Additional Reasons for the Collegiate Housing and Infrastructure Act

• Making College More Affordable Means Keeping Student Housing Costs Under Control.
  The high cost of college is a threat to educational equality and American competitiveness.  A quirk in the tax laws allows colleges and universities to use charitable contributions to build and maintain student housing while preventing other not-for-profit student housing entities from doing the same thing.
  Now is the Time to Provide Equitable Tax Treatment for All Not-For-Profit Student Housing.  There is no sound policy reason for distinguishing between charitable contributions made to colleges and universities for infrastructure improvements and gifts made to other not-for-profit entities such as fraternities and sororities for the benefit of similarly situated students.  The Collegiate Housing and Infrastructure Act of 2009 (H.R. 1547/S. 781) (CHIA) erases this disparity, allowing tax deductible contributions to not-for-profit student housing entities such as fraternity and sorority foundations to be used for the same purposes that a college or university could use such contributions.  In the 110th Congress, CHIA secured 210 sponsors in the house and 40 sponsors in the Senate.
• One Out of Every Eight College Students Lives in Greek Housing. 
  The housing shortage would be even worse without fraternities and sororities, who are the nation’s largest not-for-profit student landlords.  Fraternities and sororities provide housing for over 250,000 students each year at no cost to the host institution.  This $3 billion dollar segment of the not-for-profit housing industry needs CHIA to become law so it can fund safety and structural improvements.  Passing CHIA will help give more students access to safe and affordable not-for-profit housing, which is usually less expensive than university residence halls and off-campus housing.
• We Must Improve Collegiate Housing Safety, Capacity and Energy Efficiency. 
  Life safety upgrades are the top challenge facing fraternal housing.  Only half of our housing has fire sprinklers so our smaller and older living spaces have twice the injury rate of other campus fires and significantly higher rates of property losses.  80% of fatalities in student housing fires since 2000 have occurred in off-campus housing such as fraternities and sororities.  Installing automatic sprinkler systems saves lives - there has never been a fire-related fatality in fraternal housing that has sprinklers.  Given the age of our housing, there is a need to install modern heating, cooling and electrical systems that are more energy efficient and environmentally friendly.  
• Current Tax Laws Hinder Not-for-Profit Housing Access to Capital for Safety Upgrades.
  College towns such as Ames (IA), State College(PA), and Columbia (MO) are just some of the cities across the country that have passed ordinances requiring not-for-profit student housing to close if they don’t retrofit fire sprinklers by a specific date.  Fraternity housing can be up to 100 years old so retrofitting can cost as much as $200,000. These costs cannot be passed along to current student tenants and the organizations often cannot raise the needed money to retrofit because the contributions are not tax-deductible.  If CHIA becomes law, these organizations can raise the funds needed to make their housing safer and better for future generations of students.
• CHIA will provide incentive for the generation of funding for capital and safety upgrades through infrastructure improvements and new construction.
  Over $1 billion in capital projects have been identified by Greek organizations at campuses across the country. Private funds will create and maintain jobs for local plumbers, roofers, carpenters, electricians, contractors and other individuals working in the suffering construction industry.

Passing the Collegiate House and Infrastructure Act (CHIA) would

• Make College more affordable with a minimal cost to taxpayers by offering a less expensive housing alternative.  The Committee on Joint Taxation scored the cost of CHIA at $148 million over ten years in 2009.
• Encourage new charitable contributions to improve current collegiate housing, thereby preserving and upgrading existing housing capacity and helping construct the new housing needed to accommodate growing student populations.
• Result in safer student housing by enabling fraternities and sororities to fund the installation of modern life safety equipment such as fire sprinklers, smoke detectors, and alarm systems.
• Create and maintain jobs related to capital construction and improvements.

