AMHERST — A partnership between the University of Massachusetts and a private developer to rehabilitate existing dormitories and build new on-campus student housing is raising concerns for town officials that such projects will be exempt from paying local property taxes.
At the Town Council’s Sept. 14 meeting, District 1 Councilor Cathy Schoen told colleagues that even though UMass is working with a nationwide student housing developer to handle new construction and upgrade existing buildings, Amherst is unlikely to see any new revenue.
“The disturbing take home was that these will be structured so they will not be taxable,” Schoen said, referencing a meeting she attended earlier in the month, along with Council President Mandi Jo Hanneke and other town leaders, in which UMass senior officials outlined the possible on-campus sites where American Campus Communities could construct buildings.
Under the current plan for undertaking a public-private partnership, also known as a P3, UMass would maintain the same number of on-campus beds and wouldn’t adjust enrollment, but the private developer, based in Austin, Texas, would make significant improvements to the aging housing stock. Currently, about 80% of residence halls at UMass opened before 1971.
Town officials went into the meeting with a mindset that they would appeal to the university for opportunities to enhance the tax base, Hanneke said.
“Our mantra during the meeting was revenue generation for the town (in) multiple ways,” Hanneke said.
In her president’s report to the Town Council, Hanneke wrote, “When asked for feedback, all town officials present expressed concern that an agreement with a private entity to build, renovate and potentially manage student housing on UMass land would remain untaxable. We emphasized the need for town revenue when private companies operate housing for profit on UMass land, offering a few options to consider, while acknowledging there may be other ways not mentioned to address the need for payments to the town to help fund municipal costs associated with private housing on UMass land and the related impacts of construction.”
Hanneke also wrote that any housing, commercial or retail on UMass land completed by private developers need “to pay property taxes and local option taxes, and that any agreement regarding the development of housing with American Campus Communities should include revenue for the town, similar to what private housing developers and operators pay when housing is not located on UMass land.”
UMass has undertaken one previous public-private development, known as Fieldstone, but the town collects no property taxes from the Massachusetts Avcenue building that opened in 2023. It has 623 beds for undergraduate students and a separate area with 200 beds for graduate students.
Distirct 4 Councilor Pam Rooney said she appreciates that developments could mean taxable opportunities, but that the Fieldstone developers, Axium Infrastructure of New York City and Balfour Beatty Campus Solutions of Philadelphia, wrote into its agreement with UMass that it would remain tax-exempt. Rooney said legislators might help in changing that aspect.
“It is one of the most expensive properties in the town, I would love legislative assistance on keeping the pressure on that,” Rooney said.
Schoen said that the state underfunding of maintenance of UMass buildings has caused university officials to look to private developers for a phased approach for improvements.
At the Faculty Senate Thursday, Tilman Wolf, deputy chancellor for Operational and Organizational Strategies, provided an update on both the P3 planning and the state’s BRIGHT Act
With housing, Wolf said the intent is to only build an equal number of beds to what will be taken offline.
Wolf said three sites have been identified as the preferred locations for new residential buildings. In addition, he said that the Southwest area of campus, with the tower dormitories, will be the most complicated to renovate due to the sheer number of beds there.
A more detailed presentation on the sites where new dorms would be built is set for later this month.
At the Faculty Senate meeting, questions were raised about whether the new developments would raise the costs for students, pointing to the rents at Fieldstone.
Wolf said affordability is top of mind and UMass officials want beds on campus to be replaced at a lower cost with a private developer.
Meanwhile, the BRIGHT Act, if signed into law, would provide $1.25 billion for the UMass system for new buildings and maintenance of existing buildings, though it is uncertain how much would come to the Amherst campus, both to improve buildings and make them energy efficient.
In their meeting with UMass, councilors, too, noted that Fieldstone has caused similar apartments to raise their own rents, making the overall Amherst rental market more expensive.
“We do not want to see a similar outcome from this planning process, especially for housing considered ‘oncampus,'” Hanneke wrote.
Hanneke’s report also called out the possibility of non-student housing facilities being included in the P3 project.
“When a new hotel was mentioned as a possibility, I again emphasized the revenues generated from hotels in town, stating that any new or renovated hotel on UMass land must meet the current agreement regarding the pass-through to the town of hotel taxes collected, at a minimum, and preferably also pay property taxes or some portion of property taxes that would be due if not located on UMass land.”
Schoen said there is worry that if the UMass Hotel is redone in some fashion, Amherst could lose the room occupancy taxes it collects.
The need for faculty and staff housing also was brought up during the meeting, and whether UMass could sell surplus land to private entities for these developments. This would help the town by putting these back on the tax rolls.
During a Cuppa Joe meeting with the community Friday morning, Town Manager Paul Bockelman said this would be a good solution for enhancing the tax base.
“They have tons of land; we’d love to have them give it to us so we can develop it,” Bockelman said.
