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Monday, August, 06, 2012

Anatomy of a Campus Construction Project

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An examination of the University of Akron's newest residence hall, and some of the planning that took place to make it happen.

The days of bond-funded campus buildings and two-dimensional architectural drawings are drawing to a close at many public universities. The money, for now, is available through public-private partnerships, and plans are made in three dimensions, making for an easier sell to top decision makers.

Campus construction, particularly residence halls, starts with projections meant to keep a college or university years—sometimes decades—ahead of student demand. Those projections, once passed along the campus’s chain of command, tell the mathematical story: We’ll need more dorms, or we won’t.

That’s how it started at the University of Akron (UA), a 220-acre campus with 29,000 students.

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Sunday, May, 15, 2011

MIT Borrows for the Long Run With a $750-Million 'Century Bond'

You can read the original article, MIT Borrows for the Long Run, in The Chronicle of Higher Education. The following is a new kind of SCUP Summary of the article. Please let us know your thoughts, terry.calhoun@scup.org, about this kind of summary.

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betaSCUP Observations

1. success of the MIT deal-a banker familiar with the transaction said fuel more interest in the use of century bonds by other universities, particularly those that are treating debt, like their endowment investments, as a permanent part of their capital structure and financial-management plans
2. MIT will pay interest rate of 5.62 percent on the bonds
3. MIT "century bond" deal could herald similar transactions by other universities
4. they invest proceeds from taxable bonds than with the proceeds from a tax-exempt bond issue
5. bonds be repaid not over 30 years, the usual term for capital borrowing by universities, but over 100 years
6. MIT "century bond" deal would be rare even for blue-chip businesses like the Coca-Cola Company
7. proceeds finance projects in its MIT 2030 plan, which calls for renovations and for several construction projects, including a new energy and environmental-studies building, a performing-arts center, and a nanotechnology fabrication center
8. growing number of institutions been looking at taxable bonds 
9. this week plans by issuing taxable bonds
10. MIT issued 30-year debt
 

betaSCUP Summary

The Massachusetts Institute of Technology this week borrowed $750-million by issuing taxable bonds that it plans to repay not over 30 years, the usual term for capital borrowing by universities, but over 100 years. Bankers and officials at Moody's Investors Service said the MIT "century bond" deal, which would be rare even for blue-chip businesses like the Coca-Cola Company, could herald similar transactions by other universities, although as a Moody's analyst noted, only "market-leading institutions with global reputations" are likely to be able to command the favorable financial terms that make such deals attractive. "It will be an option, but it's not something that we think will be an option for the general sector," said Karen Kedem, a vice president and senior analyst for the higher-education and nonprofit group at Moody's. MIT will pay an interest rate of 5.62 percent on the bonds. According to bankers who work with universities, had MIT issued 30-year debt, it would have paid about 5 percent in a taxable issue and about 4.5 percent in a tax-exempt one. Although institutions that borrow by issuing taxable debt often have to pay higher interest rates than they do on tax-exempt bonds (investors accept lower rates in return for the tax benefits), the taxable bonds allow the issuers far more flexibility.

Universities also face fewer restrictions on how they invest the proceeds from taxable bonds than with the proceeds from a tax-exempt bond issue. Because of those advantages, and because interest rates for taxable bonds have been relatively low, a growing number of institutions have recently been looking at taxable bonds as a way to raise capital. The success of the MIT deal-a banker familiar with the transaction said the depth of the demand at that interest rate was surprisingly strong-might fuel more interest in the use of century bonds by other universities, particularly those that are treating debt, like their endowment investments, as a permanent part of their capital structure and financial-management plans. While century bonds are uncommon, MIT is not the first university to issue them. Borrows for the Long Run With a $750-Million 'Century Bond'By Goldie BlumenstykCapitalizing on low interest rates, the university issues bonds to be repaid not over 30 years, the usual term for capital borrowing by universities, but over 100 years.Across

betaSCUP Key Terms Map

100-year bonds
30-year debt
blue-chip businesses
bonds
capital
capital borrowing
capital structure
century bond
coca-cola company
construction projects
effective hedge
endowment investments
environmental-studies building
fabrication center
favorable financial terms
financial-management plans
general sector
global reputations
institutions
institutionthe university
interest rate
interest rates
life-insurance companies
long-term liabilities
longtime professors
market-leading institutions
massachusetts institute
mit
mit deal-a banker
nanotechnology fabrication center
new energy
performing-arts center
preeminent research universities
private business
rates
recent newspostdocs
senior instructors
similar transactions
state-supported institutions
tax benefits
tax-exempt bond issue
tax-exempt bonds
tax-exempt one
taxable bonds
taxable debt
taxable issue
transaction
university
usual term
west coast

 

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Friday, March, 25, 2011

Capital Projects in a Campus Environment: Organizing and Running a Successful Project Team

This workshop is offered on July 23 near Washington, DC.

