The Regents of the University of California reached financial close on the UC Merced 2020 Project on August 16, 2016. The project is the first higher education availability payment P3 project to be awarded in the United States, and may well serve as a template for future higher education capital projects, both within the UC system and nationally.
The Regents entered into the Project Agreement with Plenary Properties Merced LLC (PPM) for a 39-year contract term. The PPM team includes Plenary Group, as sole equity member of PPM, Webcor Builders, as lead contractor, Skidmore, Owings & Merrill Inc., as lead campus planner, and Johnson Controls, Inc., as lead operations and maintenance firm.
The project involves the design, construction, financing, operation and maintenance of a broad mix of academic, residential, student life, and recreational facilities at the University of California’s youngest campus. 790,000 assigned square feet of critically needed facilities will be delivered in phases by 2020, nearly doubling the physical capacity of the campus to support projected enrollment growth from 6,700 current students to 10,000 students within five to seven years.
The Board of Regents granted final approval for the project at its July 21, 2016 meeting, voting unanimously to approve the amended project scope, budget and commercial terms, the proposed external financing, and PPM’s proposed design of the project. The initial Board of Regents’ approval for the project was granted in November 2015.
“This project represents a major step forward for a trailblazing campus that will build on its early record of excellence to lead the way for universities across the nation as we all strive to teach, conduct research and serve the public in the most dynamic, efficient manner possible,” stated UC President Janet Napolitano.
The $1.3 billion project will be financed by the University’s external financing and campus funds, together with Plenary’s equity investment and private placement of long-term, senior notes. Up to $585 million of monthly progress payments will be paid by the University during the construction period, which will be financed from the University’s commercial paper program (and may later be refinanced into long-term General Revenue Bonds or Limited Project Revenue Bonds). Partial availability payments will commence upon delivery of the first set of facilities scheduled for fall 2018, with full availability payments to commence upon delivery of the full project scheduled for summer 2020.