#1Tasmanian Audit Office University of Tasmania's management of student accommodation Report of the Auditor-General No.2 of 2019-20#2Today's presentation • Objective and scope of the audit • Audit approach • Auditor-General's conclusion • Major themes of the audit including Auditor-General's recommendations: o Does the University have a strategic approach to student accommodation? o Does the accommodation meet student expectations? o Are student accommodation facilities effectively managed? o Is the financial management of student accommodation effective? Tasmanian Audit Office 1#3Objective and scope of the audit Objective: To express an opinion on the effectiveness of the University of Tasmania's. (the University) management of student accommodation. Scope: The audit covered accommodation facilities owned by the University The audit covered the period commencing from January 2012 The audit scope did not include: ● . . . Accommodation not owned by the University Accommodation properties managed by the College of Health and Medicine Residential properties formerly owned by the University Student safety and security outside of student accommodation Tasmanian Audit Office 2#4Auditor-General conclusion It is my conclusion that the management of student accommodation by the University as measured against the audit criteria was, in all material respects, performed effectively Tasmanian Audit Office 3#5Tasmanian Audit Office 1. Introduction 4#6Students on-campus and bed numbers 2012 to 2019 20 000 2 731 2 678 2 828 3 641 15 000 1 466 1 432 3 861 1 265 5 128 5 863 6 535 1 068 1 152 1 044 1 057 10 000 1 109 13 605 13 776 13 598 12 854 11 621 10 669 5 000 9 958 9 582 Tasmanian Audit Office 1816 1 955 2 139 1 030 1 030 1 210 1 250 1 370 2012 2013 2014 2015 2016 2017 Tasmanian Interstate International 2018 2019 Bed numbers Source: TAO, University LO#7Tasmanian Audit Office 2. Does the University have a strategic approach to student accommodation? CO 6#8Timeline of University strategies and key events. Open to Talent: Strategic Plan 2012- onwards Student Accommodation Strategy 2009-2011 Student Residential Accommodation Strategic Plan 2012-2015 MOU signed with HCC (Sep) University pursues NRAS funding for 770 studio- apartments (Dec) Approval to change site and delivery date of NRAS apartments to Hobart, Inveresk, Newnham and West Park (Feb) West Park Apartments opened (Feb) Decision to build PBSA at Melville Street, Inveresk, Newnham and West Park (May) Newnham Apartments opened (Feb) UTAS Strategic Plan 2019-2024 released (Jul) International Strategy 2016-2020 UTAS signs MOU with BCC (Feb) Inveresk Apartments opened (Feb) Hobart Apartments opened (Feb) Purchase of Melville Street and Elizabeth Street sites (Feb) Purchase of MidCity Hotel (May) Fountainside accommodation opens (Feb) UTAS signs MOU with LCC (May) Impact Statement 2016- 2017 released (Jun) UTAS signs second three-year MOU with HCC (Oct) PBSA MidCity Agreement accommodation opens (Sep) (Jul) Purchase of K&D site (Apr) Direction Statement released (Nov) Purchase of Red Cross site (Dec) Purchase of Fountainside Hotel (Dec) 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Tasmanian Audit Office Source: University, TAO 7#9Overarching student accommodation strategy • While no overarching strategy for student accommodation, strong alignment with other strategies • 2016: a strategic capital management framework ○ Opportunity to monetise student accommodation facilities ○ September 2017 Spark Living Consortium • Strategic Plan 2019-2024 - double student accommodation • Overarching student accommodation strategy allows better communications with stakeholders Tasmanian Audit Office 8#10Student demand forecasts • 2009 - University recognised need for more student accommodation • 2016 - Urbis engaged to assess overall accommodation demand • 2017 - Urbis undertook an assessment of accommodation demand in Hobart • Urbis concluded there was a excess demand Tasmanian Audit Office 6#11Hobart historical residential vacancy rates Vacancy Rate (%) Tasmanian Audit Office 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Hobart CBD Sandy Bay ⚫Hobart 2.7% 1.4% 0.8% 0.0% Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14 Jul 14 Jan 15 Jul 15 Jan 16 Jun 16 Source: Urbis 10#12Total accomodation demand Projected student accommodation