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Towson, University of Maryland reach agreement with housing management firm after students struggle to cancel leases

After students weren’t allowed to cancel leases amid campus closures during the fall semester, Towson University and the University of Maryland, College Park have reached agreements with the Maryland Economic Development Corp. to void some student leases at privately managed on-campus residence halls in the spring.

The Maryland Economic Development Corp., or MEDCO, is a quasi-governmental agency that owns student housing on three University System of Maryland campuses.

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While those living in university-owned housing had the option of canceling their leases and receiving refunds for their housing payments, students who leased rooms in units owned by MEDCO did not.

After months of negotiations — and a lawsuit filed against MEDCO by the families that were denied lease cancellations at Towson and UMD — the colleges reached agreements releasing some students from their leases for the upcoming spring semester, and crediting rent paid in the fall by students for certain residence halls to any future lease they execute with MEDCO.

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During the fall semester, Capstone On-Campus Management, the company hired by MEDCO to manage the apartments, told 3,000 students at UMD and 1,000 students at Towson University that they were legally bound to their leases for the upcoming year, even if they did not move into their units.

Capstone also had said that any student who wanted to terminate his or her lease must, in turn, lease their room to another student.

Leonard Lucchi, an attorney representing families suing MEDCO, did not respond to an email and phone call seeking comment Thursday morning.

Under the new agreement with Towson University, MEDCO has conceded to free students who meet the following criteria from their leases:

  • Those living in Paca and Tubman houses who did not move in and have not paid or requested lease terminations will be released from their spring obligation;
  • Those who made full or partial fall payments and moved into their rooms in the fall will have payments for the full fall semester credited to their rent in a future semester should they live at a MEDCO property, according to the schools.
  • Those with leases at Millennium Hall will be released from the spring leases only if they can secure replacement tenants, according to Towson University. Those who made payments during the fall term, who did not move in during the fall semester and don’t wish to move in during the spring semester will be able to apply payments they made during that semester toward any future lease they sign with MEDCO.

Towson University also initiated a plan to “de-densify” rooms in Paca House, Tubman House and Millennium Hall, all properties managed by Capstone On-Campus Management.

Paca and Tubman houses will reduce their capacity by around 50% in order to pare the number of students to one per room and two per bathroom, said Benjamin Lowenthal, Towson’s chief fiscal officer, during a Maryland General Assembly subcommittee hearing Dec. 17.

Towson University President Kim Schatzel said that reducing the number of students grouped together in a single room was an issue of health and safety, and was the impetus for the dialogue with MEDCO.

“There are not many times when a president loses sleep — meaning me, having raised two kids and being in business for 20 years,” Schatzel said during the subcommittee meeting. “We’re used to being able to deal with challenges.”

At College Park, students who requested lease cancellations will have housing credits that can be used for future leases, said Carlo Collela, the university’s vice president for administration and finance, during the subcommittee hearing.

Calling the MEDCO agreement terms between Towson University and UMD “very consistent,” Collela said that students who made rent payments in the fall can apply those payments to future leases, and those who tried to cancel fall leases but wish to return in the spring will be able to apply their fall payments to spring leases, and have the option to sublease to another student or transfer housing credit to another tenant.

Collela said MEDCO had lost about $10 million in revenue “for letting all those students out of their leases in the spring and summer” at UMD.

Towson University will split MEDCO’s anticipated $2.3 million operating loss due to the rent refunds, the university said in a news release.

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UMD also agreed to a cost-sharing component to account for the waiver of students’ fall lease cancellations, but a spokeswoman did not say how much it expected to pay for MEDCO’s anticipated deficit.

MEDCO President Bob Brennan said during the hearing that, with the cost-sharing, “we’re going to squeak by; everybody is putting a little bit of money into the equation.”

“We are really hoping by the fall of ’21 this is well behind us and we’re going to get back to normal,” he added.

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