Aug 31st 2018 | Posted in Mary Scott Nabers' Insights by Mary Scott Nabers

Officials of the University of California, Merced (UCM) last week celebrated the first visible signs of a unique and successful $1.3 billion public-private partnership (P3) initiative that truly sets the bar for P3s in higher education. An on-campus event marked the opening of a trio of the 13 new campus buildings that will be completed as P3 projects by 2020.

While two of the new structures are mixed-use residential halls that add 700 beds to the campus, the overall initiative includes classrooms, research labs, dining facilities and student life facilities. This is an historic moment for a campus that was growing so fast students were sleeping in cars a couple of years ago.

Perhaps more importantly, the community will also benefit from the UC Merced initiative. The long-term construction work on the buildings is expected to provide a regional economic impact of $1.9 billion and a $2.4 billion economic impact to the state.

Residential housing P3s are not new. The 2.2 million-square-foot Park West student housing complex at Texas A&M University included 15 buildings and added more than 3,400 new beds. Texas Woman’s University is currently constructing a residence village of two four-story and one five-story buildings on campus to meet the growing demand for student housing. Both are being built under P3 contracts.

One of the most notable P3s for residential housing is the University of Kentucky’s (UK) $450 million project that added approximately 7,000 new beds. But the university did not stop at just housing facilities – UK also entered into a 15-year, $245 million food services contract that netted the university more than $85 million in capital investments. Those levels of success have the university now exploring the probability of using a P3 for on-campus mixed-use retail and parking projects.

One of the many benefits of a campus P3 is that project costs are generally lower, all risks are transferred to the private-sector partner and operations and maintenance are locked in for several decades. Mississippi State University turned to a private developer to build a $67 million residence hall under a P3 contract. Officials project the facility would have cost 15 percent more if the university had elected to build it on its own.

Public universities are extremely competitive in their efforts to attract students. Students want and expect state-of-the-art facilities equipped with the latest technology, contemporary dorms and apartments, dining facilities that offer a variety of food service options and modern athletic facilities. These demands come at a high cost when universities are already reeling from decreasing revenues because state and federal funds have been significantly reduced.

Officials at Kent State University announced that a P3 will be used to complete a $21 million mixed-use development as part of their $1 billion, 10-year construction program. A $73 million business administration building, a part of the initiative, will also most likely be procured through a P3.

Mixed-use projects on public university campuses are a national trend.  The University of Texas at San Antonio is expected to release an RFP this fall to select a P3 partner for a mixed-use development that not only includes residential units, but also retail development and dining options.

The largest mixed-use public residential college project in the history of the University of Southern California is the USC Village. This particular project included six buildings and added 2,500 new beds on campus. The $700 million project features residential college suites on the upper floors while the ground level is dedicated for retail businesses and food and beverage establishments. The project also includes a $16 million firehouse.

At Cal State San Marcos, construction is underway on a 135,000-square-foot, six-story building that includes a 700-space parking garage. The facility will also provide commercial and retail space, laboratories, conference and study spaces, academic support centers and office space for programs at the university.

P3s provide alternative funding as well as experience and expertise from private-sector partners.  University officials are finding that P3 models can be applied to a variety of campus needs that include academic buildings, sports stadiums, food service, research facilities and housing.

The world is changing and colleges and universities with leaders who are visionary enough to make campus life attractive to tomorrow’s leaders will flourish while other less visionary schools struggle to maintain their competitiveness. Who thought that competition is keener in the commercial sector?  Not by any standards!!

Since 1995, SPI’s procurement consulting services have helped companies of all sizes effectively navigate the various jurisdictions of government procurement. Contact them today to learn how they can help grow your business.

 

As President and CEO of Strategic Partnerships, Inc., Mary Scott Nabers has decades of experience working in the public-private sector. A well-recognized expert in the P3 and government contracting fields, she is often asked to share her industry insights with top publications and through professional speaking engagements.