supply gap in Hobart using the propensity approach 1400 1200 1000 800 600 86 183 217 261 291 319 346 373 401 141 978 944 944 944 932 932 932 932 932 932 400 200 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 ■Supply Gap Tasmanian Audit Office Source: Urbis 11#13International on-campus enrolments by location from 2012 to 2019 6000 5000 4000 3000 2000 1885 1000 826 0 2012 2013 2014 2015 2016 2017 2018 Hobart Launceston Tasmanian Audit Office 2019 5390 1140 Source: University 12#14University adequately engaged with stakeholders • No overarching engagement plan • Incorporated stakeholder input and engagement, e.g. councils • University entered into strategic partnerships and MOUs: o Tasmanian Government o Councils o TasTAFE Tasmanian Audit Office 13#15Does the University have a strategic approach to student accommodation? Recommendations: • The University continues with the development and implementation of an overarching student accommodation strategy that would better articulate the linkages from supporting strategies in governing student accommodation • The University develop and implement an agile engagement and communication framework to improve the University's engagement with internal and external stakeholders regarding student accommodation Tasmanian Audit Office 14#16Tasmanian Audit Office 3. Does the accommodation meet student expectations? 15#17Does the accommodation meet student expectations? • Rents charged by the University were fair and reasonable o Accommodation GST compliant, therefore NRAS compliant ○ REIT data • Basis for allocating accommodation to students was fair and reasonable • Performance and monitoring of soft asset services were appropriate Tasmanian Audit Office 16#18Personal safety and security relating to student accommodation Personal safety and security relating to student accommodation was well managed: Physical security: electronic and patrols. • University behavioural policy • August 2017: Human Rights Commission report ⚫ June 2018: Rosenthal and Banks report • June 2019: Nous Report o Operational plan formulated in response Tasmanian Audit Office 17#19Student satisfaction levels 2017 2018 Total students accommodated Total respondents to survey 1 734 1842 468 455 Respondents leaving 120 108 45 32 Leavers who said accommodation was too expensive (37.5%) (29.6%) Respondents who do not feel included to some extent 170 168 (36.3%) (36.9%) Respondent's maintenance score 58/100 60/100 Tasmanian Audit Office Source: University 18#20Student satisfaction levels • Student surveys highlights dissatisfaction with accommodation • The University: o Should seek to better understand the reasons for the lower levels of satisfaction o Acknowledges it needs to improve its engagement with students - improvements in the 2019 survey o Has also expanded the leaders' network to encourage better engagement Tasmanian Audit Office 19#21Does the accommodation meet student expectations? Recommendation: • The University review and improve engagement with students to obtain a broader understanding of student satisfaction levels and drive improvement in the provision of student accommodation Tasmanian Audit Office 20 20#22Tasmanian Audit Office 4. Are student accommodation facilities effectively managed? 21#23Student accommodation facilities PBSA Agreement: • Christ College • John Fisher College University Apartments • Hobart Apartments Leprena (until 2022) • Kerslake Hall (until 2022) • Investigator Hall • Newnham Apartments • Inveresk Apartments West Park Apartments Tasmanian Audit Office Other facilities: Atrium Apartments • Norfolk Hall ● Fountainside MidCity Apartments • Heathfield at the 'Con' 31 Campbell (Theatre Royal) · 22#24Whole-of-lifecycle approach to asset management Disposal Concept and Planning Asset Lifecycle Creation or Acquisition ● · ● Handover Plan - provides for rehabilitation of assets Leprena and Kerslake to be withdrawn from PBSA Agreement in 2022 Inveresk campus will include new student accommodation Renewal | Rehabilitation | Replacement Tasmanian Audit Office Operation and Maintenance Source: Programmed FM 23#25The University's Strategic Asset Management Framework • Aligned with the Open to Talent Strategic Plan Methodology for managing assets on a whole-of-lifecycle basis • Not updated to reflect the PBSA Agreement • Spark