Julia Kane, a rising senior at the University of Maryland College Park, was worried about the lease she had signed in February, before she knew that the COVID-19 pandemic would upend her last semester of college. It was June, and she still had not received a definitive answer as to whether she could cancel her lease and stay at home for the fall semester.
Kane had leased with South Campus Commons, one of UMD’s public-private partnership undergraduate student apartment communities. “Capstone On-Campus Management (COCM) oversees most elements of the operation, while the UMD Department of Resident Life oversees the resident life program,” according to its website.
On June 17, COCM, the private management company, sent an email to all residents living in South Campus Commons and The Courtyards, the other public-private partnership student housing community operated by COCM. In it, they told students that they would have to “review and sign a health and safety addendum” to their fall lease related to COVID-19.
But instead of the promised addendum, COCM sent all of its residents an “updated guidelines for the 2020-2021 lease term,” in which COCM states that all residents “voluntarily assume” the risk of getting infected by COVID-19, which may result in “serious illness and/or death.” Residents are also required to relocate and “may be provided alternative housing arrangements” if they are asked to self-quarantine, according to the new rules.
While students living in UMD residential halls were given the option to either sign a housing agreement addendum accepting the new risks related to COVID-19 or cancel their housing agreement without financial penalty, the only choices that students living in the public-private apartments had was to stay in the lease or to re-lease their room to another student.
Re-leasing is incredibly difficult because with 80% of classes remote, “no one wants to live here,” said Gavin Kohn, a rising senior at UMD who has a lease with The Courtyards.
“It is an addendum. If it talks like a duck and walks like a duck, you call it a duck,” said Leo Kane, Julia’s father and an attorney. “You’re changing the terms and conditions of this contract, and it is absurd to think you can call it a different name and get away with it.”
As they tried to cancel the lease, Julia and her father were bounced back and forth for several days between UMD Residential Life and COCM. Leo Kane said the university repeatedly responded with the same explanation: The apartments are not owned by UMD, and so university officials do not have authority to address lease terms or to approve lease cancellation requests.
“I was outraged,” Leo Kane said. “It is absurd to suggest that you’re not involved when in fact South Campus Commons is listed as one of the residence communities in UMD’s 2019-2020 residence halls handbook. It’s a residence hall by every means.”
Only UMD students can lease at South Campus Commons and The Courtyards and all residents must follow the university code of student conduct, according to the handbook.
“The fact that they act like they don’t have any power right now and are letting COCM take advantage of their students is cruel,” Julia Kane said. “They said the health and safety of their students are top priority but they’re treating these 3,000 students [students leased with COCM] differently from the rest.”
Tammy Spengler has two sons at UMD, a rising senior who has a lease with The Courtyards and an incoming freshman who canceled his on-campus housing agreement. “It doesn’t make any sense to me that UMD is letting some students die and other students the right to keep themselves safe,” she said.
Leo Kane told COCM management that the “rules and regulations update” sent out in mid-July is a violation of the lease because COCM is unilaterally changing the terms of the contract.
In response, COCM sent Julia a lease cancellation form on July 16, which she signed the next day.
Shortly afterwards, she publicized the legal argument she had used to get out of her lease, leading more students to email COCM, but to no avail.
“The announcement regarding updates to rules and regulations does not alter the lease agreement and was based on expectations for students who will be on campus this fall,” South Campus Commons management emailed back to residents. “The lease agreement allows for modifications to be made to the rules and regulations as needed.”
Around 15 students and parents participated in a car caravan on campus Monday, driving from The Courtyards to the Division of Administration and Finance. Students in cars, covered in signs that said “people over profit,” “#HousingHostages” and “cancel the contract,” honked during the entire route, with blinkers on.
“This is not a standard contract dispute,” Leo Kane said. “This is fraudulent activity by a company that should know better and a university that should be protecting their students.”
Who is responsible?
The terms of UMD’s public-private partnership with COCM and the Maryland Economic Development Corporation has never been so critically analyzed by students as it has been now. Who exactly has the authority to cancel student leases in this “public-private partnership”?
