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Student housing gets 'A' for building re-use.

Old hotels around the city are being cleverly re-used for student housing through the work of a company called Educational Housing Services. Not only does this adaptive use create a steady and reliable clientele for the building owners, but it serves area colleges that need to attract students to the otherwise scary and expensive world of New York City apartment dwelling.

While some buildings are completely turned into dormitories for one school, others are mixed with students from several colleges, and yet others are generationally mixed with long-time residents, who have so far been enlivened and not intimidated by their younger building mates.

George Scott, president of Education Housing Services, said "We don't like to use the word `dorm' because we offer student apartments. We create a residence hall environment for kids that want a more mature experience than a dorm..

Scott is aggressively seeking out properties, not only in New York City, but outside as well. "We're also considering new construction in some cases," he said.

One targeted area is Downtown Manhattan, where both Pace and New York University are in need of dorms, as well as the Brooklyn schools. Several owners of office properties that have been targeted for residential redevelopment are now in discussion with the group, and the students would be the perfect pioneer residents for Downtown.

"If the office space generates $20 a foot, if you can generate $25 to $30 a foot by converting to residential, it begins to make sense," explained Diane K. Wilson, president of Corporate Realty Partners, which has been representing Scott, a former university dean whose company contracts with the schools and building-owners in bulk for apartments.

Additionally, says Scott, "A lot of the kids have an obsession with living in Manhattan."

Right after Lloyd Goldman bought the George Washington hotel that had most recently been used as an SRO, Corporate Realty Partners broker Mike Meyers called him up and said, "How would you like to never have another vacancy?"

Meyers and Wilson had been representing the School of Visual Arts that had been looking for a dormitory for its students for a long time. Meyers put Scott in touch with David Rhodes, Dean of Visual Arts.

"I put everyone together at a big meeting," he said, "and then it took six months with all the lawyers to complete the deal."

Scott said Goldman bought the Washington in August and by January kids were moving in.

Under the 15-year deal, the George Washington, with 340 rooms, is exclusively sublet to the School of Visual Arts. At other properties, there is a mixture of students from Marymount Manhattan, Duke University, NYU, Fordham University, the Julliard School and other area colleges.

While Meyers likes to put the parties together, Wilson does the actual nut and bolts of the deal points. "She takes the pieces and put it together," Meyers said.

One building, the Allerton Hotel at 57th and Lexington Avenue, is operated exclusively for women only and has been since the 1920's. That is owned by Alan Goldman and has 175 rooms.

The Henry Hudson on West 57th contains 507 apartments of which 340 are occupied by college students. That hotel is operated in conjunction with St. Luke's.

The Broadway American at 77th and Broadway is owned by Alan Goldman and in that case, EHS subleases all the available units, which are those that are not occupied by permanent tenants. Of 410 units, students now occupy 250.

At this location, the elderly residents act as quasi-grandparents to the students. "We found it to be a very good mix," said Scott. "Some nice friendships have come from this."

While student housing may call to mind rowdy fraternity parties, along with beer blasts raging in the halls, Scott says that isn't what happens at all. "We run a tight ship," he insisted.

Students are chaperoned by "student life personnel," including resident assistants that Scott requires the larger contract schools supply on a one per 30 student basis. "We also have our own," he said. Their are rules, and Scott said students have to live by them.

Scott's company also offers extra security, counseling, and limited activity programs.

Each student must also become a member of the Educational Housing student organization and pay an annual membership fee of $100. The organization helps provide roommate searches and discounts to area stores and activities. EHS has a license agreement with the students and "they have to prove to us that they are an enrolled student."

Rents range from $500 to $750 a month per student, an amount that is lower than currently available rent stabilized Manhattan apartment rents. If there is a contract with the school, the school writes a check to EHS once a month. Otherwise the student pays EHS directly.

As not-for-profits, universities come under an exception from the rent stabilization law specifically for student housing.

According to Joseph Strasburg, president of the Rent Stabilization Association, if the building is owned by a not- for-profit then those units are exempted from Rent Stabilization and they can move people in and out. Two of the biggest rental owners in the City of New York are Columbia and NYU, he said. "But here, the ownership is in private hands and there is no specific agreement with the state."

Nevertheless, working with attorney Edward C. Wallace of Counsel to Greenberg Taurig, who is a former Manhattan City Council Member, EHS has structured the deals as licensing agreements with the students, while the leases are directly with the not-for-profit institutions.

"As long as you meet the statutory test you are okay," explained Wallace. "Right now you have to be very careful and craft it in a certain way that conforms to the statute very carefully."

He said the State legislature should change the statute to make it easier to rent to students in this manner.

Right now, each situation is handled differently, depending on the ownership of the building and the number of units being rented.

Lloyd Goldman, head of BLDG Management Co., who was represented by attorneys with Weil Gotshal & Manages, said in his cases, they have a bulk lease with EHS. "We made sure that the rents are all in compliance," Goldman said. "We have one number with them [EHS] and they deal directly with the school. We're dealing with a not-for-profit organization under a master lease."

Two earlier lawsuits on slightly different issues were won by Columbia and New York University respectively.

Scott said they also have virtually no problems collecting rents, since most students are directly supported by families that plan for this portion of the college expense and many students also have part-time jobs.

"We have under two percent on non-payment," he said. "If you are spending $25 grand for tuition, you make sure they can pay the rent," he said of the parents.

Strasburg believes the relationship is good for property owners. "Owners would love this if they get their monthly rent and they don't have to deal with housing court," said Strasburg. "They have more efficient collection. I don't see the schools losing, but it provides the ability for students to come to the city and provides the dorms."

The students come from places around the world, from "New Zealand to Nairobi," said Scott, who doesn't worry about converting the former hotel rooms or even former Downtown office buildings that do not have kitchens. "Kitchens always equate to fire damage and to cockroaches," said Wilson.

Additionally, institutional feeding s one of the most profitable businesses going. "Who sends their kid to college and doesn't buy them three squares?," said Wilson. "But the typical student goes to only half the meals, so the profit margin is tremendous."

Scott also treats the students as if they are guests, said Meyers of Scott's program, noting "He is very sensitized to the students' needs and wants."

As one example, Meyers said, first aid services are available 24-hours a day. "If someone doesn't like their roommate," relayed Meyers, "George asks if they can wait until the morning to change. He's brought a whole new dimension. He leases it himself and signs a contract with the university to run it.

Scott was involved in college administration and was an executive vice president at a college before coming to Katharine Gibbs.

"I saw a tremendous shortage of student housing and developed a few places," he said. "Now, we are being asked to go to Boston, Chicago, Pennsylvania and Washington D.C., all urban markets where there are many colleges."
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Title Annotation:Educational Housing Services
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Dec 27, 1995
Words:1420
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