December 1, 2009
While recessions certainly don’t make capital planning a cinch for campus leaders, construction plans don’t have to come to a halt—even in a faltering economy. In fact, as many know firsthand, it can be a great time to build. Following are dozens of strategies and tactics employed by officials across the country for getting building projects to ground breaking and through construction to completion.
1. Take advantage of the downturn. Doane College (Neb.) leaders received an original estimate of $16.6 million for their new sports facility, but the final bid dropped to $13 million due to decreased costs for materials and labor. At Indiana Wesleyan University, officials found that three projects bid out this spring came in at 2007 prices. The reason? It was deflation in materials and commodity costs, combined with very modest labor cost increases, says Brendan Bowen, vice president for operations and facilities planning. “We believe that contractor margins were down as well, since so many contractors were seeking projects just to keep their doors open.” Leaders at Stevenson University (Md.), meanwhile, jumped at the chance to buy and renovate a new but empty office building near campus for housing. The space already included roads, parking, and utilities, but it was built without committed tenants, so the owner was seeking a quick sale. The cost to purchase and retrofit the building to residences was just $15 million. The soft real estate market also helped Rollins College (Fla.), which snapped up a 3.3-acre site with a historic hotel for $9.9 million. The site will serve as a hotel and conference center for the college.
2. Cash in on unexpected opportunities (even dirty ones). Stevenson needed 25,000 cubic yards of clean fill to prep the site of its new gymnasium. Neighbor T. Rowe Price needed to unload dirt left over from a recent building project. Dirt isn’t in high demand when construction activity is down, and it would have cost $800,000 to have it hauled away. Instead, the company donated the dirt (and hauling) to the university, earning the company a $250,000 tax write-off (market value of the dirt). By staying alert to what was happening nearby, Stevenson leaders were able to capitalize on an unexpected, and unusual, windfall.
3. Plan for mixed use. North Central College (Ill.) has proven that combining projects can save money and time. Students there won’t have an excuse to skip a workout, since the new residence hall is in the same building as the new athletic center. The $24 million, four-story Res/Rec building reduced two buildings to one footprint. An estimated $10 million was saved over building separate structures?since just one construction site needed to be prepped and certain spaces, such as the lobby and main entrance, are shared.
4. Don’t build from scratch. The admissions office at Capital University (Ohio), located in the administration building’s basement, was less than inviting. Priority placed on building residence halls and classrooms to meet enrollment growth needs meant a brand-new facility wasn’t an option. But finding a new home on campus was. Officials saw the potential in a facilities building used for offices and equipment storage, particularly because of its location on the pedestrian mall built through the center of campus in 2006. Ologie, Capital’s branding agency, helped officials renovate the space to tell the university’s story in a clear, compelling way and immerse prospective students in the institution’s brand from the moment they arrived. The cost of the project, which included infrastructure upgrades, was about $1 million, funded by donations ($250,000) and excess unrestricted reserves from an operating surplus.
5. Get bids on alternate ideas up front. When revamping its math and science departments, East Los Angeles College bid out two options: three new buildings around a central plaza, called for in the master plan, and one new building with renovations to two existing buildings. The second option won out due to cost. HGA Architects and Engineers, which handled the original master plan, is at work on the project, for which construction will begin in 2011. Like options on a new car, bid alternates show the cost of adding or subtracting different features on a project. Having multiple bids up front allows for flexibility as planning continues and may eliminate or reduce the need for redesigns.
6. Remain flexible in design and planning. The University of Washington carried multiple phasing options for the Molecular Engineering Building through the final design and bidding process. By being open minded, project leaders were able to take advantage of decreased construction costs to expand the project scope. The project, which will cost an estimated $78 million, broke ground this fall and was designed by ZGF Architects.
7. Prioritize for impact. Leaders of a growing institution with a major housing shortage probably aren’t going to make an administrative building the top capital project priority. Likewise, potential donors might balk at contributing to a new fitness center when academic program space is at max capacity or when budget shortfalls have caused academic program cuts. The emotional reaction to a call for funds for a particular building must be considered.
8. Build in revenue generating space. Officials at Lawrence University (Wis.) knew the riverfront setting of the new $35 million Warch Campus Center would be attractive to the broader community. So the design team from KSS Architects and Uihlein-Wilson Architects included in the center 12 venues open for event rental. This involved strategically placing the catering and service kitchens as well as banquet rooms. “As the building was nearing completion and the economic situation changed, the possibility of outside revenue sources became an even more critical goal,” says Nancy Truesdell, vice president for student affairs and dean of students. Media publicity and a well-attended community open house during the building’s grand opening helped build interest in facility use.
