Last updated on 2011.03.14
South Dakota State University is finally pushing socialism too far, at least for some Brookings capitalists. Jill Fier of the Brookings Register reports that Brookings developers John Mills and Dennis Bielfeldt want the Brookings City Council to express official opposition to SDSU's Northwest Neighborhood development plan.
Now on face, the Northwest Neighborhood, also known as the Northwest Quad, looks like a nice idea. The plan would transform the empty tundra between the Highway 14 bypass and the SDSU campus proper into a living part of town, with mixed-use apartments and shops, townhomes, maybe even a hotel/conference center and a retirement community, along with lots of trees and even a pond on the east side of the Medary-US14 intersection.
Pretty cool, right? Wrong, say a couple locals:
Developers in the past have expressed concerns about the Northwest Quad plans, saying the university should not be going into business against the private sector. Building any of these facilities on state-owned land that's not subject to property tax puts those facilities at a financial advantage over others in the community and will erode the county's tax base, they argue.
John Mills said local developers see the plans "as a potential danger to our community, our county, our city, our schools, that I don't think has been recognized appropriately up to this point. It's time to take this issue into a more public dialogue" [Jill Fier, "Developers Want to Stop NW Quad," Brookings Register, 2011.03.11].
We should probably note that development around the SDSU campus wouldn't really erode the Brookings tax base. The Northwest Quad would turn mostly idle land into sales-tax-generating businesses. It would make room for more people to live and work in Brookings, with the particular advantage (pointed out by the feasbility study) of freeing up more units citywide for non-student renters. And it would create jobs, including the temporary but tasty jobs associated with $80 million worth of new construction. $80 million of hardhat action, and it creates another attractive gateway to the community---most towns would leap at such an opportunity.
But not Dennis Bielfeldt. His luxury apartment development was made possible by SDSU's Innovation Campus. But he sees the Northwest Quad as an obstacle to his own business plans:
Dennis Bielfeldt, a Brookings developer and former SDSU professor, said the Northwest Quadrant plans could halt economic development in the rest of the community.
He would like to build a second and third phase of the Innovation Village apartment/retail complex but wants to know what he'd be facing first.
"This causes a paralysis when it comes to economic development, because we don't exactly know what's going to happen, and when we don't know what's going to happen, we start to think, "˜Well, we better not do anything until we know what's going to happen'" [Fier, 2011.03.11].
From Bielfeldt's complaint, one might conclude that capitalists normally operate in (and are entitled to) a world with no uncertainty, where every investment has a guaranteed return.
Bielfeldt and Mills also exhibit a bad case of scarcity mentality. They seem to think that the Brookings pie is finite, and that a handful of shops on the north side of town will provide such retail satisfaction that SDSU students may never leave campus for the dulled temptations of Wal-Mart, Hy-Vee, and Jim's Tap.
Dennis, John, snap out of it! That thinking is so Madison. You're better than that! You're Brookings! You just unseated Watertown as fourth-largest city in South Dakota, after a decade of 19% population growth. Brookings is growing fast enough that SDSU won't put you out of business with the Northwest Quad any more than SDSU has put Zesto's out of business with its ice cream shops.
Northwest Quad is not a threat; it is an opportunity. The Brookings pie is growing fast enough for you private developers and SDSU to get your E.D.-freak on (that's economic development). Let SDSU do the heavy lifting and get the Northwest Quad going. Then the smart entrepreneurs can buy up adjoining land and plunk down the gas stations and coffee shops and housing developments that will synergize with the new neighborhood. And all those weary travelers on the Highway 14 bypass will look out their windows and say, "Wow! North Brookings is so pretty! So lively! So accessible! Let's get coffee! Let's move here!"
In short, quit bitching, and start pitching.
Update 2011.03.14 09:42 CDT: Somewhat related: Brookings makes the roster of "Boom Town" counties on this map from The Atlantic that divides America into 12 states based on income and demographics. Lake County falls into the "Emptying Nests" with an older, less diverse population, heavy on fixed-income retirees.
