The University of Maine in Orono is on the hook for more than $1.5 million in financial shortfalls of a hotel on campus, a public-private partnership between the university and Radnor Property Group.
Now, the public university hopes to offset these shortfall payments by instead paying more than $1 million each year in rent to Hotel Ursa to house students there.
The Maine Monitor reviewed contracts, a study and a lease agreement provided by UMaine. A 2022 contract showed UMaine is obligated to share in the highs and the lows of the hotel, but could be responsible for increasing, maximum shortfall payments each year of its 25-year agreement.
The university pursued a hotel in part because empty, aging buildings were costing it money. However, a Monitor review of a 2020 study that looked at what to do with these buildings showed that experts suggested a private entity should take on most of the financial responsibility.
Since the hotel opened in 2024, it has failed to reach its operating income goals, meaning the university has paid the hotel a backstop for each fiscal year that it has been open so far.
A Monitor review of a new lease with the hotel, which starts on August 26, shows that the university hopes to offset these hefty backstop payments by instead renting rooms at the hotel for student housing. Student housing fees listed in the contract, however, will only cover about half of UMaine’s rent obligation.
