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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and reinforces for the private sector their obligation to build cost effectively. • The project is financed using tax-exempt bonds, reducing overall project costs. • Private-sector expertise, which offers a streamlined pre-development and construction process, results in faster build time and reduced construction risk in building green. • Since the building is owned by the nonprofit and privately maintained, maintenance cost and risk is also reduced. What Type of Buildings? Projects that are best suited to the public-private partnership model are those that are revenue-generating. These include: • Student housing • Student fee-supported activity centers • Dining facilities • Intramural athletics facilities • University-operated hospitals • University laboratory and research facilities Perceptions of Public-Private Partnerships If you decide to explore the publicprivate partnership option, be prepared for questioning and perhaps even skepticism from university officials. Many people equate public-private partnerships with privatization. But as I explained earlier, when properly structured, a public-private partnership is a true partnership that provides significant benefit to the public university. There will also be concern about the fact that the building built through a public-private partnership is not actually owned by the university for the life of the bonds. Instead, it is constructed for and leased to the university by the nonprofit until the bonds are paid off. This ownership structure can make some university officials uncomfortable because they perceive that the building is out of their control. Remember, the nonprofit builds the facility, owns it, manages it, and leases it back to the university. All of this is done on behalf of the university, and with the requirement to transfer fee ownership to the university as soon as the bonds have been repaid, at no additional cost. Because the nonprofit is working on behalf of the university, it is the leading voice in design of the building and in management and operations once the building is completed. With LEED-designed buildings in particular, this ownership structure can provide significant benefits to a public university. Under the public-private partnership structure proposed above, the challenges and risks of managing a LEED facility fall to the nonprofit. This means that for the mutually agreed-upon period that the bonds are active (typically 30 years), the university does not need to worry about deferred maintenance, staff changes, maintaining compliance with LEED certification, warranties on green technologies, and other issues related to LEED building maintenance. And of course, during those 30 years, the university continues to reap the benefit from lowered energy costs and utility costs. Conclusion A properly structured public-private partnership can provide tremendous benefit to a public university looking to build green. Establishing a guaranteed maximum price and the involvement of an experienced private team reduces the risk of construction cost overruns. Maintenance and operations risk are decreased because the building is managed and maintained by an independent third party with the guidance and input from the public institution. And the energy efficiency of green building means cost savings on energy bills; a clear benefit to the university's bottom line. CPM John Finke is senior program manager of NDC HEDC Public-Private Partnerships (, with more than 35 years of experience in local government, nonprofit management, and in financing public-private partnerships. He can be reached at URINE HAS TO GO. Urine is one of the toughest stains to clean and odors to remove, especially on porous grout. When uric acid crystals are left behind, moisture will reactivate them and the smell will return. Clorox® Urine Remover eliminates odor-causing uric acid crystals and stains. You can breathe easier. Find more restroom solutions at SMART and TOUGH © 2013 Clorox Professional Products Company. NI-20369 APRIL 2013 / COLLEGE PLANNING & MANAGEMENT 53

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