The SCUPers listed as authors of this post will be repeating their renowned pre-conference workshop this summer on Saturday, July 23, at National Harbor, Maryland, outside of Washington, DC., at SCUP–46. SCUP–46 is the Society for College and University Planning's annual, international, integrated planning conference and idea marketplace.

Please turn your volume up, as this was the first-ever such SCUP interview and our microphone was a little far from the workshop presenters. Also, this is just after they spent an entire day of heavy interaction with a room full of SCUPers in the workshop, so they're just a little tired here. 

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Below is the abstract for this year's workshop, and here is a link to the SCUP–46 workshops page:

Saturday, July 23, 2011, 8:30 AM–5:00 PM
Capital Projects in a Campus Environment: Organizing and Running a Successful Project Team

Presented by: Frances M Gast, Planner, University of Connecticut; Celia M Kent, Director, FAS Planning Office, Harvard University; Debi L McDonald, Associate Principal, Cannon Design

What can campus leaders and their design and construction partners do to facilitate successful capital projects, and avoid costly and consequential missteps? Complex facility projects are difficult undertakings and require that activities be orchestrated among project team members. The natural momentum of construction projects can fuel fundraising, engage campus constituencies, and inspire great design. We will explore and practice team planning and organizational skills to manage through the inevitable interruptions and setbacks that can sabotage a successful realization of the project’s vision. The strategies that carry us through are less technical than organizational and team-focused: setting realistic priorities; creating a high-functioning project team; resolving conflicts; challenging assumptions; and asking questions. This workshop will enable participants to hone their skills and take home practical tools and strategies to help project teams excel.

Cost: $295 USD (includes workbook, continental breakfast, lunch, and refreshments)

Learning Outcomes:

  1. Identify problems likely to occur in the early stages of a project, such as collective over-optimism, programming for yesterday, and conflicting goals and agendas.
  2. Use a “tool-kit” of diagnostic, analytic, team-building, and organizational skills to educate others and to model behaviors that can improve project success.
  3. Consider the value of being a reflective practitioner and learning from what goes wrong.
  4. List the organizational leadership roles that support better planning, design, and construction outcomes.

TAGS: Teamwork, Project Planning, Project Teams

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Monday, January, 31, 2011

Construction Spending to Rise in Latter Half of 2011

An upturn for commercial construction is expected in 2012, but institutional construction is projected to be steady, according to AIAarchitect:

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The nonresidential construction market is expected to recover this year, but late enough in the year that 2011 spending levels are unlikely to see any growth over 2010 levels. A consensus 2 percent construction spending decline in 2011 will hopefully indicate the bottom of the recession trough and set the stage for a recovery in 2012. After falling around 30% on an inflation-adjusted basis last year, commercial construction is expected to see a modest decline this year, while the downturn for manufacturing should be greater. Institutional building activity is projected to stay near 2010 levels.

As the nonresidential recovery strengthens, 2012 is expected to produce stronger gains. Overall building construction should rise around 5 percent, with growth twice that rate for the more cyclical commercial sector. Spending on institutional buildings is projected to increase a more modest 1.6 percent.

 

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Tuesday, January, 11, 2011

Building for Tomorrow: 'Architecture is sexy. Faculty salaries aren’t.'

 A snarky piece from an English professor, using building and facility names as a hook for writing about the dissonance of having money for new buildings, but not for faculty salaries. Useful for a reminder about faculty perceptions:

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“Architecture is sexy. Faculty salaries aren’t.” So, for the next five years, or until the moolah runs out, the U of All People campus will be alive with the cheerful roar of electric saws, cement mixers, and nail guns. Here are just a few of the current building projects:

The Tip Tapp School of Dance: named after alumnus George Tapp, whose latest trophy wife, Tip, wanted something more substantial than another house in the Hamptons. This 40,000square-foot facility will contain five soundproof rehearsal rooms, a 3,000-seat auditorium with a massive proscenium stage, and even a classroom. Cost: $22 million, $40,000 of which will go to recruit students for the new dance major and hire instructors to teach them.

Bland Cafeteria: puzzling, since we already have three cafeterias, a café, a refectory, and two dining halls. But this is what the class of 1985 pooled its donations for: a 24/7 facility so that students pulling all-nighters need never go without munchies. Shaped like a giant pretzel and designed by the ecologically correct Swedish architectural firm ELOF, known for its innovative use of building materials, Bland will have its very walls made of hardened dough. “It is edible, theoretically,” says ELOF CEO Elof Elofsen, “and that is the point, yes?”

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Monday, December, 06, 2010

Not Every Library Has to Preserve All Books, Just in Case. It's Not Feasible

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Blogging at Inside Higher Ed, Barbara Fister makes the case that ... well, read our title, Not Every Library Has to Preserve All Books, Just in Case. It's Not Feasible. This would be good reading for any campus that has a team looking at library space:

Going into the stacks and taking the books off the shelf one at a time is instructive. Today, I pitched a handbook for secretaries published in the 1980s and career guides from the 1970s. I ditched a shelf of how-to books for budding executives published in the 70s and 80s. (Really, how many of these do we need?) I eighty-sixed software guides for dummies stupid enough to run software that's generations old. These books will not be missed. Even in their prime most of them were never checked out, not even once.