Good eye, Cory. South Brookings could be going under water likely starting next week; moving town north and east is really the only way to go.
[CAH: ...except there's that creek on the north side of town, too! Here comes Lake Agassiz, just as you said!]
I could see many potential problems with this approach depending on how the development is structured. If these facilities aren't subject to normal property taxes/etc. this would be direct competition under government subsidization with the private sector. This would lead to decreased rents through out the city which could easily cause problems for all existing rental property owners. Rental units are not cash cows and are very sensitive to small market fluctuations.
I have no problem with universities providing at cost housing to students, but I don't want to see it compete with private sector.
Curious, Tony: if these developers aren't building to meet the housing demand that the SDSU feasibility study identifies, are the developers just trying to keep housing supply artificially low? If they won't provide that housing for the market, is SDSU obliged to leave its students' housing needs underserved?
I think you've got this all wrong. All the property in that area is owned by the State of South Dakota (SDSU). There is no room for private developers in that direction.
These private developers have create hundreds of new units in all price ranges during the past few years.
Their point about uncertainty is that when they compete with other privates, they are all on the same footing. Yet when they compete with the state, the state is motivated by other, unpredictable factors.
The NW Quad, as proposed would result in huge costs to the city and to the schools with no resulting property tax revenues.
I agree that what I perceive to be whining about "competition" from SDSU isn't really necessary or warranted from the local developers (more on that below), but it's also not a particularly new thing for the Brookings/SDSU relationship. When SDSU explores an expansion of the Student Union (as has happened more than once during my time of student/alumni affiliation), there's usually conversation around offering amenities like a bowling alley or movie theater (things that are commonplace at large-ish institutions). From experience, I can say that most of these conversations get shelved not because of feasibility issues or a lack of interest but because of what I've heard called an "unwritten agreement" that SDSU will not put itself in competition with Brookings businesses. I've heard (though not substantiated) similar explanations--avoiding direct competition--for the exorbitantly priced convenience store fare on campus and the past business model of the University Bookstore. So, there would seem to be plenty of history of Brookings community members saying/doing some of the same things as Mills and Bielfeldt (at least sub rasa) for awhile. Perhaps, even, this new development plan is problematic in that it seemingly disposes of the previous "unwritten agreement."
I think, on the housing front, the complaints from developers only seem warranted if the sole decision factor for prospective college tenants is cost. If all other factors are irrelevant and SDSU gains an unfair advantage from its tax status, there might be justification in keeping it from building. However, there would seem to be much more to the decision-making process about college housing than the pure cost--particularly in a market like Brookings that seems to have a relatively low cost of living. Landlords off-campus have some advantages in terms of location (many students quite simply don't want to live in any degree of "on-campus" housing unless they're required to do so), longevity (many off-campus housing options have traditional lines of renters based on organizational affiliation or personal connection), and comfort (it seems unlikely there would be much that could be described as "high end" in the event of a state-bid contract), not to mention the fact that it's entirely possible that the new housing on the Northwest Quad could be subject to the same alcohol rules and noise regulations as campus residence halls. The housing SDSU proposes offers students in the free housing market but one more option, not some unfairly easy choice that costs local landlords business.
Public-private partnerships like what is being proposed at SDSU are becoming standard operating procedure for state institutions of higher learning as they face the realities of budget crises brought on in large part by our society's failure to adequately support higher education as an equal-opportunity endeavor in the first place. The State of Maryland, as I understand it, has told the system of public universities that all housing built on campus must be a public-private partnership (often meaning that it is managed by a private, for-profit company while still retaining the privileges and responsibilities affiliated with being a state government entity). There may be ways to avoid the competition Mills and Bielfeldt decry, but there is no obligation to do so when colleges and universities must in many cases must compete--even outright fight--for their financial survival.
PP, you out there? Mr. Divestiture?
The question should be: What is the long term viability of SDSU? Can the current enrollment numbers be maintained given the state budget crisis?
