Dear faculty and staff,
One of our top priorities over the last few years has been to find creative means of adding sufficient new facilities by the end of the decade to ease existing space constraints and support enrollment growth to 10,000 students, despite uncertain levels of state funding. Today, I want to advise you of a major step forward in our “2020 Project” planning that we believe will achieve these objectives quite effectively.
On Wednesday of this week, I will provide the UC Board of Regents with an informational update on our plans and the innovative development strategy we’re pursuing. I invite you to review the PowerPoint developed for this update .
The strategy I have selected to respond to our current and near-future space needs will channel the resources and expertise of a multi-faceted private development team into a fast-track, master-planned project that will more than double the physical capacity of our campus by 2020. I believe that this strategy will both shorten the time and costs compared with the traditional UC approach to the design and construction of buildings.
Following are the highlights of the project proposal that I will present to the regents:
Scope of the project
As currently envisioned, the 2020 Project will add nearly 1 million assignable square feet of academic, residential, recreational and student-life facilities on university-owned land adjacent to the existing campus, to the south and east. (“Assignable” square feet is a technical term for space that can be allocated directly to a dedicated use or user; the measure excludes space needed for general-purpose building operation—hallways, janitorial closets, utilities, etc.)
Buildings will be designed and built by a single development team, rather than as multiple independent projects, and will be adaptable to change. The design objective is to create a space-efficient, mixed-use, living-learning community that will serve multiple needs, encourage interaction among students, faculty and staff and stimulate new approaches to multi-disciplinary learning and research. Additionally, the design and operation of the new facilities will meet UC Merced’s sustainability standards, including our “Triple Net Zero” goal (zero net energy usage, zero landfill waste and zero net greenhouse-gas emissions).
Process and timing
The next step in the process is to select the private developer who will partner with us to deliver the 2020 Project.
Several months ago, we completed a Request for Qualifications (RFQ) exercise that generated strong submissions from six well-qualified development teams. Three of those teams have advanced to the next step, the Request for Proposals (RFP) phase, and have been meeting with campus stakeholders in recent weeks to learn more about our values, culture and space requirements.
This spring, we will begin an industry-review process, which is a standard process for eliciting feedback and input from the short-listed teams. After reviewing feedback from the short-listed teams, will issue the final RFP late in 2015. Detailed submissions are due from all three teams in early 2016. These submission will include, among other things, a master plan for the 2020 project and partial building designs.
As this activity progresses, we will continue to work closely with the UC Office of the President to refine our financial strategy and operational considerations that will be incorporated into the single development contract.
We expect these dual lines of activity to converge in spring 2016 with regental review and approval of our recommended partner and a detailed project agreement.
Construction will then begin later that year or in the first half of 2017, with phased delivery (completion) of facilities beginning in 2018.
How the model works
The private development team we select will design, build, finance, operate and maintain the entire 2020 Project. This approach, known as a “DBFOM” model, unlocks significant economies of scale, operational efficiencies and long-term pricing benefits not available in traditional procurements.
The developer will finance the project internally and with funds borrowed from private lenders. Lump-sum payments by UC Merced as certain construction goals are met (“milestone payments”) and a fixed stream of periodic payments once the buildings become available for use (“availability payments”) will compensate the partner and repay its lenders.
The DBFOM approach allows the university to maintain ownership of the land and buildings throughout the project while giving the private developer significant incentive and flexibility to meet or exceed performance requirements and schedules built into the contract. Equally important, it also allows the university to focus on our teaching, research and public-service mission while the developer handles project implementation. Finally, the contract with the developer will contain significant protections for the university in case of poor performance or default.
Once the buildings are completed, the developer will operate and maintain the buildings to UC Merced’s standards for the life of the long-term contract. This requirement will serve as added incentive to design and build quality facilities, as the developer assumes performance and reliability risks normally absorbed by the university. The developer will staff these activities in accordance with UC labor policies, including the payment of prevailing wages and other requirements outlined in a Labor Compliance Program.
The scope of the project will allow the campus to protect all currently represented positions while creating hundreds of new employment opportunities for both represented and non-represented employees. We estimate the project will generate some 10,800 construction jobs and create nearly $1.9 billion in economic value in a region still struggling with high unemployment and sluggish growth. Statewide, the totals are projected to be 12,600 construction jobs and about $2.4 billion in economic impact.
Why I have chosen this strategy
UC Merced was established during a period of economic uncertainty that rapidly deteriorated into a deep and prolonged global recession. While California has begun to rebound, demand for state funds to address pent-up needs is greater than ever. This economic reality, coupled with the steady erosion in state funding for UC capital projects, requires us to broaden our thinking beyond the approach our sister campuses relied up on during their formative years.
I believe our proposal, a form of public-private partnership, makes the most prudent use of available public dollars while tapping a deep reservoir of private capabilities well-suited to addressing our space requirements. Traditional state-financed, one-at-a-time projects simply won’t allow us to add facilities fast enough to meet the growing enrollment demand we’re experiencing and reach the 10,000-student plateau on a timely basis.
What’s next
Following my presentation to the Regents this week, I will report back to the campus community on any significant points of discussion that might affect our plans. As usual, periodic updates will be posted on the dedicated 2020 Project website.
I want to close by thanking you for your patience and support as this project moves forward. Academic focusing and workforce planning, which many of you participated in, have been key components of this effort as well. Both efforts have allowed us to better predict our faculty and staff growth trajectories and hence will help our development partner to create the building and spaces that best meet our needs. In addition, many, many people are involved in the day-to-day, very complex, and enormously time-consuming aspects of this project, mostly but not exclusively under the Vice Chancellor for Planning and Budget and the Vice Chancellor for Business and Administrative Services. Thanks to every one of you who have worked tirelessly on this effort.
Thank you in advance for your understanding and commitment to make the 2020 Project a shining example of UC Merced imagination, ingenuity and can-do attitude. Any comments or questions you may have can be directed to ucmerced2020@ucmerced.edu.
Sincerely,
Dorothy Leland
Chancellor