What's even better is that removing books can lead to adding them. When an entire subject area turns out to have no books with a publication date newer than 1975, and we are offering courses in that subject area - or it concerns a region of the world or a topic that is not in the curriculum, but is in the news - it's time to track down book reviews and acquire some more current material.

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Monday, December, 06, 2010

Ouch! Move into New Moshe Safdie-Designed Campus in 2001; Sell It and Move Out in 2010

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As reported by Lisa Wangsness in The Boston Globe, when Hebrew College moved into its brand new Moshe-Safdie-designed building in 2001, it had high hopes. But those hopes were financed by borrowing, perhaps too much borrowing. Now the school is selling its Newton campus and moving into rented space nearby at Andover Newton. The new president says that the school is a community of learners, not a building:

The deal, which relies on private donations as well as the proceeds from the building’s sale, is a painful sacrifice for an institution with dreams of becoming a preeminent Jewish cultural center and academic powerhouse. But it is also a relief: Mortgage and maintenance costs far exceeded the college’s fund-raising capacity, particularly amid an economic downturn that has badly shaken the financial stability of colleges and universities nationwide. In the past three years, Hebrew College has slashed its operating budget nearly in half, and it has no equity in its building.

Lehmann, who replaced the school’s previous leader, David M. Gordis, in 2008, said the debt settlement will reposition the college to continue operating — and growing — albeit in rented quarters.

“We are excited about what our financial stability is going to allow us to do, moving forward — and I can say, taking the pulse of students, faculty, and staff here, that there is a sense of real opportunity and energy in this community about it,’’ he said. “It wasn’t an easy decision but . . . the board and I felt very strongly that Hebrew College is not about a building. . . . This is about a community of learners.’’

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Monday, November, 29, 2010

Renovate and Reuse: Higher Education’s New Mantra

Here's a link to a search of SCUP.org on this topic.

Authors Robert A. Brown and Paul Viccica in University Business magazine cover some of the permutations of the decision whether to build new or renovate and re-use. Nothing here is uniquely new to SCUPers, but it's a good collection of issues, and the authors suggest that "[r]enovating existing buildings might just be the new “new” for colleges and universities."

They consider the value of existing campus footprint in the campus core, the cost of building new over time and the costs of renovation and re-use, and the impact of the decision to renovate and re-use on potential town and gown frictions. 

Their bottom line:

Renovation and reuse are often thought of as “second-best” solutions, but they can be the optimum strategy and produce results every bit as effective as new construction. The more you look at renovation and reuse, the more appealing it is as an approach to planning, design, and building regardless of the economic climate.

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Monday, October, 25, 2010

Two NACUBO Conference Sessions Reviewed Risks and Returns of Capital Projects

In this brief, "bonus coverage" two NACUBO sessions on capital planning are reviewed:
Enhance Operations and Save Money: Creating Successful Partnerships With the Private Sector: Slippery Rock University used a pubnlic-private partnership to replace a dormitory with residential suites. Lessons learned: 
    • Carefully define objectives at the outset.

    • Consider transferring the risk of building and operations to a third party; this can lead to significant value.

    • Work with your private-sector partner to identify best-in-class developers who will compete for a new project, yielding the most innovative design options possible.

    • Realize that the level of experience of the team and the personalities of the contractors chosen by the developer can influence project outcomes.

Managing Working Capital Risk: 
[T]o dismiss 2008 to 2010 as an aberration of market performance would be a due-diligence mistake. Risks are real and are here to stay, they noted, and failing to recognize the warning flags can take an unfortunate toll on the day-to-day financing of institution operations.
Trainor and Wetzel walked attendees through a tiered approach to managing working and long-term capital, offering tips for understanding the relationship between risk and returns, cost and rewards, and liquidity within the context of cash cycles, marketplace options, concentration risks, and organizational objectives.

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Thursday, August, 26, 2010

New Book: Strategic Capital Development: The New Model for Campus Investment

Strategic Capital DevelopmentA couple of weeks ago we shared a good article on this topic with you. Now we share the existence of the book the article came from, by Harvey Kaiser and Eva Klein, who are well known among SCUPers. APPA describes Strategic Capital Development with these words: 

[It] presents a bold approach for planning capital investments from a strategic and long-range perspective. The authors combine their extensive higher education experience and expertise to improve capital planning and decision-making and to make a case for a new model that seeks to balance idealism with pragmatism. They define stewardship principles necessary to create and sustain a physical plant that is responsive to institutional strategies and functions, that remains attractive to faculty and students, and optimizes available resources.

...

The proposed comprehensive model is presented as a fully integrated set of methodologies to assess needs and develop a prioritized capital projects plan, integrated with a physical master plan. The authors include, and advocate, the concept of a strategic funding framework--a larger view of feasible and desirable capital funding for defined capital needs.

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