FOR THE PROPOSED UNIVERSITY CAMPUS IN

LAKE HAVASU CITY

Not for public distribution. The 3-8-09 draft is for review and critique only. For the complete draft document, contact the Foundation. To date, this project has consumed 1,400 hours and would have cost $630,000 with an [...]]]> A BUSINESS PLAN WITH A BROADLY BASED RESEARCH COMPONENT

FOR THE PROPOSED UNIVERSITY CAMPUS IN

LAKE HAVASU CITY

Not for public distribution. The 3-8-09 draft is for review and critique only. For the complete draft document, contact the Foundation. To date, this project has consumed 1,400 hours and would have cost $630,000 with an outside contractor. The Foundation estimates over a year and a minimum of 1,000 hours to finish this business plan project.

Executive Summary

(A Power Point presentation and jpg slides are also available.)

The basic mission of the Lake Havasu Foundation for Higher Education is to develop a comprehensive residential 4-year university in Lake Havasu City.

The Foundation vision includes an impressive lake-side “Greenfield” campus near the center of town with awesome vistas, marina, beaches, municipal golf course, fine and performing arts center, two small shopping areas, and a $1 billion mixed-use private development with a resort hotel.

Our long-range plan projects a campus of 2,731 students within 20 years of initial operation, growing to the size of the NAU or Northern Arizona University Flagstaff campus within 40 years. Such enrollment growth would be a direct result of significant population growth in Mohave County and the state at large.

The projected growth in college-bound students in Arizona is estimated at 39,500 new students by 2010. By 2020, university enrollment must double for Arizona to be nationally competitive. We are also aware of the increasing sensitivity of students and their families to the costs of higher education and the trends to select public colleges within their state and area of residence.

The Foundation’s mission is anchored to economic development. Our objectives include economic expansion in ways that will significantly broaden and improve the employment base of our community and county, attract businesses and industries that most benefit from and contribute to a university town, expand the tax base, and significantly increase tax revenue streams that result in improved city infrastructure and a reduced tax burden on individuals and families. The tax benefits are also expected to help the county and state in ways that directly benefit our community. To expand this objective, an Arizona State University (ASU)-Phoenix downtown campus educational and economic fiscal impact type study will be needed.

The economic development focus  within our mission in no way diminishes the educational and social benefits individuals, families, businesses, organizations, and government will gain from meeting the basic mission of creating a vibrant and successful comprehensive residential 4-year university in our town.

To enhance this vision, a major business plan project is required with a broadly-based research component including market demand surveys. To that end, the Foundation retained the services of Huron Consulting Group, Inc., a nationally recognized firm specializing in financial, managerial, technical, legal, industrial, medical, governance, and university services; http://www.huronconsultinggroup.com/ Huron is assisting with the review of the content and methodology of the business plan, as well as assisting with the formulation of a major market demand study. A grant from the PED has made this support possible.

The initial results of the first of dozens of market demand studies are impressive. For example, 84% of those local students surveyed have indicated they would attend the Lake Havasu university campus if it were to open soon. By the end of April 2009, such surveys will have been completed for all of the major high schools in Mohave County and Parker. From there we will survey parts of Western Maricopa County and most of the rest of Western Arizona. You can check the survey instrument on; www.HavasuSurvey.com

We recognize the most important factor for students and their families in selecting a college, is cost-to-attend. The second ranked factor is availability of financial aid. The third ranked factor is the influence of the academic reputation of the institution on enrollment decisions. The Foundation in its business plan development and the related market demand research embraces the significance of such selection factors and is designing a campus and long-range operational plan accordingly.

Thus, the Foundation’s plan includes a quality university partner with a brand-name that will readily attract quality students. Otherwise, the Foundation will face a significant level of scholarship fundraising to insure a critical enrollment base.

Cost-to-attend factors also require a business plan design that takes advantage of the economies possible within our small town (modeled on Prescott area colleges) for student room, board and personal expenditures. The overall cost savings to students could be as large as $10,743 per year when compared to Arizona metro area university campuses. Or, $3,306 per year less than the average cost to attend a California State University system school.

