A growing off-campus empire

By Liz O'Brien

Santa Clara owns more than 80 individual properties within a half-mile radius of campus and plans to knock down houses to build new residence halls in the near future, according to university officials and property records.

A search of Santa Clara County property records by The Santa Clara found the university has purchased at least 68 properties off campus since 1996. In all, the university owns 87 off-campus properties in Santa Clara County, according to property records.

The university intends to eventually construct new residence halls south of campus near Bellomy and Market Streets, and has plans for academic or retail buildings north of campus near Franklin and Benton Streets, said Bob Warren, vice president for administration and finance.

"The conversations that we've had to date are that we'd probably build a residence hall between Market and Bellomy (Streets)," Warren said. "Our master plan across Franklin Street is probably more academic space, possibly some mixed use housing and retail."

Warren indicated that it could be a long time -- possibly five, 10 or even 15 years -- before the university's plans to expand become a reality, adding that the properties are not purchased to turn a profit. The university has been preparing to expand for the last 30 to 40 years by purchasing both commercial and residential properties from individual owners in Santa Clara County, according to county property records.

Warren said while the university plans to build new dorms, a housing expansion would not likely lead to an enrollment increase.

"It isn't that we're wanting to expand the enrollment, it's that we would want to increase the number of students in the current enrollment that would have the opportunity to live on campus," Warren said.

A significant percent of the university's real estate is residential property, including apartments and homes on streets such as Bellomy, Lafayette, Market, Alviso, Benton, Park and Franklin. Many of these properties house students, though Warren said that this is coincidental, and the university is not intentionally in the real estate business.

Some of the better-known off-campus residences owned by the university are 544 Alviso St., also known as "Brown House;" Tripoli Apartments on Alviso Street between Market and Bellomy Streets; and 671 Franklin St., known as "The Jump Off."

The university also owns 787 Franklin St., the current location of Henry's Fresh Mexican Grill.

Santa Clara's territory

The university began increasing the amount of properties it purchased outside of the boundaries of 500 El Camino Real in 1996, when it owned 17 properties within a half-mile radius of campus.

Most of the late '90s expansion occurred north of campus. In 1996, the university bought two properties on Benton Street and one on Franklin Street. In 1997, the university quadrupled that amount, purchasing 12 more properties between Franklin and Benton Streets. Several of the properties were clustered together, as the university bought four houses on Sherman Street and four properties where the current Jesuit Residence is located on Franklin Street.

By 2000, Santa Clara had purchased 27 properties north of campus in the previous five years, including 12 on Franklin Street and seven on Benton Street.

Growth was more modest south of campus, as the university bought five properties between 1996 and 1999 -- two Market Street buildings that are now offices and three Alviso Street complexes.

Things didn't slow down after 2000, as Santa Clara continued buying properties at a steady pace. On the south side of campus, the university started acquiring more student houses, as it purchased four houses on Bellomy Street, one on Alviso Street, two on Lafayette Way and two on Locust Street. Santa Clara also bought Bellarmine Hall on The Alameda.

Four more Franklin Street properties were purchased after 2000, bringing the total number the university owns on Franklin Street to 17. Santa Clara added four Benton Street properties and two properties adjacent to The Hut on The Alameda (the university does not own The Hut, however).

West of campus, the university bought six houses near the Santa Clara Public Library on Main and Lexington Streets in 2000, and one Lafayette Street building in 2006.

Most of the property purchases were houses, apartments or commercial buildings, but the university also bought several parking lots.

"It's the land, more than the houses, that we're interested in," Warren said.

University as a landlord

The university manages many of its properties through RealSource Property Management, according to Warren and RealSource property manager Chad Brittendahl. Brittendahl said that RealSource's involvement with university properties includes improvements, remodeling, general maintenance and determining rental rates and lease terms.

"We set the rent rates based upon a study of all the different property owners in the year, including the ones we don't manage," said Myron Von Raesfeld, broker and owner of RealSource.

The university is not generally involved in determining what student renters pay to live in a university-owned property, Warren said, but the university does sometimes offer a reduced rate to faculty living in university-owned homes in the area as an incentive for working for the university. Both Warren and Von Raesfeld maintained that rental rates for university-owned properties are comparable to most other rates of properties in the area.

Von Raesfeld said that though there are no leasing terms specific to the university, leases for all properties rented by students -- regardless of the owner -- include some extended restrictions against activities, including excessive partying, parking cars on lawns and having couches on the porch.

A violation of the lease or citation from the police usually results in fines from RealSource. Three or more major offenses will usually prompt eviction, Von Raesfeld said. He also said that in addition to notifying the property manager, the Santa Clara police will sometimes alert the university of citations or fines.

According to Associate Dean for Student Life Matthew Duncan, disciplinary action by the university is not affected by a student's residence off campus, even if the university owns the residence.

"If it's determined through the judicial process that there's a violation of the student conduct code, then they're held accountable just like any other student would be," Duncan said, adding that the sanctions in the student handbook already give the university legal authority to discipline students for certain off-campus behaviors.

Senior Ryan Romanchuk, a Brown House resident, said that he and his housemates have never been subject to university disciplinary action, even though their house has received two citations from Santa Clara police in the last year and a half.

So far, there have not been any issues concerning liability that have made their way back to the university, at least in the last year or so, according to Sam Florio, group risk manager for the university.

Florio also said that the university's accountability for activity off campus is essentially the same as its accountability for on-campus behavior, even though on-campus activity is much more closely monitored. As the university's involvement in student housing is a byproduct of gaining more real estate, there are no specific terms differentiating their liability from other owners in the area.

Real estate ventures

In addition to receiving property as gifts, the university acquires off-campus real estate either through actively pursuing houses on the market or accepting an offer from a local resident seeking to sell, according to Warren.

"The real advantage that we typically have over most buyers in that circumstance is that we can close for cash, usually quickly, so I think people view us as a desirable buyer," Warren said.

Funding for property purchases comes from the university's endowment fund, Warren said, which is comprised of gifts to the university. The endowment fund currently contains about $700 million and is largely investments. And while university-owned properties are currently treated as investments, their ultimate fate is to become a part of the campus itself.

One way the university acquires property close to campus is by initially purchasing properties farther away, holding on to the property to later trade with owners closer to the university, Warren said.

While Warren said the strategy is sometimes effective, other times the university ends up sitting on property in a less desirable location for years at a time. With a package of homes they purchased across the street from Lafayette, for example, the university bought them with the intention of trading, but they have yet to sell them.

It's too early to know if the university plans to become a four-year residential college, said Warren. However, it is the university's preference to have as many students as possible living in residence halls, he said.

"We prefer to have all of our student housing that we own right here on the campus," Warren said, "but it's going to take building some more residence halls to accomplish that."

Jeremy Herb contributed to this report. Contact Liz O'Brien at (408) 554-4546 or eobrien@scu.edu.