Frequently Asked Questions and Answers

1.  What does the Act do?

• The text of the bill simply states that a 501(c)(3) organization will not lose its (c)(3) tax-exempt status solely because it chooses to make housing and infrastructure grants to (501(c)(2) or 501(c)(7) organizations, which should include all existing house corporations for fraternal housing that provide not-for-profit housing to college students.   The grant may be used for any purpose that a grant made to build a dormitory at a university could be used for, with the exception of recreational/physical fitness equipment.
• Under the current tax code, colleges and universities may expend tax-deductible charitable contributions for the building, improvement or alteration of student facilities including dormitories, dining halls, study areas, libraries, computers, laundry facilities, physical fitness facilities, and social or recreational areas.
• Conversely, fraternity and sorority educational foundations are allowed to expend tax-deductible charitable contributions for the benefit of college students only if the grant is of a purely educational nature, such as libraries, scholarships, leadership programming, computer wiring, and study facilities.
• The Collegiate Housing and Infrastructure Act eliminates the distinction between the types of student facilities that may be provided by a tax-exempt college and those that may be provided by another tax-exempt charitable or educational organization to a collegiate organization for the benefit of individuals who are full-time college students.  It allows fraternal education foundations to have equivalent economic rights as universities to fund collegiate housing for similarly situated students.
• Fraternal educational foundations (501(c)(3) organizations) would be able to make grants to the not-for-profit house corporations of their respective undergraduate chapters (501(c)(2) or (c)(7) organizations) for a larger array of purposes including bricks and mortar infrastructure and life safety improvements to chapter housing.
• Note: Passage of the Act will benefit existing 501(c)(3) organizations with a track record of providing educational grants.  The Act’s passage will not allow organizations to start or operate 501(c)(3) entities solely for the purpose of accepting tax-deductible charitable contributions to be used to make housing grants.  The net effect is that the primary beneficiary of this legislation in the fraternity world will be national educational foundations with a track record of making educational grants; local foundations of chapters will likely have to show a similar, long-term track record of past educational grants in order to begin using future funds for housing purposes. 
• Note:  Students will not ever control any of the funds impacted by CHIA.
• The relationship between a host college/university and Greek housing varies from school to school but generally fits one or more of the following three models:
  • College-Owned Facility on Campus (28%) – The college or university owns and maintains the housing occupied by Greek students.  In that case, the college would be completely responsible for paying for and installing life-safety improvements to the Greek housing.
  • Greek-Owned Facility (65%) – The Greek organizations own and maintain residences on campus and residences outside the established campus boundaries.  While the college has rights of entry to on-campus facilities for a number of purposes, including fire safety inspections, the college has no direct obligation to fund life-safety improvements for its students living in those homes.  The college has no rights of entry off campus and has no direct obligation to fund life-safety improvements for its students living in those homes.
  • Privately-Owned Facility Off-Campus (7%) - Greeks rent or lease a private, off-campus facility operated by a for-profit landlord.  The college has no rights of entry and the private landlord is completely responsible for funding life-safety improvements to the facility.

2.  Why is the Act necessary?

• There is no sound policy reason for distinguishing between gifts made to colleges and universities for infrastructure improvements and gifts made to fraternities and sororities for the same purpose to benefit similarly situated students. 
• Not only does it “Make College More Affordable” but private funds will be used to address the college student housing shortage as opposed to scarce state funding.  Encouraging charitable giving for housing improvements by fraternal organizations relieves the burden of doing so on financially strapped colleges and universities.  Cash-strapped states cannot provide sufficient housing improvements to accommodate the rapid increase in post-secondary students.  If colleges are left to address this housing shortage, the cost will be passed on to the student and will contribute to the ever-increasing cost of college.  This Act will help rein in cost, while offering a less expensive housing alternative to on-campus living.
• Campuses are now seeing increased demand by upperclassmen to move back into recognized campus housing (including Greek housing) due to high costs of private, for profit housing, rising energy costs and parental/student issues with paying for school.
• Fraternities and sororities are the largest not-for-profit student landlords in the United States, operating over $3 billion of housing for more than 250,000 students at no cost to the American taxpayer, but their non-profit status makes it virtually impossible to otherwise raise the funding needed for housing infrastructure and life safety equipment improvements. Our housing is growing old and needs critical infrastructure improvements to house future generations of students.
• The Act will encourage private investment in the improvement of fraternity and sorority infrastructure through tax parity.  Improvements will include the construction of new houses, and improvements to existing houses, including the installation of fire safety and other life-saving equipment.

3.  Is this change in the tax code creating preferential treatment for fraternities, sororities, or other organizations?

• The Act provides tax parity for all grants made to non-profit entities for the benefit of college students.  This legislative change would be the final step in leveling the playing field for charitable giving to all organizations that provide non-profit housing, dining, and educational facilities that benefit college students.
• Other campus organizations, including some religiously affiliated and traditionally minority organizations, will be able to use this change in the law to fund their own expansion of grants for the benefit of their student members. 
• What the Act really does is eliminate needless discrimination that favors one set of students living in non-profit collegiate housing (owned by the host institutions) over similarly situated students living in other non-profit collegiate housing (such as fraternity and sorority housing).