We researched several small university models…public and private…within Arizona and California, including the two 2+2 campuses in Arizona. We investigated the economics of upper and lower division offerings, resident and non-resident student mix, management structure, curriculum, marketing, and student recruitment.

We built statistical tools to extrapolate into the Havasu campus model, data accurate to the penny for specific numbers of students. Our plans are well documented, with active links to the sources, and we have shared the results with the Arizona Board of Regents, legislators, and the three public universities.

Our initial goal of a 500 FTE or Full Time Equivalent enrollment with entering freshmen classes of 156 FTE students simply reflects the prudence of starting small and managing for maximum educational quality and financial stability. The Foundation has identified several small private colleges within our region that function quite well at that level of operation.

The 4^th year revenue budget is $9.3 million. It could be as high as $12 million with the level of general fund sharing the UA or University of Arizona provides to its Sierra Vista branch campus. Interestingly, the enrollment for the proposed Lake Havasu campus would be a miniscule 1/10^th of 1% of the total Arizona university system enrollment.

From the revenue budget analysis, a university partnership with UA as one example, would add $3,356,000 to the annual Lake Havasu campus budget if funded at the same rate and level UA funds the Sierra Vista branch campus. Accordingly, the Foundation keeps the door open to several options for a university partner and is prepared to negotiate the level of “withholding” by the parent university of Lake Havasu campus earned general fund revenues.

The Foundation business plan includes an appropriate mix of resident and non-resident students similar to that ASU has achieved where 28% of its total student body and 35% of entering freshmen are non-residents. It is the out-of-state enrollments, currently capped at 40% by ABOR, that help Arizona universities reach the critical mass of students needed for basic operations while expanding the options and choices for Arizona residents. In short, it is the appropriate mix of in-state and non-resident students that help the state universities meet their basic mission of service to Arizona.

Given the enrollment potential for the proposed Lake Havasu campus, the Foundation is able to project a profitable small campus operation, particularly with the $1.2 million of WICHE Western Undergraduate Exchange non-resident tuition income.

The Foundation envisions a common-sense method of financing campus and facilities construction modeled on the ASU-Phoenix downtown campus. Essentially, ASU and Phoenix developed agreements for acquiring land and financing buildings. Phoenix then passed a $220 million bond to acquire costly downtown land. In contrast, our town has access to 320 acres of prime lake-side land at no cost to the university. This BLM section is valued at over $128 million.

Before Phoenix voted on the bond, ASU and Phoenix developed lease agreements for the buildings. Essentially, Phoenix provided the land and buildings. With campus enrollment assured by ASU, more than adequate revenue is being generated for the bond payments. Once the bonds are retired, ASU (actually the state through the Arizona Board of Regents) will take title to the land and facilities.

The Foundation’s facility cost analysis is based on an initial campus of 80,000 sq. ft. with costs of $177.74 psf, which equals $14,219,200 in 2008 dollars. The Foundation rounded that calculation up to $17 million to include campus amenities such as sidewalks, parking, lighting, modest recreational areas, etc. The annual principal/interest on a 30-year revenue bond for the $17 million would be $808,380.

The campus revenue budget identifies monies to cover that expenditure including:

$389,120  in surplus revenues from WUE enrollments

$250,000  in a student facility fee at $500 for each of the 500 FTE students

$169,260  from a portion of other revenues allocated to facility leases

Some advantages for the university partner include access to a targeted California market of 5.1 million population (over 20 million overall in Southern CA), which is as large as all of Arizona at 5.1 million (2000 census). Moreover, within the five Southern CA counties, there are nearly a million high school students. The University of California and California State University systems alone enroll over 69,000 freshmen each year. By comparison, the Lake Havasu campus will need to draw a miniscule 63 non-resident freshmen each year (likely Southern CA students) at the ABOR 40% cap to reach the desired overall Lake Havasu campus level of 500 FTE students.

