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Havasu Foundation for Higher Education

Havasu Foundation for Higher Education. Business Plan Executive Summary. The HFHE Mission. Our mission is to develop a comprehensive 4-year residential university in Lake Havasu City. It’s all about -. Positive economic influence Revenue growth for businesses and city

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Havasu Foundation for Higher Education

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  1. Havasu Foundation for Higher Education

  2. Business Plan Executive Summary

  3. The HFHE Mission Our mission is to develop a comprehensive 4-yearresidential university in Lake Havasu City.

  4. It’s all about - Positive economic influence Revenue growth for businesses and city Diversification of economy Job creation and job growth Cultural enrichment Quality of life Community vitality

  5. Business Plan Development It’s a comprehensive analysis Evaluates our market Evaluates our university partner Supports the economics of a 500 student campus Project is almost complete

  6. Students eyeing cheaper collegesChristian Science Monitor 10-23-08 • Students want at colleges closer to home • 60% considering less prestigious state colleges for affordability • Some eliminating all but the in-state public colleges

  7. Havasu wants a minuscule 1/10th of 1% of the total 2008 system enrollment. Az is ranked 43rd in % of H.S. grads going to college Az enrollment will expand 41% by over 39,500 students 2000 to 2010 By 2020, enrolment must double for AZ to be nationally competitive

  8. NAU’s Marketing Studyfor Havasu campus by Lipman-Hearne, April 2008 • Which geographic landscape would create the greatest student interest? • Which curricular offerings are most appealing to the university’s demographic? • What is the university’s demographic? • How much marketing funding would be needed to bring in the first wave of students? (The impact on the main campus?) • How much funding would be needed to sustain a reasonable growth? • Accomplished in part, more work to be done by HFHE. • Not accomplished, must be completed by HFHE..

  9. NAU 2004 Marketing StudyFlagstaff campus research by Lipman-Hearne • Determine NAU’s image and reputation • Identify features and attributes of high quality universities • Assess NAU’s performance • Comparable elements were not done for the Havasu campus study; must be done by HFHE.

  10. Work nearly done Havasu campus, 2009 • Southern CA impact on Havasu; economic and education • Cost to attend study; ASU, NAU, UA, and So. CA • Revenue budget study • Comparisons to NAU-Yuma, UA-South • Impact of non-resident students on the Havasu campus and WUE tuition income

  11. Work yet to be done Havasu campus, 2009 • Questions of image, reputation, attitudes, comparisons • Data on students in Mohave County, Parker, Western Maricopa County, Southern Nevada, and Southern California • Continuing education needs of teachers and other professions in the Colorado River area of Mohave County • Fiscal and economic impact study by city

  12. What looks goodfor the proposed Havasu campus. • “Statistically, Lipman-Hearne numbers provide the data to move forward in the development of the Havasu campus.”City mgr R. Kaffenberger • “Having one out of 5 students saying, ‘I’d like to go to Lake Havasu City,’ I think that’s a good thing.” Mayor Mark Nexsen

  13. HFHE hires major consulting firmWork started on business plan and marketing research • January 2008; business plan and research initiated by HFHE • HFHE board appropriated funds for an independent review and improvement of the business plan and marketing research • The nationally acclaimed Huron Consulting Group retained by HFHE November 2008; www.huronconsultinggroup.com • Results to be presented to the public in a work-session with the city council in 2009

  14. HFHE hires major consulting firmWork started on business plan and marketing research • April 2008; business plan and research initiated by HFHE • HFHE board appropriated funds for an independent review and improvement of the business plan and marketing research • The nationally acclaimed Huron Consulting Group retained by HFHE November 2008; www.huronconsultinggroup.com • Results to be presented to the public in a work-session with the city council in 2009

  15. Complete experience campusSome findings of the Lipman-Hearne student survey 94% extremely/very appealing response rate on: • Multidisciplinary (interdisciplinary) studies • A complete college experience • Close guidance and rigorous academics • Small university setting • Emphasis on outdoor activities • No specific area of study was mentioned by more than 1 in 5 students; suggesting a need to be comprehensive rather than specialized.

  16. Benchmarks for Havasu • 28% non-residents at ASU • 35% non-resident freshmen at ASU • 4,900 CA students in Az university system • ABOR increased the non-resident cap to 40%

  17. WICHE -- WUE Western Undergraduate Exchange • AZ students save over $4.6 million by participating in WUE in other states • All programs at NAU-Yuma are WUE (our goal) • WUE student tuition is 50% above the resident rate • The additional tuition income remains with the institution. For Havasu, that could total $1.3 million

  18. Why did they enroll?Factors influencing choice.2007 National Research Report • Cost to attend • Financial aid • Academic reputation Followed by location, size, setting.

