The College of William & Mary’s plan to purchase the Hospitality House will have both positive and negative implications for the city.
The purchase addresses a source of frustration for residents in single-family neighborhoods, where many houses are rented to students who were wait-listed for campus housing. Because most college property is not taxed in Virginia, the sale also removes a significant source of tax revenue from the city’s tax rolls.
The city will lose approximately $110,000 per year in property taxes, along with an unspecified amount of revenues associated with business license, room, meal and retail sales taxes, according to Kate Hoving, spokesperson for the city.
Mayor Clyde Haulman said the property sale brings a number of concerns to mind: loss of tax revenue, increased pedestrian traffic and job losses for citizens. Hospitality House’s owner, Texas-based 1859 Historic Hotels, did not respond to questions about how many employees would be affected by the sale.
The college, which pre-dates the city by 29 years, owns 1,088 acres out of the city’s nearly 5,781 acres. In addition, the college’s Endowment Association and Real Estate Foundation collectively own more than 30 acres of property.
“The college has been purchasing more and more property and it takes that off of our revenue stream. At the same time, the city provides a number of services to the college, such as fire protection and EMS. It may be time for a serious discussion about payments of fees in lieu of taxes,” Haulman said. “There is a significant budget impact here, but that doesn’t mean we change the level of services we provide.” The college does not currently pay any fees to the city for emergency services.
The Hospitality House purchase will help the city address two of its goals for the downtown area: preserving neighborhood character by encouraging more student housing and restoring vibrancy. Haulman, who is a professor emeritus of economics at the college, said the new facility will remove pressure from the demand for housing and address the need for more parking.
“Plus, for businesses in the area, it will be 500 consumers living next door,” he said.
The exact number of students who will be housed in the Hospitality House won’t be known until the college completes an inspection. At that time, the college will evaluate what renovations and adaptations will be needed and have a better estimate of how many students the building can accommodate.
The university will purchase the Hospitality House for $21 million to use for student housing and on-campus parking.
The purchase and any needed renovations will be financed through 20-year bonds authorized by the Commonwealth of Virginia, according to Vice President for Finance Sam Jones. The state requires residence halls to be self-supporting, so the bonds will be repaid through student housing fees.
The Hospitality House faces the college’s Alumni House, sitting on 3.6 acres on Richmond Road. It has 318 rooms, 20,000-square-feet in conference space, two restaurants and 370 parking spaces, including a 308-space parking garage.
The college plans to close on the purchase in late May, following the 2013 Commencement weekend.
It’s the latest in a series of efforts by the university to address the strain on student housing. The mixed-use development Tribe Square, also on Richmond Road, added 56 beds to campus housing when it opened in 2011. This fall, a $26 million fraternity housing project will add 187 beds.
In addition, private projects are accommodating student housing needs. Planning Commissioner Demetrios Florakis has developed City Green, eco-friendly residences, and is in the process of converting the 118-bedroom Quality Inn & Suites on Richmond Road into 94 one-bedroom student apartments, to be called City Lofts.
Read more about the Hospitality House purchase here.