The Lake Havasu campus operation is designed to be profitable thus reflecting well on the management and fiscal reputation of the university. Moreover, a small-college liberal arts (interdisciplinary studies) campus with a high-quality private college image at public college tuition will also reflect well on the parent university partner.

The university partner can expect to draw a larger share of the Mohave County higher education market, gain additional enrollments for the university’s main campus, and achieve a small increase in FTE’s from the Lake Havasu campus. Thus, the project becomes a model for other small cities.

For the Lake Havasu campus project, the City and Foundation need a major brand-name university partner to draw that proper mix of resident and non-resident students. Designating a university partner will also strengthen the City’s applications for economic stimulus funds. It will dramatically improve the campus business plan and help complete the planning of a “Greenfield” site and marketing strategies

Designating a university partner will also permit the City to move forward with the economic fiscal impact study as well as position the project for the upswing of the nation’s economy.

The text of the business plan narrative provides the detail, documentation, and reference sources to illustrate the Foundation’s vision for higher education in Lake Havasu City.

Table of Contents

PART A:  Review and Critique of the Phase I Lipman-Hearne Study

A.1  Public university partner

A.2  Initial work with NAU

A.3  Positive results of Lipman-Hearne study

A.4  Complete experience campus

A.5  Cost of entry

A.6  Market demand survey

A.7  Realistic timeline

A.8  Lipman-Hearne survey instrument and study

A.9  The state of higher education in Mohave County or lack thereof

PART B: Business Plan and Related Research

B.1  Focus of the business plan and areas of research including various surveys, case studies,

Internet reviews, etc.

B.2  Ethics of marketing and marketing research

B.3  Economic factors

B.4  The costs of attending California State University system campuses.

B.5  The significance of Arizona and California residents on the Lake Havasu City economy

B.6  Campus site and components

B.7  Small college models, case studies

B.8  Student living and dorms, review of research

B.9  Campus facilities and cost estimates

B.10 Campus revenue factors

B.11 Factors influencing college choice

B.12 University brand name influence on college choice

B.13 Arizona survey methodology and instrument

B.14 Mohave County and Parker student survey form

Appendix:

A.    Tables

B.     Graphics

C.     Attachments

Click Here for the Power Point summary of the business plan.
Click Here for those who can’t open a Power Point file to get a folder of jpg slides.

The preferred public university partner for the [...]]]> The nearly 3,000 member Havasu Foundation for Higher Education (HFHE) is an Arizona 501(c)3 non-profit IRS approved tax-exempt public service corporation formed in March 2004. Our primary mission and objective is to establish a comprehensive residential four-year university campus in our community, Lake Havasu City, Arizona (City).

The preferred public university partner for the Lake Havasu City project is being addressed in the business plan, now under development. Considerable information on this project, incorporation details, by-laws, news articles, land plan, etc. can be found on our Foundation website http://www.havasufoundation.com/

So, how can NAU make [...]]]> One challenge for the HFHE plan is the small but growing population of Mohave County. We believe our town and county does have the population base to support a full campus of a university operation. Interestingly, Lake Havasu City now has a larger and faster growing population than Flagstaff.

So, how can NAU make a go of it in Flagstaff? A campus that now has a billion dollar-a-year impact on the Flagstaff and Coconino County economy? The simple answer is non-resident students. NAU in Flagstaff draws 97% of its students from all over Arizona and neighboring states. Fortunately, Arizona is a part of a western states compact http://www.wiche.edu/ that allows students to attend colleges in our region at affordable near in-state tuition rates for some programs.

Given Lake Havasu City’s traditional draw from the Southern California area for tourists, home-buyers, and new business as well as being a major destination for spring-breakers from all over our nation, our town is uniquely positioned to draw on its historical economic and tourism market bases for non-resident (adjoining states and Arizona at a distance) university students.

There’s no rocket science to this basic and simple strategy. It works for our town. And, of course, the lake with its 450 miles of coastline is the big draw as is the climate, clean air, low crime, good government, and friendly residents. For all of Arizona, nearly 58% of overnight non-resident visitors come from California. For Lake Havasu City, that proportion is much higher.