[CAH: Hmm... I hadn't thought about that. Could SDSU's growth end? Could university enrollment shrink? Could a developed Northwest Quad become a ghost town?]
Oh, never mind CAH, I just read through their joke of a feasibility study:
http://www.sdstate.edu/about/nw-neighborhood/loader.cfm?csModule=security/getfile&PageID=76615
They looked at ~100 units to make conclusions. They peg the monthly rent for their "apartments" at ~$530-650 PER PERSON (where the private units are at ~$300 per person). Good luck with that. These will not compete with private off campus units. I hope they don't actually go through with this. These will be MASSIVE money hemorrhagers unless they require students to live in them.
Oh wait, that's right. They are part of the university. The university can force them to be rented by the students.
Also, if you read the feasability study "apartment complex" section, they don't even conclude that additional rental units are needed. They conclude that from the discussions they have had with a few students and the SDSU administration that "junior, senior, and grad students" want to live on campus. No data necessary.
Btw: Scott Munsterman should be asked about P-poor planning in south Brookings.
So, what can Madison and Dakota State take from this proposed project, are there any elements that could work here, or not work here? Although the SDSU project study does seems a little far-fetched and poorly researched, nods to Tony on that one.
DSu has already engaged in some similar small-scale socialism with its apartments on North Harth. Aramark has opened a coffee shop on campus. Have those operations hurt local business?
CAH:
Ask yourself this: Would the Aramark coffee shop be competitive if DSU would lease a small section of its property nearby to a private citizen that wanted to open a coffee shop? Or even just a coffee stand for that matter?
If it's anything like the SDSMT campus, the answer is of course no. No one but fresh/sophmore students that are required to buy meal plans purchase anything from our local on campus facilities because the prices are horrible.
Similarly, take a look at those apartments on Harth and compare them to local offerings. Would you choose to rent one of them when compared to the private offerings? I think not.
Now, taking that into consideration, the true harm of the on campus coffee shop/Harth apartments are that they dissuade local businesses from further investing in the area. I can't comment directly on the coffee shop, but I can on the rentals. I know of 3 developers who were looking at putting up units but now are not. This cycle will repeat now. no one is going to invest, DSU is going to say look we need services, and they will put up more inefficient government subsidized businesses. It's a vicious cycle that I don't know how to stop once it gets started. (we have a similar problem on the SDSMT campus, our 'foundation' has started buying up surrounding properties which eliminates any potential private sector investment in local services)
The question for me would be about the nature of the public/private partnerships. Would their coffee business be another Aramark locked in relationship? If so, do they need to be profitable in that particular venture or do they simply try to scoop up more of the whole pie for the parent company?
I would love to open a coffee venture on the south side of campus or magically swap Main and Medary so Brookings resembled many other college communities (attached business district).
And as a final disjointed thought: I read the feasibility study section on new retail and it seems pretty dubious to me. First of all, it was conducted when we still had a vibrant (some would say oversold) economy. Secondly, the report even states that they feel no new retail is needed until at least 2013. I think the idea that Brookings is lacking in retail options is extremely subjective. The study shows that a "student survey" indicates desire for a fitness center...what? Another? We have five or six already, including the facilities on campus!
Maybe public universities should just stick to education.
SDSM&T has farmed out their campus parking ticket system to perhaps Aramark as well. They hire Pakistanis or other non-English speaking aliens to enforce the parking checking. Sure cuts down on conversation regarding a ticket.
The food at SDSM&T has always been terrible, but may be even worse with private contractor. Back in the days when students had no rights, I complained about food service corned beef meat with mold on it. I told the bearcat woman running the system that it would be a good recipe for a dog food company. The next day I got hauled into the dorm managers office for a chewing out. But, when I told what had happened, he laughed and told me to get out of his office.
I don't know what the answer really is, but I have never understood why any school administrators assume that a company that must pay sales taxes and income taxes can provide better service for students than a service that doesn't pay those taxes and also is not expected to suck out profits to pay obscenely paid exectutives.