It depends on who you ask.
MEDCO is a state corporation that promotes economic development in the state through bonds and projects, which includes student housing projects. The agency currently owns The Courtyard and South Campus Commons.
Capstone On-Campus Management is a private managing company that MEDCO hired to manage administrative and leasing services.
Only UMD students who are approved by the Department of Resident Life can live in the two apartment complexes.
Once MEDCO-issued bonds that were used to finance student housing projects are repaid, ownership of South Campus Commons and The Courtyard will go back to the University System of Maryland (USM), according to MEDCO’s 2019 annual report.
In the spring, USM had “asked MEDCO to provide refunds for unused rents,” Robert Brennan, the executive director of MEDCO wrote in an email to Del. Marc Korman (D-Montgomery) on July 29.
“MEDCO complied with the request and was told by the System that they would work with MEDCO to assure we did not run into cash flow problems. At this time, the University has not asked MEDCO to offer cancellations or any payment assistance in the event of cash flow short falls.”
Still, the university does not recognize any responsibility over the leases.
“Students have signed contracts with a private management company, not the university,” said Hafsa Siddiqi, a spokeswoman for UMD College Park.
This suggests that all leasing decisions fall on MEDCO, where officials said they have received around 500 requests from students leased with the two apartment complexes to cancel their contracts.
“MEDCO is unable to release all students due to our obligations to bond holders, vendors and other entities, as well as not being eligible for any of the federal relief programs currently available,” Amy Velich, the associate director of bond financing in MEDCO, said in an email.
Yet students and parents strongly believe that UMD has more power to influence public-private housing contract decisions.
“When we signed these leases, we put our trust in UMD’s endorsement,” said Simin Li, a rising senior who wants to cancel her lease at South Campus Commons. “All pressure has to be on UMD.”
A short-sighted decision
Although MEDCO is looking out for the best interests of its bondholders now, the agency will be liable if a tenant dies due to coronavirus, Leo Kane said.
“The broader strategy needs to be minimizing the number of students that are around the campus,” said state Sen. James C. Rosapepe (D-Prince George’s), whose district includes College Park.
If some students are let out of their leases, it will help depopulate the area, which is healthier for everyone, Rosapepe said. “Residential universities are like cruise ships on land.”
First month’s rent for these apartments was due on Aug. 1, but per legal advice, students who want to cancel their contracts did not pay, Spengler, a parent, said.
Frostburg State University students living in Edgewood Commons, which is also owned by MEDCO, received a similar response if they are trying to get out of their leases — those decisions lie in MEDCO’s hands.
“If a student wants to make a responsible decision to stay at home and practice social distancing, we want to encourage that rather than create an incentive for an action that goes against what is good public health,” said Del. Ben Barnes (D-Prince George’s), who represents College Park.
“I think all parties are seeking a solution to this,” Barnes continued. “There is a state role and a university role in coming up with funds to hold MEDCO harmless.”
Although the University and MEDCO will lose money if they release students from their leases, “it’s about doing the right thing,” said Del. Joseline A. Peña-Melnyk (D-Anne Prince George’s), who also represents College Park. “It’s about finding a compromise and understanding that these are very trying circumstances where everyone is hurting financially.”
There are several possible outcomes that could play out.
First, the university and the state could successfully find funds that relieve MEDCO’s concerns about bondholder obligations and enables the agency to release students from their leases.
Or MEDCO does not find any money, students refuse to pay their rent and MEDCO files a deficiency appropriation in the next legislative session.
Or students can bring MEDCO to court. But until they experience some harm, it is unclear whether they have a definitive standing to sue.
“We are hoping for the best, but also preparing for the worst,” Li said. Around 100 students have obtained a lawyer together, in case they have to fight in court.
“While I do have sympathy for UMD, COCM and MEDCO, responsibility should not ultimately fall on the students,” Li said. “Everyone is struggling, but students should not be the ones who are footing this bill.”