Builders are tapping into tax credits and taking advantage of a growing student population to develop a new model for student housing near campus. Beacon Properties broke ground on an estimated $10 million project Wednesday.
By August 2014, developers said they will be welcoming students into a new Beacon Suites. It is the third new project near Missouri State University in less than three years.
"Beacon Suites will have one-, two-, three-, and four-bedroom suites, but the suites are set up to where they each have their own private bedroom and private bathroom," said Tim Roth, one of the developers.
The tear-down and buildup process started with Beacon Commons in 2011, followed by Beacon Park in 2012, and now Beacon Suites. Each time, the projects have doubled in size.
"We rent by the bedroom. Each student gets their bedroom, and they pay the rent per bedroom," Roth said.
It costs more to live in the new Beacon properties than it does for some apartment complexes farther away from campus. However, paying by the bedroom, rather than by the unit, is an idea that developers say appeals to a lot of parents.
"If they are in a three- to four-bedroom house, and two of people skip out, the two that remain have to pay the entire rent," Roth said.
So far, developers say, the business model is working. Beacon Properties are 100 percent full, and tax breaks from the City of Springfield help with the cash flow.
"This area's determined as blighted, and so, because of blight, and because we're redeveloping and removing that blight, we are receiving a 10-year tax abatement on the improvements," Roth said.
The conditions and ages of an area's buildings are what determines whether an area meets the legal definition of blight that triggers the tax breaks for developers. They get to pay property taxes for 10 years based on the values of the properties before the improvements.
Costs for campus housing are comparable to the new apartments. In some cases, campus fees are a little higher, but those fees typically include both room and board (food).
There are 4,000 beds on campus for the 22,000 students enrolled. Gary Stewart, the director of campus housing for Missouri State University, said the university does not see the new apartments as direct competition.