SENATE HOUSING POLICY COMMITTEE
- At the beginning of the academic year the committee assessed the responsibilities and powers provided by the mandate and prioritized, by vote, the issues to be addressed over the year. The highest priorities were determined to be the audit of the annual rental increases and assessment of the rental increase policy and housing allocation policy. Some committee members felt that the mandate of the committee should be revised to clarify the priorities of the committee.
- The Deputy Vice President and Vice Provost explained the division of responsibility for housing allocation between the central administration and real estate office. The committee discussed, at length, the chronic gap between demand for and supply of university housing. While the situation is improving with the addition of new units, maintenance of the existing housing stock and increasing costs (explained below) limit the options available for resolving the gap between supply and demand in the near future.
- The committee met with the Executive Vice President of Facilities to discuss current strategies for reducing operating and maintenance costs. The Executive Vice President provided a summary of the recent and ongoing merger of the former Institutional Real Estate (IRE) and Facilities Management, now Columbia University Facilities (CUF), as well as the numerous efficiencies gained from this merger and from streamlining of internal processes such as purchasing and billing. These gains are significant and will continue to provide cost savings as they are implemented in the near future. The committee recognizes and commends the efforts and success of the facilities management in achieving significant savings by improvements in operating efficiency.
- The primary charge of the committee is to audit the rent increases that will be imposed on residential tenants in 2006. Because of the scheduling of the university budget process, IRE was unable to provide the committee with budget figures for a full discussion of this issue until late in the spring semester. The Executive and Deputy Vice Presidents provided a detailed breakdown and explanation of the current and projected costs driving the widening gap between the residential income and expenditures.
- The immediate situation is that CUF intends to impose a 5% average increase in rents for faculty, staff, and students. As in previous years, the committee was unable to determine whether this was a reasonable figure, as the university does not seem to have a clearly articulated strategy for setting rental increases in the face of rapid escalation of operating costs. As in years past, the rental increases are greater than the median projected salary increases of officers of instruction or officers of research. Salary increases for officers of research are expected to average 3%.
- The gap between growth of residential operations expenses and growth of income is widening. With the impending 5% rental increase, growth of income will average 12% over two years while growth of total operations expenses will average 18%. This increase in expense represents a 20% increase in core operating expenses in addition to debt service and University overhead. As in years past, the gap between income and expense incurs increasing debt while the cost of servicing this debt ($18.8 million in 2004-05) continues to increase. The committee and Executive and Deputy Vice Presidents agree that the current trend is unsustainable.
- In spite of the efforts, and success, of CUF management in holding down costs, the largest cost increases (utilities: 49%, insurance: 32%, legal compliance with NYC lead paint laws: 50%) are due to factors beyond control of the University. Recent increases in energy costs are especially insidious as they indirectly drive up many other costs. The efficiencies gained from streamlining the recently merged facilities and real estate management will help to offset these increases for the next several years but these gains are unlikely to offset projected increases in costs of utilities, materials, insurance and debt service.
- The committee discussed numerous strategies for cost reduction with the Executive and Deputy Vice Presidents and was impressed to learn that many of the strategies proposed by committee members were already in the process of being implemented by CUF management. Given likely continued increases in energy costs, the committee recommends that Facilities management, and the University as a whole, develop and implement aggressive policies for reducing excess energy consumption and maximizing efficiency of energy intensive components of the system.
- The committee recognizes that Columbia is extremely dependent on favorable housing arrangements for its faculty, administrators, and students. The lack of any apparent policy for rent increases, and rapidly increasing operating expenses, have resulted in year-after-year rent increases in excess of the CPI. Continued rent increases at the current rate will progressively erode the benefit of University housing to both current and prospective faculty, staff and students. The potential impact of this diminishing benefit on the University is difficult to assess on the basis of anecdotal evidence alone. The committee recommends that the University conduct a detailed survey of Department Chairs and Deans to assess the importance of University housing to recruiting and retention. Quantifying the importance of this benefit could help the University determine the best course of action to rectify the current situation while the benefit still exists. The Committee believes that the University’s interests are best served by curbing the current rate of rent increases which are eroding this important benefit.
Chair, Housing Policy Committee