9. Build future operating costs into the project budget. Building construction ends, but maintenance needs don’t. As part of a long-term planning process for a new $90 million science center, leaders at The University of Scranton (Pa.) budgeted for construction as well as operating costs. That step of allocating operating expenses is often skipped when a new project is planned, says Edward Steinmetz, vice president of finance. Taking the long view means an affordable building now and in the future.
10. Build a single project in phases. Grinnell College (Iowa) is in the second and final phase of an athletic and fitness center project funded by capital reserves and bonds as well as ongoing fundraising that targets alumni and friends. The first phase, costing $21 million and completed in 2005, included a fitness center and gym. The $72 million phase two, now under construction, adds a pool building and field house. Bidding as a single project yet spreading the cost over several years and three buildings made the project more manageable from a cashflow standpoint, explains Mickey Munley, vice president of college and alumni relations.
11. Stagger multiple projects. The University of Florida needed $4 million in repair and maintenance work on 12 parking structures. In order to dilute the cost and impact on parking availability, officials had Walker Restoration Consultants develop an eight-year plan that prioritized work and included built-in cost increases.
12. Build green. Buildings designed for energy efficiency are simply more cost-effective. Allegheny College (Pa.) officials decided that aiming for LEED Silver with the North Village Phase II project was the right thing to do on several levels. Geo-exchange heating and cooling, energy efficient lighting, heat recovery, and insulation are expected to reduce energy use by about 40 percent compared to a similar building. And at Saginaw Valley State University (Mich.), money-saving green features of a $28 million health and human services building now under construction include an aquathermal heating and cooling system. Its underground pipeline will connect to a nearby retention pond, and officials estimate a 37 percent energy use reduction and savings of $71,000 a year, which means it will pay for itself in less than two years.
13. Use an alternative delivery method. Instead of putting the new student union out to bid, leaders at the University of North Carolina at Charlotte hired Balfour Beatty Construction to be the construction manager, then negotiated a final price for the entire project. As the construction manager at risk, Balfour Beatty hired the subcontractors and assumed all risks associated with their project performance. Thanks to this project structure, 24 “wish-list” items were incorporated into the final plan without raising the price, including a 300-foot pedestrian bridge linking the new student union with an existing residential area. (See the July 2007 issue of University Business for a feature on alternative delivery methods.)
14. Consider permanent modular construction. Having a project finished on time can go a long way toward saving money. With permanent modular construction, the building is pieced together off-site under controlled conditions, with no restrictions on design, layout, mechanical systems, or other architectural design feature choices, explains Glenn A. Court, vice president of building development at Triumph Modular. The controlled manufacturing environment means no scheduling overruns and minimized downtime due to subcontractor delays or inclement weather. As the building is constructed, site development is already underway.
15. Ditch your construction manager. Rather than delay renovating Babcock Hall, a 75-year-old residence hall, leaders at The College of Wooster (Ohio) kept the construction manager role in-house. Around $200,000 in fees was saved by having trusted contractors work closely with an in-house design team. Catching up on deferred maintenance was the bulk of the project, but improvements included a new kitchen in the dining area, individual thermostats in student rooms, and motion sensor lights in public spaces.
16. Celebrate an opening—even for a building that lacks finishing touches. California State University, Fresno, officials got the bad news just as a $105 million library expansion and renovation project was nearing completion: The $8 million earmarked for furnishings and other equipment would not arrive, thanks to a state budget shortfall. Just before the spring 2009 semester began, students were notified that the building would open a month late?and with only about one-fifth of its furnishings (and most of these borrowed or rented). Although permanent furniture didn’t begin arriving until May, there was still much to celebrate, including an electronic book shelving system and the fact that the finished building makes it the largest CSU system library.
17. Partner with a private developer. These firms can provide guidance in initiating and navigating the financing process. One such firm is RISE, which has helped secure bonds for 41 campus projects in the last decade. Utilizing a college’s tax-exempt status, the firm establishes a single-purpose LLC to serve as the project owner as well as to ground lease the required property from the institution for the term of the financing. Tax-exempt bonds are issued for the total cost of the project, which is solely guaranteed by RISE, then paid back by rental, dining, and/or parking revenues from the project over a 30-year term. The separate LLC means that associated debt does not encumber the institution. Once the bonds are fully repaid, the ground lease expires and the land plus all improvements revert to ownership by the institution. RISE recently partnered with Southern Polytechnic State University of Atlanta to develop a $45 million housing and dining complex, to be completed by next fall.
18. Use off-balance-sheet financing. It isn’t new, but it is working for the University at Buffalo to fund the South Ellicott Housing project. UB Foundation assets are being used as collateral to borrow money. Revenue from room rents pays the debt service on the loan. A Connecticut College program to raise $53 million for facilities over seven years has kept donors motivated by focusing on the most visible projects, including a new fitness center.
