Orlando philanthropists offer Hillel evergreen funding model

(JTA) – Real estate developer Hank Katzen has a conviction: If you build it, they will come.

Except this is no baseball field in an Iowa cornfield. It’s a $60 million, 600,000-square-foot luxury dormitory at the nation’s second-largest college campus, the University of Central Florida.

When it opens in August, the new dorm will push the bounds of cushiness. Every room has en-suite bathrooms and flat-screen TVs. Suites have island kitchens with stone countertops, washer-dryers and walk-in closets.  Duplex units feature spiral staircases and two-story atriums.

There is a resort-style swimming pool, 24-hour fitness center, sauna and game room. The parking garage is seven stories, ensuring that no student will have to take an elevator or brave the Florida elements on the way from their cars to their dorm rooms.

But what makes Katzen’s new facility noteworthy isn’t so much the lavishness as the idea behind it: to create America’s first self-sustaining Hillel. The ground floor of the seven-story building will include a 20,000-square-foot Hillel center with operations to be be funded in large part by rental income from the 600-bed dormitory.

The Jewish philanthropists behind this unique arrangement aren’t simply giving the 15-year-old Hillel at UCF a building; they’re giving it a permanent income stream.

“This is a remarkable gesture of philanthropy—the university desperately needs the beds, and Hillel could use this funding,” said Sidney Pertnoy, a Miami businessman and philanthropist who is chairman-elect of Hillel International.

“There are some Hillels connected to some housing, but nothing even remotely resembling this model. It’s a unique cash-flow model and we’re super excited about it. We’re hoping this is a prototype for other communities.”

The unusual project is an attempt to address a perennial problem faced not just by Hillel chapters but by Jewish institutions around the world: How to create a perpetual funding source.

“There are communities around the country where a powerful donor provided an agency with a building free and clear only to find shortly thereafter that the agency was crushed by the operating costs,” said Katzen, the Jewish philanthropist spearheading the project as well as the board president of UCF’s Hillel.

“The capital crunch and the Bernie Madoff double whammy has emaciated the endowment model for many organizations,” Katzen said. “We were looking for an economic machine that would take advantage of the opportunities afforded by a large university to connect a student housing project and our Hillel.”

The new venture represents a collaboration among local Jewish philanthropists, Hillel and UCF.

What makes the project viable, the donors say, is the university’s massive student body and limited housing supply. Over the last seven years, UCF enrollment has ballooned by 50 percent, to 60,000—second only to Arizona State University. An estimated 5,000 to 6,000 UCF students are Jewish.

Alan Ginsburg, a real estate developer and Orlando philanthropist, donated about $7 million to the project, including the land, which was purchased six years ago and is now valued at $12 million.

Katzen, who was a Taco Bell franchise owner before turning to real estate full time 20 years ago, is donating his time and construction expertise.

The university’s nonprofit foundation will handle dorm logistics, including collecting rental fees. A Catholic student center similar in size to Hillel will be housed on the site rent-free for at least three years.

After debt servicing on the 35-year loan and operations costs, leftover rental income will be divided between Hillel and the university foundation along a 60-40 split. All of which should deliver about $350,000 annually to Hillel—that is if the dorm, called NorthView, is ready and fully occupied by the fall semester. Rent starts at $800 per student per month.

“Social media got word around campus that we are the place to live, and the students are really knocking at our door,” said Zan Reynolds, the executive director of real estate for the UCF Foundation.

Initial financing for the project came from Ginsburg, who wanted to do something to memorialize his son, Jeffrey, an active Hillel member at Stetson University in Florida who died in a plane crash about 10 years ago.

“If it works, there could be a demand for this type of structure on most large campuses,” Ginsburg said. “It’s a very nice way for Hillel or any faith-based organization to have a steady income and not have to rely on donors. Most donors are a pain in the ass even if you can find them today.”

Some other mixed-use Jewish dorms exist in America, but nothing on this scale. The Chabad house at Rutgers University in New Jersey has a dorm attached, but its 107-bed facility is exclusively Jewish, governed by Orthodox rules and is a money loser. The Orlando project is expected to be cash-flow positive and will be open to Jewish and non-Jewish students.

Ultimately, the success or failure of the venture will hinge not just on its financial viability but on what it does for Jewish life at the fast-growing Orlando campus.

UCF has just a handful of Jewish student groups, there are no real kosher dining options and Hillel’s Friday-night meals typically draw no more than 50 students.

That’s a lot fewer than the local Chabad house, which regularly has 100 to 200 students on Fridays, according to its executive director, Rabbi Chaim Lipskier. But the Chabad is more than three miles from UCF and also draws from two other area schools, Valencia and Rollins colleges.

UCF’s Hillel, which also serves the two other colleges, had a one-room office on the UCF campus that it had to give it up last October. Since then, the organization has been run from the dining room of its interim executive director, Sam Kauffman.

“Hillel student leaders spend a lot of time now just trying to get room reservations on campus,” Kauffman said. “Next year they’ll have dedicated space for their events and can spend more time building their relationships and Jewish campus community.”

To anchor the project, a new Hillel director has been hired: Aaron Weil, a 10-year veteran of the University of Pittsburgh Hillel. Weil says he’s excited to move from a job where he must raise 80 percent of his $1.1 million budget to one where 50 percent will be generated automatically.

As dorm rental rates rise and the building’s debt is paid off, Hillel’s income should go up, too.

“Most Hillel directors have to deal with the daily struggle to raise funds to run the programs to sustain a vibrant Jewish campus life,” Weil said. “What’s unique about the UCF Hillel model is that it removes what I call the treadmill of soft money and replaces it with predictable income. Rather than consuming your time and your energy with existential fundraising, you’re able to focus on strategic fundraising.”

Having a gleaming new Hillel center won’t hurt, either. The new facility will include a theater, a kosher cafe, an auditorium for 300, a game room, offices and plenty of conference rooms and hang-out space. The philanthropists are planning a $2.5 million capital campaign to complete the interior of the Hillel space by the fall.

During a recent hard-hat tour of the construction site, Katzen told JTA that having a new facility and a top-tier executive will enable Hillel to tap the Jewish potential at UCF: If you build it, they will come. It’s a conviction based not on hope, he says, but on years of research, five years of planning and then a year of breakneck-pace construction.

“It’s more than a ‘Field of Dreams’ voices in our heads sort of thing,” Katzen said. “We’re changing social architecture on a broad scale.”