College Planning & Management

APR 2013

College Planning & Management is the information resource for professionals serving the college and university market. Covering facilities, security, technology and business.

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Page 51 of 75

USING PARTNERSHIPS TO BUILD GREEN IS YOUR #1 RESTROOM PROBLEM THE SMELL OF #1? TOUGH JOBS DEMAND SMART SOLUTIONS NI-20368 52 • A pre-development agreement is entered into between the nonprofit and the public university to fund pre-development work. During pre-development, the design is developed, a guaranteed maximum price is established, and contracts and agreements are drafted. These agreements are designed to insulate the university from construction and development risk. • After pre-development is complete, the nonprofit and the public university enter in to a long-term lease. The nonprofit then issues tax exempt lease revenue bonds and construction begins. • During construction, the nonprofit works with the developer to oversee the project with significant input from the university. • After construction is complete, the nonprofit maintains ownership on behalf of the university, subject to the lease. The university makes rent payments to the nonprofit equal to the debt service on the bonds, plus actual operating costs. Management of the building is a partnership, with the university actively involved in all decisions. • The partnership is maintained for the life of the project's debt and no longer. Once the bonds have been repaid, ownership of the project transfers at no cost to the university. Because the work is completed under the ownership of the nonprofit and not by the university itself, and the debt is the debt of the nonprofit, a private development process can be utilized, avoiding the often costly public procurement model. This results in a streamlined decisionmaking process, leading to savings of both time and money. We have used this model to build more than 10 LEED facilities for various local governments and public institutions, including a LEED Platinum wet and dry laboratory, a LEED Gold medical office building, LEED Gold and Silver offices, and several LEED-rated student housing COLLEGE PLANNING & MANAGEMENT / APRIL 2013 communities. All of these projects were completed on time and within budget. All have maintained their original LEED certification. One project that particularly stands out is one in which we partnered with the University of Washington (UW) and King County to complete a university medical center, a project already underway but that was stalled by a $30M cost overrun after site excavation. The UW and King County officials were concerned about how to fi ll this budget hole, so achieving LEED status was not even on their radar. Using the public-private partnership model outlined above, we were able to restructure the project and reduce development costs from their projected $800 to $450 per sq. ft. This savings allowed the building to move forward, and the result is a LEED Goldcertified medical center that is privately maintained and operated on behalf of the University of Washington. Deferred maintenance is not an issue, as it is the private sector's contractual responsibility to maintain the building to its LEED Gold design until the bonds have been paid and ownership transfers to King County and the University of Washington. The Benefits a Public-Private Partnership To achieve a true public-private partnership, there must be a significant benefit to the public institution. Each project is unique, and each public university that embarks on a public-private partnership has its own reasons for doing so. Some of the most common benefits seen by public universities are: • The university does not take on predevelopment or development risk; this is the responsibility of the development team as part of their contractual commitment to the public institution. • A guaranteed maximum price contract (GMP). Once a price is set, the university can be confident that the building will be completed within this budget. A GMP provides predictability for the university WWW.PLANNING 4EDUCATION.COM

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