Each year, more than 2.5 million visitors visit the London Bridge alone. Total numbers of visitors citywide are considerably higher. In particular, our town is a popular Spring Break and summer weekend vacation destination among the traditional college-age 18-24 groups. Tourism statistics estimate 20,000 visitors, most from out of state, enjoy Lake Havasu City’s re-creational amenities during the six-week Spring Break period from March to mid-April. The number has been as high as 45,000 college-age visitors in some years.

Lake Havasu City’s position as a college-age recreation location will benefit the Arizona university system by bringing in dollars. In 2004 when HFHE was founded, while Arizona residents pay $3,983 in tuition as fulltime students, the dollars garnered from out-of-state tuition are $12,503 (AY 2004-05). In simple terms, if we convert only 10% of our out of state Spring Break visitors to full-time college students, we will generate a minimum of $25 million dollars in “new money” annually for the Arizona university system. Assuming a conservative 2% increase in out-of-state enrollment and a 1% increase in tuition each year, over a 5-year period tuition revenue at Havasu from this segment alone would approach $105 million.

Our initial goal of a 500 FTE enrollment with entering freshmen classes of 156 FTE students simply reflects the prudence of starting [...]]]> Our vision projects a campus of 4,000 to 6,000 students within 15 to 20 years of initial operation, growing to the size of the NAU Flagstaff campus within 35 to 40 years.

Our initial goal of a 500 FTE enrollment with entering freshmen classes of 156 FTE students simply reflects the prudence of starting small and managing for maximum educational quality and financial stability. The annual revenue budget could be about $9 million. Or, as high as $12 million with the level of general fund sharing UA provides to the Sierra Vista branch campus.

The Foundation’s vision includes one of a quality public university partner with a brand name (ASU, NAU or UA) that will readily attract quality students. Thus, the Foundation keeps the door open to several options for a university partner and is prepared to negotiate the level of “withholding” by the parent university of Lake Havasu campus earned general fund revenues.

The Foundation’s vision includes an appropriate mix of resident and non-resident students similar to that ASU has achieved where about 28% of its total student body and 35% of entering freshmen are non-residents.

The Lipman-Hearne study included recommendations for a “complete campus experience.”

“The new campus in Lake Havasu is focused on the complete college experience for its students. Promoting close guidance and rigorous academic programs in a small university setting, students can complement their multidisciplinary education with outdoor activities such as boating, fishing, hiking, biking, and golfing.”

It was the complete experience campus with “multidisciplinary education” (interdisciplinary studies in NAU and ASU terminology) on the Greater Los Angeles sampled group, that drew the 59% extremely appealing/very appealing responses or 94% if one adds “somewhat appealing” to the mix.  Or, 93% for the Lake Havasu area. As marketing research goes, that is a significant number of favorable responses when projected to the total population of potential students.

(See land map on our website. See also, the PowerPoint presentation on land.)

All of these elements, taken together, present [...]]]> Our Foundation with the assistance of the City has identified a closed school site at the corner of Acoma and Swanson. HFHE has played a key role in identifying and helping secure this property.

(See land map on our website. See also, the PowerPoint presentation on land.)

All of these elements, taken together, present a huge economic potential for our city and county. This campus will be about a half mile from the London Bridge and about two blocks from the physical center of the up-town area. With awesome vistas, this parcel may be one of the most valuable and desirable pieces of lakeside real estate in western Arizona.

Moreover, the partnership already includes individuals [...]]]> Several factors go into estimating the cost of the master plan. One might look to similar projects in our area such as SARA Park to get a rough idea of the work that goes into master planning. Much of the master planning work can be done by staff.

Moreover, the partnership already includes individuals with the expertise to do some of that work. First of all, a public university partner would bring a significant intellectual capital to the project. The state’s university business and geography departments have worked with government and private developers around the state on land use plans and ecological and archeological impact studies. Similarly, the City, Arizona State University, and the school district have in-house expertise that they can bring to the project. In addition, members of the Havasu Foundation have volunteered engineering and architectural assistance to master planning the campus and the larger project.