  19. The Name’s the ThingSource; www.dehne.com • Connotation of Prestige; name recognition • “Brand Name” Mind Set; name recognition Q. NAU’s position relative to ASU or UA? Q. Costs to HFHE in scholarships for recruitment? Q. Which potential partner would be best for Havasu?

  20. Sources of students for Havasu’snew 4-year university campus • Otherwise bound for out-of-state 17% • ASU/NAU/UA bound 23% • MCC bound (but, a net gain is expected) 2% • Other 18% • Non-residents (new ABOR cap) 40%

  21. Enrollment model w/ attrition YearFreshSophJrSrTotal FTE • 156 156 • 156 125 281 • 156 125 112 393 • 156 125 112 107 500 Attrition rates similar to ASU. Annual growth not shown. Q. Can we get 156 freshmen each year? 93 regional + 63 Californians?

  22. 20-year projections

  23. 20-year projection of enrollment

  24. General Fund split FY08 with 113,092 FTE students fall 2007 in AZ system ASU $ 496 million NAU $ 161 million UA $ 443 million Total$ 1.1 billion The Havasu general fund budget is projected at $3.8 million for a 500 FTE campus, or a miniscule 1/10th of 1% of AZ system FTE’s.

  25. General Fund contrasts per FTE ASU-Tempe per FTE $10,073 ASU-Polytechnic $ 6,014$4,059 difference from main campus ASU-West$ 7,696 $2,377 “ NAU-Flag per FTE $ 8,800 NAU-Yuma $ 4,956 $3,844 “ UA-Tucson per FTE $12,938 UA-South$11,668$1,270 “ Proposed Havasu $ 8,035 $2,038 (similar to ASU-West) The main campuses keep the difference for “whatever.”

  26. Potential university partnerbased on a theoretical 500 FTE campus Gen Fund ASU-Polytechnic $3,007,000 ASU-West $3,848,000 NAU-Yuma $2,478,000 UA-South $5,834,000 • Obviously, UA would be the better university partner by $3.4 million per year compared to NAU. • Obviously, NAU would be the least generous.

  27. Havasu campus revenue budgetbased on 500 FTE’s and FY08 dollars Resident tuition $1,291,200 (at 60% of total enrollment) Non-resident WUE tuition $1,291,200 (at 40% of total enrollment) Collected fees $ 331,000 Misc. revenues $ 372,500 Share of gen fund revenues $4,017,260 (using ASU-West model) Non-appropriated funds $1,904,000 (using UA-South model) Total campus revenues $9,207,160 • Note that UA-South and NAU-Yuma have less than 2% non-resident students • Q. What might be the impact for marketing and recruitment with a UA-type allocation of an additional $3.4 million of general fund revenues and a $12 million budget?

  28. Economic model for the Havasu campusFactors impacting the revenue budget • Freshmen and sophomore classes are less costly than upper division classes • UA-Sierra Vista and NAU-Yuma branch campuses are 2+2; with no lower division offerings • Both therefore, carry the weight of the more costly upper division structure

  29. NAU-Yuma enrollment decline Fall/YearFTE’s 2005 529 2006 519 2007 481 • A 9% decline in three years! • Both UA-South and NAU-Yuma are 2+2 campuses . • Both have less than 2% non-resident students. • 2+2 would = financial disaster for the proposed Havasu campus. • CA 2-year college system as a competitor

  30. Survival economicsNumbers and WUE revenue • Both Sierra Vista and Yuma lose access to $1.3 million in WUE non-resident tuition • Q. Could the Havasu campus survive with less than 2% non-resident students, fill seats, and get the critical mass in numbers to run a campus? • Q. Could the Havasu campus survive economically without the WUE tuition income?

  31. Revenue that provides funds for building leasesASU-Phoenix downtown campus model • Phoenix passed a $220 million bond for the land. By contrast, Havasu is in the process of securing prime BLM land for $10 per acre (valued at $400,000 per acre). A $128 million asset. • Enrollment could guarantee revenue for building leases. • ASU and Phoenix did IGA’s for the land and buildings. • Phoenix was able to sell bonds for the buildings. ASU will ultimately own the land and buildings. • With enrollment potential for the proposed Havasu campus, HFHE projects a profitable small campus operation.

