WSU made private housing decision without formal state go-ahead

Wichita State University decided to lease space at a privately built apartment complex without direct state approval.

The university formally asked the state’s permission for the lease agreement six days after it announced it was moving more than 300 students from an old dorm to the new apartments. The request came after staff at the Board of Regents raised questions about the timing of the arrangement.

That’s according to e-mails and documents obtained by The Eagle through a Kansas Open Records Act request to the board, which is responsible for overseeing WSU and the other state regents universities.

WSU announced this month it would close Fairmount Towers, a residence hall at 21st and Hillside, for the upcoming school year. More than 300 Fairmount Towers students will now live in a new private apartment complex called The Flats on WSU’s Innovation Campus.

The 120-acre public-private development on the university’s former Braeburn Golf Course is rapidly developing to include housing, businesses, a law enforcement training center and academic space.

“Our best long-term strategy with the Regents is to increase the number of students living on campus in high-quality housing,” said Lou Heldman, WSU’s vice president of strategic communications. “That’s what will make us an attractive university for attracting and retaining students.”

WSU proposed a formula in which it would pay The Flats about $1 million in base rent for 10 months.

Here’s what happened after the university’s July 14 announcement:

The regents’ vice president for finance and administration, Elaine Frisbie, e-mailed her counterpart at WSU, Werner Golling, on July 18 after the regents office received questions about the arrangement from WSU’s student newspaper The Sunflower.

“I’d like to understand the time-line for closure of Fairmount … and the decision for WSU to lease apartments in The Flats,” Frisbie wrote to Golling. “I had always understood that students would be leasing apartments at The Flats, not WSU.”

Frisbie noted that WSU’s housing and dining plan for the upcoming year included a Fairmount Towers option for students. She also said WSU’s capital improvement plans have typically included money for razing Fairmount Towers in the future.

“Apparently in late June this changed to FY 2018,” she wrote, referring to the state’s current fiscal year.

Frisbie pointed to a University of Kansas request to lease beds at a private dorm called Naismith Hall “to demonstrate how other universities have handled this.”

In that instance, KU asked to lease 150 additional beds in Naismith Hall while new housing facilities were under construction. KU’s request was approved by regents in January 2016, with the proposed lease beginning in the fall 2016 semester.

“It was handled in advance, with the Board’s oversight,” Frisbie wrote.

Rules require state approval

Frisbie noted state rules prohibit universities from entering into short-term private housing agreements without KBOR approval. The regents’ facilities director is supposed to make a recommendation, which can be approved by President and CEO Blake Flanders on behalf of the board, according to KBOR guidelines.

“In Board policy, anything tied to private housing requires direct authorization,” Frisbie wrote. “This goes back to an incident at FHSU (Fort Hays State University) a number of years ago.”

“So if WSU wishes to lease space from The Flats, and if it is for less than one year, Blake (Flanders) has authorization to approve it, if he’s OK with it,” Frisbie wrote to end her e-mail.

In a July 20 letter to Regents Facilities Director Nelda Henning, WSU President John Bardo formally requested approval of an agreement to lease student housing in The Flats.

The agreement would include WSU, The Flats and MWCB, LLC, which developed the apartment complex. Regent Chairman David Murfin partially owns MWCB, LLC, along with Wichita businessmen Nestor Weigand Jr., Ivan Crossland and Steve Barrett.

$4,350 per room

The university proposed a rent formula in which it would pay $4,350 per room on 230 rooms for a base rent. That $1 million would be divided into 10 equal monthly payments from August to May, or $100,050 a month.

WSU would also pay The Flats the gross room rental revenue received from leasing another 51 rooms.

Maintenance responsibilities would be divided between WSU and The Flats. The university would pay for routine air conditioning and plumbing repairs while The Flats would pay for work on the walls, roof and “any other structural part of the building.”

The university would be responsible for all utility costs. The Flats would maintain all insurance coverage.

The lease would be effective from June 1 to May 29, 2018, according to WSU’s letter.

On July 24, Regents General Counsel Julene Miller asked her WSU counterpart, David Moses, to send her a copy of the proposed lease or agreement or “at least a letter of intent.”

“I don’t think Blake (Flanders) will be able to approve the request without having seen the lease/agreement,” she wrote.

Moses said the Board of Regents was sent an agreement this week.

“Regardless, we wanted to make sure our students are able to move in and have the experience they need to have as students,” Moses told The Eagle on Friday.

‘Some fluidity to it’

Moses and Regents spokeswoman Breeze Richardson said Flanders could authorize approval of an agreement as early as Monday.

Richardson said WSU and the board of regents have had “many conversations” before the announcement about closing Fairmount Towers and the administration’s housing goals for the campus.

“This Innovation Campus, this doing things in new ways, has some fluidity to it,” Richardson said.

“The timing of things did not necessarily work out in the best way,” she added.

She said WSU’s goals of putting more students on campus and following its master plans have been adhered to throughout the process. But she said regents could move to clarify board policy on the approval of private housing agreements in the future.

“Policy is a living thing and they are a policy board,” Richardson said of regents. “You can always see policy be improved.”

Heldman said WSU has maintained a continuing dialogue with KBOR on its housing options.

“We’re talking to a variety of people at the regents,” Heldman said. “We began with a different interpretation of where this arrangement fell (under rules for university or private housing).”

“There’s nothing about this that changes the fact that The Flats are going to open for the fall semester and Fairmount Towers are going close,” he added.

When asked about the timing of the formal request and if it should have been done differently, Heldman said “the important thing is the continuing relationship that we have with KBOR and it’s a good one.”

“In every transaction, hindsight is 20-20,” Heldman said. “The important thing is we keep talking and we always find ourselves at the same place in the end.”

This story was originally published July 28, 2017 at 3:38 PM with the headline "WSU made private housing decision without formal state go-ahead."