4.  Why help fraternities and sororities?

• As the nation’s largest not-for-profit student landlord (other than the host institutions themselves), there is a need to continue serving the 250,000 students who currently live in the more than $3 billion in housing we own and operate. 
• Collegiate housing is a big factor in the costs students face in financing their education.  Greek housing is a less expensive alternative to on-campus university residence halls.  Aiding fraternities and sororities helps achieve the current Congressional objective of making college more affordable.
• Much of this housing is significantly older than the equivalent housing provided by the host institution or the private housing market off-campus.
• The existing tax code provides universities with the ability to privately raise the capital needed to improve their housing without passing along the bulk of the costs to the student residents.  The private, for-profit housing market charges rates sufficient to cover the cost of infrastructure improvements over time.  Unfortunately, the combination of a tax code that arbitrarily discriminates against not-for-profit housing owned by entities other than the host institution and the inability as not-for-profit entities to charge market prices, leaves fraternity and sorority housing in a state of decline that must be addressed.
• Raising funds under the existing tax laws is doubly difficult, because fraternities are already forced to increase rent revenues simply to keep pace with an unprecedented rise in property insurance costs.  There are only a handful of insurance companies that even provide coverage for not-for-profit student housing such as fraternities and sororities, and in the last few years those companies have raised fraternal housing property insurance premiums.  This incredible increase stems in large part to the lack of modern life-safety equipment and the declining condition of housing facilities due to lack of funding for capital maintenance and improvements.
• Passing this Act would make a long-term difference in the insurance market available to not-for-profit student landlords, as insurance companies typically reduce property insurance premiums 30% upon installation of fire sprinklers in these facilities. 
• Approximately 39% of Greek housing facilities are protected by a sprinkler system. 
• Much like the federal student loan program, the primary beneficiaries of this public policy choice are students, in this case students living in not-for-profit housing that lack adequate life safety technology or needs infrastructure improvements. 
• Fraternities and sororities will benefit because the life-safety improvements will make their aging housing safer and more competitive with newer housing offered by the institution and private landlords.
• Helping to spur private charitable giving to be used for life-safety and housing infrastructure improvements is a cost-effective way for the federal government to protect the multi-billion investment it already has made in each generation of college students.
• This change in the tax code will generate American jobs in the construction industry as fraternity housing undergoes significant renovations in the coming years.  Jobs will also be created in several manufacturing industries, most notably at companies that make life safety equipment such as fire sprinklers.

5.  Are fraternities and sororities the only beneficiaries?

• Fraternities and sororities are the largest beneficiary as the nation’s largest not-for-profit student landlord.
• However, there are other organizations that provide not-for-profit student housing who would benefit from the passage of the Collegiate Housing and Infrastructure Act.
  • Hillel
  • Newman Association
  • Muslim Student Association
  • Baptist Student Association
  • Any existing fraternity-similar group, like the Evans Scholars, or local co-ops that might be organized as C-3/C-7 entities will benefit from the passage of the Act.
• The construction industry will benefit from CHIA.  The bill’s passage will generate American jobs in the construction industry as fraternity housing undergoes significant renovations in the coming years.  Jobs will also be created in several manufacturing industries, most notably at American companies that make life safety equipment such as fire sprinklers.

6. What will fraternities and sororities do if the Act passes?

• If the Act becomes law, the first priority of fraternities and sororities will be to raise the funding needed to make critical life safety improvements to their aging housing stocks – only 39% of our housing has fire sprinklers.  Fraternity and sorority housing averages almost three fires a week.  While those fires represent only 10% of the on-campus residential fires each year, the average fraternity and sorority house fire incurs five times the damage done in an average residence hall fire and the injury rate for fraternity house fires is twice as high as other campus fires.
• The second priority if the Act passes will be to secure the private funds needed to make capital improvements to fraternal housing, in order to modernize facilities and provide competitive housing for the foreseeable future.
• Finally, over the long-term, the Act’s passage will provide incentive for raising the private funding needed to build new fraternal housing, stimulating an increase in the housing resources available to college students in the future.  College enrollment is spiking - 2011 is expected to be 15% higher than what it was in 1999.

7.  If there are no college campuses in my congressional district that offer not-for-profit student housing, why is this bill important for my constituents?

• Even if there are no colleges or universities in your district or none that offer not-for-profit student housing, there are still students from your district attending universities where this bill would make a positive impact.  This law would make college more affordable and provide safer, less expensive housing options for those students. 

8.  What is the current status of the Collegiate Housing and Infrastructure Act and how much does it cost (“What’s its score?”)?

