.
  • Rents maintained at or below Vancouver and Okanagan rental housing market prices.
  • More students will have the convenience of proximity to classes and campus amenities.
  • Continued alignment with UBC’s student experience goals: provide a supportive and inclusive environment, an exceptional campus life, enhanced learning opportunities, and opportunities for engagement and connection.
How would HOST be structured?
HOST would be a financially self-sustaining separate legal entity, and would be responsible for Student Housing, Conferences and Accommodation, and Food Services on both UBC campuses. HOST would contract with UBC SHHS and other UBC departments for the continued provision of existing operational services, at non-subsidized market rates. Integrated security and emergency management services would continue to be provided by UBC to HOST, also at market rates.
How many employees would HOST have?
UBC would transfer or recruit the minimum number of primarily senior management staff to meet the necessary business needs of the GBE. This would likely consist of a five-person senior management team and seven technical/administrative support positions.
How would HOST be governed?
The UBC Board of Governors and executive would set the HOST board priorities and long-term strategies, ensuring HOST meets student expectations regarding affordable housing and related student services. High-level service standards and performance expectations for HOST would be established through a Memorandum of Understanding negotiated between UBC and HOST.
Why would a new governance structure be an improvement to this portfolio
Due to rapid growth, UBC Student Housing and Hospitality Services (SHHS) operations currently represent more than $1.1 billion in asset value and $190 million in annual revenues (budget for 2018/19). UBC runs the largest student housing, food service and conference operation of any university in Canada. HOST would have its own board of directors with a wide range of industry expertise, which is appropriate for an operation of this size and complexity. This will allow UBC’s Board of Governors to focus on UBC’s core mission.
Tell me more about the HOST Board of Directors?
The establishment of HOST would include the appointment of a separate board of directors made up of a mix of UBC representatives, students and external industry experts with experience in multi-unit housing development and operations, food service operations, and other hospitality-related business services. Their relevant industry knowledge and expertise would help to guide HOST’s current and future operations.
How would the HOST Board of Directors be appointed?
  • UBC representatives would be appointed based on position. For example, the Vice President Students will be an ongoing member of the Board of Directors.
  • Student representatives would be appointed via an all-student election process, similar to how the current capital board and capital senate student representatives are selected.
  • External industry experts would be solicited to participate, upon approval by the UBC Board of Governors based a pre-established skills matrix.
How would this change impact the UBC Board of Governors and executive?
The UBC Board of Governors and the UBC executive have a broad and deep mandate to provide direct oversight over UBC’s core operations, including SHHS. By establishing a separate HOST Board of Directors, the UBC Board and executive would be better able to focus on UBC’s core mandate and strategic mission to create an exceptional learning environment that fosters global citizenship, advance a civil and sustainable society, and support outstanding research to serve the people of British Columbia, Canada and the world. UBC’s interest will continue to be represented by the appointed UBC representatives and the elected student representatives of the HOST Board of Directors, as well as the external industry experts solicited to participate upon approval by the UBC Board of Governors.
How would this change impact service standards and expectations?
The creation of HOST will not negatively impact service standards; it is expected service delivery and financial performance would be improved upon under this model.
How would this change impact Child Care Services?
No change. Child Care Services would remain part of UBC SHHS operations and would not be included in the GBE. HOST would not be responsible for Child Care Services.
When would this happen?
There is still work to be done to finalize all the details required for this change to occur. We are hopeful we can get through these details in the next 6 months; transition would likely occur in 2019.
Would this mean housing is cheaper for students?
SHHS offers housing at or below market rates and that would not change under a GBE model. The University remains committed to the principles outlined in the Board of Governor’s Housing Action Plan.
Would the Residential Tenancy Act (RTA) be extended to student housing under this model?
UBC supports the rights of students to advocate for what they feel is important. UBC also strives to provide safe, caring, respectful and comfortable living environments for every student resident. Under this model the same RTA exemption would apply as currently exists.