Tuesday, January 29, 2019

U of M Looks to Acquire Apartments, Re-purposes Foundation to Do So

Posted By on Tue, Jan 29, 2019 at 12:50 PM

click to enlarge The U of M Board of Trustees at its specially-called meeting Tuesday
  • The U of M Board of Trustees at its specially-called meeting Tuesday

The University of Memphis is looking to add the Gather on Southern to its stock of residence halls.


The U of M Board of Trustees approved the acquisition Tuesday morning at a specially called meeting.


In order to acquire the property, the university is re-purposing its Tigers of Memphis Athletic Foundation as the University of Memphis Auxiliary Foundation.


The Tigers of Memphis Athletic Foundation was established in 2014 to support the university’s athletic endeavors, but after not being utilized it was absolved by the Secretary of State in 2018.


The foundation was re-established this month and now as the University of Memphis Auxiliary Foundation will be responsible for holding and operating auxiliary enterprises that directly benefit the university.

Raaj Kurapati, the university’s chief financial adviser, said the model for financing public higher education is shifting from reliance on state support to “an expectation of greater reliance on self-generated revenues.”


“The current administrative structure that governs public institutions of higher education at times impedes the university’s ability to react quickly to opportunities and think creatively to take advantage of alternative mechanisms to sustain the current infrastructure and expand services to support future growth,” Kurapati said in a report to the university board of trustees.


The new foundation will help the university be “nimble” and take advantage of alternative opportunities to make investments in infrastructure, like the Gather on Southern.

click to enlarge The Gather on Southern
  • The Gather on Southern

The Gather, constructed in 2014 by Dallas-based Rael Development Corp., houses 435 beds and sits adjacent to the university opposite the railroad tracks. The university is looking to enter into a partnership with Municipal Acquisitions to manage and eventually acquire the property after 30 years.


Kurapati said the deal would be economically beneficial to the university because it wouldn't have to take on too much debt with the proposal.


Aside from the financial benefits, Kurapati said the university’s management of the Gather would lead to greater security measures on that property, citing three major felony-type incidents that took place at the Gather over the past three weeks. The acquisition would allow for the university to expand its secure perimeter to include the Gather and to better control what happens there, he said.


U of M president M David Rudd supported the proposal, saying that the average age of the buildings on the campus is about 57 years, and that constructing new residence halls is an expensive endeavor.


“We have not been able to build the kind of housing that is attractive to students,” Rudd said. “We can’t afford to get in the business of building new housing.”


Rudd said the newest residence hall, Centennial Place, costs the university upwards of $56 million. Acquiring the Gather is a way to contain costs — an overarching goal of the university.


The university’s plan to acquire the property has been endorsed by state officials, but must also be approved by the Attorney’s General office.


This move by the university comes after the creation of a federal program in 2017 that offers financial incentives for those who want to invest in areas designated as “opportunity zones.”


The program allows businesses or individuals to be forgiven of taxes on capital gains when invested in an opportunity zone. Kurapati said that a significant portion of the properties around the university have been designation as opportunity zones, and that the creation of the University of Memphis Auxiliary Foundation will help the university “fully capture the benefit of the program.”


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