• The language of the stand alone bill was part of the House version of the Charitable Giving Act of 2003, which passed in a non-controversial bipartisan 408-13 vote in September 2003.  Due to other issues, the larger bill never passed the Senate in 2003. 
• The bill has not yet been scored in the 111th Congress, but we expect the cost to be roughly the same to the score from last Congress.  In 2007, scoring for the bill was $148 million over 10 years, $75 million over 5 years, or approximately $14.8 million per year. 
• By comparison, recent construction of a single dorm at schools nationwide has cost $1M to $73M to house 120 to 850 students.
  • Average New Residence Hall Built in 2006-07 - $21.6 million for 350 students
  • Average New Residence Hall Built in 200-08 - $11 million for 204 students
  • Average New Residence Hall Built in 2009 - $8.5 million for 242 students 
  • Indiana University of Pennsylvania - $270 million on nine residence halls for 3,000 students
  • University of Georgia - $37 million for a 500-bed dorm
  • University of Texas - $50 million for 574 students
  • University of Hawaii - $71 million for 800 students
  • Missouri-St. Louis - $24 million for 430 students
  • University of Illinois at Springfield - $15.8 million for 200 students
  • Purdue University – $41.5 million for 365 students
  • University of Wisconsin-Whitewater - $33.3 million for 450 students
• Note that the money being spent on residence halls by universities has declined sharply in the last three years due to the broader economic crisis.
• It is cheaper to pass CHIA ($14.8 million a year) than it would be to build the average 350-person residence hall ($21.6 million).  The entire 10-year cost of CHIA ($148 million) is barely half the cost of the new residence hall complex at Indiana University of Pennsylvania ($270 million for 3,000 beds).

9.  How much do these related educational foundations already raise in charitable contributions and how will that giving be impacted by passage of the Act?

• The approximately 100 educational foundations that support national collegiate fraternities and sororities are extremely small players in the higher education charitable giving world, with annual charitable contributions ranging from $3,000 to $6.4 million.
• The total sum of giving to educational foundations that support national collegiate fraternities and sororities in an average year is approximately $81 million.
  • Approximately $49 million raised by NIC Educational Foundations in 2006  
  • Approximately $32 million raised by NPC Educational Foundations in 2006 
• Fraternity Foundations are dwarfed by charitable contributions to higher education institutions, which topped $28 billion, a 9.4 % increase from the year before. 
• The combined assets of all 100 national fraternity and sorority foundations are approximately $504 million.  The Greek world’s combined foundation assets are roughly equal to ten months of fundraising at Yale University ($608 million in FY08).
• Therefore, giving to educational foundations that support national collegiate fraternities and sororities is an afterthought in the larger pool of giving to higher education institutions.
• The asset base and endowment for the universe of educational foundations that support national collegiate fraternities and sororities is similarly small.  The largest asset bases and endowments in these groups are in the $25 million range, but the average for the 100 foundations is more in the $5-6 million range.
• By comparison, many top fundraising higher education institutions now have multi-billion dollar endowments, and it is increasingly common for higher education institutions to have endowments that run well into nine figures.

10.  Why can’t fraternities and sororities simply use their membership dues and rents to pay for life-safety improvements in their housing?

• To remain competitive in collegiate housing, Greeks often must charge less than comparable campus housing or private landlords would charge for comparable facilities and amenities.  This leaves little money for capital improvements.
• Unlike colleges and universities who often have the resources to simply replace old dormitories with new facilities, Greeks lack the financial ability to build new structures and also lack meaningful alternatives to upgrade their aging housing stock.
• Private landlords have little problem tapping capital for infrastructure improvements, and colleges/universities can rely on tax-deductible contributions to fund all manners of capital improvements in their housing.  Meanwhile, Greek housing’s unique status makes it difficult to secure traditional bank loans and the existing tax code prevents deductible contributions from being used for life-safety or infrastructure improvements in Greek housing.
• Even at campuses where the college owns the Greek housing, that housing is often the last to receive infrastructure upgrades such as life-safety improvements.
• Capital improvements to existing housing are one of the easiest targets when colleges begin to cut their budgets.  The increasing red ink in many state budgets means there will be little, if any, state funding for critical life-safety improvements.

11.  What are the public benefits of fraternity and sorority housing?

• Both public and private colleges and universities benefit from the presence of Greek housing.
• Greeks operate housing for more than 250,000 students at no cost to the host schools or the American taxpayers.  Greeks own and manage more than $3 billion in housing stock on college campuses in the United States, but the replacement value of this housing is immeasurable.
• Most public universities and many private universities rely on Greek housing to support a significant percentage of the school’s student population, as evidenced by the fact that we are the nation’s largest not-for-profit landlord outside the schools themselves. 
• Most colleges/universities are not equipped to handle the increased residential load caused by the deterioration of Greek housing units, especially with the current spike in enrollment.