Living Consortium must comply with University policies and rules • University responsible for student support and engagement Tasmanian Audit Office 24#26Student accommodation hard facilities are effectively managed • Student accommodation facilities comply with statutory requirements • All facilities have preventative maintenance annual plans Under the PBSA Agreement: Monthly and annual reporting of asset performance • PBSA Transaction Parties Co- Ordination Group Tasmanian Audit Office 25#27Student accommodation facilities are efficiently maintained Priority Level Received in 2018 Non-compliant Percentage (%) Priority A (Immediate) 19 2 10.5% Priority B (Urgent) 51 8 15.7% Priority C (Routine) 4 137 53 1.3% Source: Programmed FM • 26 of the 53 service failures for Routine requests were recorded from January to March 2018 • Only one service failure for Immediate and Urgent requests recorded from April to December 2018 Helpdesk support for students Tasmanian Audit Office 26#28Are student accommodation facilities effectively managed? Recommendation: • The University review and update the Strategic Asset Management Framework to ensure the University's change in operating model for its student accommodation facilities is reflected in the Framework, and includes the process for approving the maintenance provider's suite of asset management plans to ensure that they align and support the University's existing asset management policies and strategies. Tasmanian Audit Office 27#29Tasmanian Audit Office 5. Is the financial management of student accommodation effective? 28#30The University has a funding mechanism for new PBSAs University Council agreed to pursue strategy to monetise its student accommodation in September 2016 Spark Living Consortium selected as preferred respondent • The University received $132.6m from Spark Living Consortium in September 2017 • Other Australian universities have entered into similar transactions Tasmanian Audit Office 29 29#31The University followed robust processes for its property acquisitions • Due diligence and property valuations • Acquisitions funded from the University's investment portfolio • Expectation for commercial rate of return • Cannot comment on whether the University achieved value for money • The University was operating in a difficult private rental market: o Rental vacancy rate in Hobart at a five year low o Limited availability of suitable properties for student accommodation Tasmanian Audit Office 30 30#32The University's recent property acquisitions Property Strategic location, near existing Hobart Apartments Purchase date Rationale for purchase 40-42 Melville Street December 2017 (former Red Cross building) 44 Melville Street and 123, 139, 141-143 Elizabeth Street February 2018 MidCity Hotel May 2018 Fountainside Hotel December 2018 Kemp and Denning (K&D) April 2019 site Sufficient demand for new PBSA build, properties acquired to form PBSA2 together with 40-42 Melville Street Acquired to meet demand for University student accommodation in Hobart Acquired to meet immediate demand for student accommodation in Hobart and to alleviate concerns for students commencing in Semester 1 2019 Strategic location and opportunity to co-locate student accommodation with teaching and learning facilities Tasmanian Audit Office 31#33Reporting of financial outcomes • There is clear reporting of financial outcomes from the provision of student accommodation: o The University prepares financial reporting and reconciliations from revenue generated from PBSA o Clear reporting of activities related to provision of asset services • Rent collection is effectively managed: o StarRez computer package used by students for bookings, payments and other related student transactions o StarRez produces a number of reports ○ Student Living chase up late payments from students Tasmanian Audit Office 32#34Comments received Chancellor of the University: • Welcomed the report's conclusion that the University reacted well to changing and challenging circumstances • Accepts all four recommendations • Acknowledges there are areas for improvement: o Need to better communicate strategic approach o Understanding student satisfaction levels o Updating the SAMF to reflect change in operating model Tasmanian Audit Office 33#35Tasmanian Audit Office Thank you 34