University of California, Merced undertakes major expansion with public-private partnership.
The University of California, Merced named Plenary Properties Merced (PPM) the winning bidder for its next major phase of campus development — a $1.34 billion, four-year project that will nearly double the physical capacity of the campus by 2020, allowing it to grow to 10,000 students shortly thereafter.
“We are impressed by the creativity, efficiency, and aesthetic qualities evident throughout the winning proposal,” UC Merced Chancellor Dorothy Leland said. “Plenary Properties Merced has produced a compact, environmentally sensitive design that blends beautifully with our existing campus, facilitates our multi-disciplinary teaching and research methods, and provides flexibility for future changes in building usage. Most important, it’s a cost-effective way of building out our campus.”
PPM is a consortium of design, engineering, construction, maintenance, operations, and financial partners, anchored by lead developer, equity provider, and financial arranger Plenary Group, an international infrastructure developer and investor in public-private partnership (P3) projects across North America. PPM’s lead contractor is Webcor Builders, a San Francisco-based firm whose previous projects include California Memorial Stadium at UC Berkeley, Zuckerberg San Francisco General Hospital, and the California Academy of Sciences. Johnson Controls is providing the operations, maintenance, and renewal services to the project throughout the 39-year contract term. Skidmore Owings & Merrill, Inc. is lead campus planner. The team’s selection is the culmination of a rigorous process of identifying, prequalifying, and thoroughly vetting developers capable of taking on a project of this size.
In July, UC Merced regents voted unanimously to approve PPM’s design proposal, the proposed external financing, amendments to the project’s budget and scope, and revisions of the commercial terms of the project agreement. The regents previously approved a $1.14 billion budget, commercial terms, and all major elements of the delivery model. The developer is increasing its investment in design and construction by $204 million, with less funding allocated to financing. The amount of UC financing, about $600 million, remains unchanged. The additional PPM capital increases the budget for design and construction to $1.338 billion. The regents’ approvals cleared the way for a formal project agreement to be executed as early as mid-August, with groundbreaking scheduled for October.
The new facilities will be built within a 219-acre site that currently supports the existing campus and its 6,700 students. The first phase of buildings is scheduled for delivery in 2018, with the remainder completed in 2020.
The project will be the first in the UC system to use a single private development team for a multi-year, multi-building project of this scope. PPM will not only design and build all of the new facilities as a single, fast-track project but also ensure major building systems operate effectively over the 39-year term of the contract. In addition, the developer will be responsible for raising all required private financing as part of the P3.
“The 2020 Project effectively leverages private capital in conjunction with UC funds to both cover project costs and allow UC to make efficient use of our own financial resources,” said UC Chief Financial Officer Nathan Brostrom.
The scope of construction decreased from an original 918,000 assignable square feet to approximately 790,000 assignable square feet. Design changes allow for space efficiencies that will facilitate UC Merced’s emphasis on interdisciplinary learning and research, and provide flexibility for future changes. Changes in the design and scope of the project will allow PPM to produce more efficient and durable buildings that will significantly lower its financing, operation, and maintenance costs over the life of the contract. As a result, UC Merced’s financial commitment will be reduced by nearly $9 million.
PPM will be paid in installments over the 39-year term of the contract, subject to the continued availability of the facilities for use at performance standards set within the contract. Upon expiration of the term, maintenance of the assets will be handed back to UC Merced. UC Merced will own the buildings and land at all times.
“UC Merced, the youngest campus in our system, is poised to become a model for our other campuses as we look for the most efficient ways to construct, operate, and maintain facilities that enable us to pursue our teaching, research, and public service missions,” UC President Janet Napolitano said. “As the first public research university to be created in the 21st century, UC Merced is prepared to build on its remarkable academic achievements as the campus itself is built out to accommodate future growth.”
In keeping with UC Merced’s strong emphasis on interdisciplinary learning and research, PPM’s design themes make creative use of environments and buildings that are designed for multiple purposes, generating dynamic, interdisciplinary interaction among students, faculty, and staff. To accommodate changing needs over time, the design and construction approaches are flexible and highly adaptable, helping the campus achieve long-term life-cycle and sustainability goals.
The new buildings will fully support UC Merced’s environmental sustainability objectives, including its “Triple Net Zero” goal — zero net energy use, zero landfill waste, and zero net greenhouse gas emissions by 2020. The campus has been recognized by the U.S. Green Building Council as one of the greenest in the nation.
“The UC Merced 2020 Project will put UC Merced at the forefront of higher-education design and delivery in the U.S.,” Dale Bonner, executive chairman of Plenary Concessions, said. “Plenary is delighted to be a part of this partnership.”
Information provided by the University of California, Merced (www.ucmerced.edu).