To Renovate or Build?

The answer to the question of whether to renovate a campus structure or to build a new building must satisfy two logical but separate criteria: finance and campus tradition. Often, a conclusion based on one of these criteria conflicts with the conclusion drawn from the other.

A financial analysis, for example, may leave no doubt that a new building will serve best, while campus tradition may argue strongly for a renovation that preserves a historic building and the long-standing architectural identity of the campus.

How to decide? Plant directors cannot and probably should not try to resolve such conflicts when they arise, according to William H. Mills Jr., president and CEO of University Housing Services in St. Petersburg, Fla. "The plant director will probably take a strictly technical and financial approach to developing recommendations," Mills says. "Policy makers will make the final decision."

In developing financial recommendations to policy makers, Mills suggests that plant directors evaluate the total project cost of three options: renovation, rehabilitation and replacement.

The total project cost includes brick and mortar costs for construction as well as soft costs such as debt service on borrowed funds; architectural and engineering fees; threshold inspections; and furnishings from desks through telephone, Internet and cable television connections to the clocks on the wall.

Crunching Numbers

Mills also recommends evaluating both renovation and rehabilitation project costs as well as replacement costs.

Renovation and rehabilitation are two different things to Mills. Renovation involves minor changes in a structure. It might include remodeling rooms and making minor electrical upgrades, but it is primarily cosmetic.

"Rehabilitation means making major changes to the interior structure of a building," he says. "This includes replacing mechanical and electrical equipment; heating, ventilating and air conditioning equipment; altering the look of the building; and constructing major enhancements.

"You might renovate a traditional residence hall by painting the rooms, upgrading the light fixtures, recarpeting and putting in new furniture, but you wouldn’t change the basic layout," Mills explains. "When you are done, you will still have a double-loaded corridor configuration with gang showers.

"To rehabilitate a structure, you would tear out the partitions and reconfigure the interior. If it’s a residence hall, you might install suites, separate bathrooms and kitchens. A rehab, of course, carries much greater costs than a renovation."

An economic analysis of renovation, rehab and new construction options compares the costs for each, according to guidelines generally applied in the construction industry.

Jim Grimm, director of housing at the University of Florida in Gainesville, has written and spoken extensively on these guidelines.

According to Grimm, an acceptable renovation will add more than 10 years to the life of a building and carry costs less than 70 percent of a new building. If the reverse is true - if the renovation will add fewer than 10 years to a building’s life and cost more than 70 percent of the cost for a new building, then new construction represents the wisest financial course.

Next, an acceptable rehabilitation must add more than 20 years to the life of a building and cost less than 80 percent of building new. If the reverse is true, build a new building, say the guidelines.

Decisions, Decisions

Of course, guidelines can often prove confusing in their practical application.

At the University of Florida, for instance, Grimm recently faced a decision about a residence hall for which the guidelines did not provide a clear answer. Built in 1959, the original hall featured double-loaded corridors with gang showers. Students today, of course, demand living facilities with more privacy and convenience. As a result, saving the building would have required a major rehabilitation, including a reconfiguration of the living spaces and the replacement of the existing air conditioning, heating, plumbing and electrical systems.

Grimm’s estimate for a rehab offering at least 20 years of life totaled $19 million. A new structure would cost $25 million. Eighty percent of $25 million comes to $20 million.

Should Grimm rehab or build new? The guideline leans slightly toward rehab, but the relative figures are close enough that other issues have entered into Grimm’s analysis. "In a residence hall, you have to consider revenues as well," he says. "The $19-million rehabilitated structure would lose 100 beds. The $25 million new structure would lose only 28 beds." The additional revenue from 72 more beds makes replacing the building the best financial solution. "I’ve recommended replacement," Grimm says.

Shifting Priorities

Changes in university policy, the geographical evolution of a campus and outside events can also combine to make financial analyses somewhat less relevant to decisions about renovating, rehabilitating or building new structures.

For example, administrators at the University of Utah in Salt Lake City must balance construction questions with a change in policy regarding on-campus residency, a property acquisition and responsibilities related to the 2002 Winter Olympic Games.

First, the university is beginning to evolve beyond its roots as a commuter school. Approximately 1,200 students of the school’s total 24,000 enrollment currently live on campus. Recently, university administrators decided to raise the number of students living on campus. The decision stems from a desire to enhance the community experience of life at the university.

At the same time, through a federal transfer, the university has acquired property from nearby Fort Douglas, a military reserve. "The property we acquired at Fort Douglas includes a residential area of historic interest," says Anne Racer, director of facilities planning for the university. "It seems appropriate to maintain that environment."

In addition, the university has received an assignment to provide the athletes’ village for the upcoming Winter Olympics. All three of these issues have factored into the university’s decisions about new and rehabilitated construction on campus.

The Fort Douglas property offers enough space to build new housing for approximately 2,400 students, Racer says. That new housing will cost less than rehabilitating the three dormitories on the main campus currently occupied by the 1,200 resident students. The new construction will provide the kinds of apartments and amenities that students expect today, while fitting into the existing architectural style of Fort Douglas.

With all of this in mind, the university has begun construction of new living facilities at Fort Douglas. The plan goes like this: Resident students will occupy the new residence halls for one year, until the beginning of school in 2001. During that school year, a portion of the resident students will return to the existing residence halls, making room for the Olympic athletes.

After the Olympics, the students will return to the Fort Douglas living facilities and vacate the old dormitories once and for all. "At that point, we’ll make a decision about the final disposition of the existing dormitories," Racer says. "We are considering rehabilitating those buildings for academic and administrative uses. All three have double-loaded corridor designs with bathrooms at the ends of the corridors. That design doesn’t work for residence halls anymore, but will make a perfect office building."

Tradition Counts

Following a campuswide evaluation of facilities, Don Linder, the renovations coordinator at Ohio University in Athens, Ohio, has concluded, like many of his counterparts around the country, that the cost to renovate campus housing stock equals and may well exceed the cost of new construction. But the university treasures the architectural integrity of its buildings with their red brick exteriors and clay tile roofs.

"To construct new buildings with similar designs would cost in the range of $160 per square foot," Linder says. "The national average for new residence hall construction lies between $95 and $138 per square foot." From that point of view, renovation makes more sense.

What to do? In many cases, Linder takes advantage of Ohio University’s inventory of well-constructed buildings and opts for renovations that preserve the traditional campus look. In Scott Quadrangle, for instance, four brick buildings surround a central courtyard. Before 1960, these buildings served as residence halls. During the 1970s, as enrollments began to fall off, the university converted the quad to office use.

Last year, an uptick in enrollments led Linder to reconvert the buildings to their original use as residence halls. "We added 62 bed spaces and 31 rooms, at a cost of $5,000 per bed or $44 per square foot," he says. "The price was right because most of the work was cosmetic. We painted the rooms and replaced floor tiles, installed computer cabling, telephones, cable television connections, and new furnishings, while making modest upgrades to the bathrooms.

"We didn’t change the configuration of the building. It remains a double-loaded corridor design, and we sacrificed the new style of residence hall to get the lower cost. But we also preserved the exterior look of the building, which is important to us."

In the end, the decision to renovate, rehabilitate or build new usually requires a judgment that balances the competing considerations of cost and campus character.

Michael Fickes is a Baltimore-based freelance writer with experience in higher education issues.

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