  32. Campus facility calculations • 80,000 sq ft of buildings projected for a 500 FTE campus • $177.74 cost per sq ft, includes site prep, etc. • = $14,219,200 • Round up to $17 million to include other campus costs • $808,389 principal/interest per yr for 30-yr revenue bond

  33. Sources of revenues to cover the annual bond principal/interest payments • $389,120 in surplus revenues from WUE non-resident enrollment • $250,000 from a $500 per student fee for the bond payments • $169,260 from a portion of the general funds earned by the campus FTE’s

  34. Cost to attend ASU or UA ASU 2008-09Resident UGRDWUE UGRD Tuition $6,789 $10,184 (150% of RT) Fees/loan 350 350 Books/supplies 2,100 2,100 Room 5,836 5,836 Board 2,518 2,518 Transportation 1,444 1,444 Personal 3,2363,236 Total $22,273 $25,668 NAU is slightly lower.

  35. Cost to attend Havasu Havasu 2008-09Resident UGRDWUE UGRD Tuition $4,304 $6,456 Fees/loan 643 643 Books/supplies 980 980 Room 2,110 Board 3,174 3,174 Transportation 1,500 1,500 Personal 1,0001,000 6 Total $11,530 $15,286 Tuition based on UA-South. Other costs are similar to those of Prescott area colleges.

  36. Cost to attend contrasts Resident UGRDWUE UGRD Tempe total $22,273 $25,668 Havasu total $11,530 $15,286 Difference $10,743 $10,382 Per 4 years $42,972 $41,528 The WUE rate is 50% above the resident tuition rate. Still, for CA students, the total cost to attend the Havasu campus is $3,306 less than the average for the Cal State U system.

  37. Private college contrastsbased on 500 FTE’s and FY08 dollars Public tuition $ 4,304 Private tuition $12,603 (a 3-fold increase) Or, to replace gen fund revenues of $3,848,000, an endowment of $1.7 billion with an investment return of 2.25% would be needed. • How many Havasu students could afford private college tuition? • How would it affect enrollment? • Could Havasu raise the difference in scholarship funds? • What would it take as a brand-name university partner to draw students at such rates? Harvard?

  38. Economic Impact NAU is a $l billion a year boost to the economy of Flagstaff and Coconino County. Even with a small campus, there would be increases of tax revenues for Havasu. Surely that could help reduce the burden of the sewer system. First and foremost, this university project has always been about economic development.

  39. Economic Fiscal Impact Study • Modeled after that of the Phoenix-ASU Downtown campus project. But, Havasu will have a broader set of projects including: • A residential comprehensive university campus. • A multi-purpose facility for conventions, fine/performing arts, and sports. • A municipal championship quality golf course. • A mainland marina at Contact Point State Park, boating, beaches. • On adjoining private lands, a resort hotel, town center (small shopping/recreational area), and student and faculty housing. • Also on adjoining private lands, the Riviera Estates planned community of luxury homes, estimated at $1 billion at build-out.

  40. Renderings from William Johns

  41. Lake Havasu’s backyardand economic engine

  42. Summary of County and Target Zip Code Area Populations

  43. Southern CA counties by travel time to Havasu by target zip code areas Range Range Avg. Range Range Avg. Miles Miles Travel Time Time CountyMilesLowHighTimeLowHigh Riverside 233 175 310 3.9 3.2 5.0 San Bernardino 238 163 289 3.8 3.1 4.6 Orange 295 273 311 4.6 4.3 4.9 Los Angeles 297 257 337 4.7 4.0 5.3 San Diego 317 296 358 5.2 4.2 5.6 Average 276 233 321 4.4 3.8 5.1

  44. Sample zip code cluster Palm Springs SMA, Riverside County Median Family UPS Zip Code Miles to Time to Income Zip CodesNamePopulationHS DistrictLHCTravelZip Code 92242 Earp 1,545 47 1.1 $32,415 92201 Indio 56,296 Indio 175 3.2 $45,539 Amstad 92203 Indio 2,730 177 3.3 $48,911 92211 Palm Desert 19,699 Palm Desert 182 3.3 $73,401 92234 Cathedral 43,129 Cathedral 191 3.5 $51,618 Mount San Jacinto 92240 Desert Hot Springs 22,779 Desert Hot Springs 199 3.5 $37,408 Las Brisas 92241 Desert Hot Springs 5,512 194 3.6 $39,551 Total 146,178

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