19. Don’t give up hope on stimulus funds. The American Recovery and Reinvestment Act of 2009 provided hundreds of millions of dollars to education facilities for building enhancement, new construction, and more. Initially, “shovel-ready” projects—pre-existing proposals in search of funding—took precedence, and many of the submission deadlines have now passed. But there is money still available for building and infrastructure improvements, says Judy Marks, associate director of the National Clearinghouse for Education Facilities. Funding from the Treasury Department’s Build America Bonds program (see www.irs.gov/irb/2009-16_irb and click on “Notice 2009-26”) can be used for a wide range of projects, she says, including construction and modernization of higher education facilities. Additional dollars available for distribution are through Qualified Energy Conservation Bonds (see www.irs.gov/irb/2009-16_irb and click on “Notice 2009-29”). These bonds are awarded for capital expenditures that reduce energy consumption in campus buildings. Finally, there is still money available through the $2.4 billion Clean Renewable Energy Bond program (see www.irs.gov/pub/irs-drop/n-09-33.pdf). The program allows state higher education facilities to apply for bonds to finance qualified renewable energy projects.
20. Look to local banks. At Western New England College (Mass.), construction was beginning on a new 108-bed residence hall and planning had begun for a new 126,000-square-foot academic building. That’s when “the sharp realities of the economy became apparent,” says William Kelleher, vice president for finance. Halting construction was considered, but officials felt the projects were too important for fulfilling goals of enrollment growth and expanded academic offerings. The number of residence hall beds was increased to allow for an additional planned hall to be placed on hold, and then financing options for the academic building were explored. As one of the largest, most complex buildings on campus, it required external financing, but the credit markets weren’t favorable. Officials turned to local banks, which are generally willing to invest in the local economy. Working with a lead bank, officials developed a consortium of local banks to provide funds for a direct placement of the bond issue at attractive financing terms.
21. Turn to your trustees. In April 2007, the Centre College (Ky.) board of trustees accepted $22.5 million from a small group of trustees—a gift that provided a base to generate the $45 million needed to carry out “The Trustee Challenge.” Plans included construction of a campus center (completed this fall); expansion of the college’s primary science academic building, Young Hall (on which construction began in June); and refurbishment and renovation of a performing arts center (also completed this fall). The trustees conceived this idea, and their initial combined gift allowed the college to put together a bond issue, which provided funding for the projects. The gift money is being invested and will be used to pay off the bonds over time.
22. Raise funds through a foundation. Public universities must often cut through a lot of red tape to get capital projects approved, and desired special features may well get nixed. The College of William and Mary (Va.) needed more space for its Mason School of Business, and the institution now has it with Alan B. Miller Hall. The $75 million, just-completed project did not need the help of tax dollars, with the college contributing one-third of the funds and the rest being raised by the private Mason Business School Foundation. The foundation served as project leader and was responsible for the planning, timing, and cost of the operation. Designed by Robert A.M. Stern Architects, the building is awaiting LEED certification. Yet some sustainable amenities, such as the locally sourced roof and bricks from a nearby quarry, may not have been included had the project been funded by tax dollars. Halting construction was considered, but officials felt the projects were too important to the institution’s goals.
23. Partner with government agencies to meet regional needs. This works especially well for facilities benefitting the broader community. George Mason University (Va.) officials partnered with Prince William County, the City of Manassas, and the state to jointly fund the $44 million Hylton Performing Arts Center, the first such building in the region. Each partner contributed its portion based on projected utilization: 60 percent for the county, 30 percent for GMU, and 10 percent for the city. GMU, which will own the building, also donated land. A board representing all the partners will be formed, and a permanent endowment will cover future operating expenses. Likewise, Eastern Kentucky University’s Center for the Performing Arts was funded jointly. The $30-plus million project costs were shared by EKU, the Commonwealth of Kentucky, the government of Madison County, and the cities of Richmond and Berea. The university, county, and cities will provide ongoing funding for general operations, which is the responsibility of a board representing each of the funding interests.
24. Partner with a nonprofit. In a move that not only saves money but enhances collaboration, the $200 million Center of Excellence in Bioinformatics and Life Sciences at the University at Buffalo was built in conjunction with the Roswell Park Cancer Institute’s new Center for Genetics and Pharmacology. This allowed a larger complex to be built and brought the cost savings of shared common space. In addition, UB partnered with Kaleida Health, a regional health care provider, to piggyback its new $118 million Clinical Translational Research Center and Biosciences Incubator on top of a building under construction for Kaleida Health. The deal eliminated land acquisition costs and includes savings from shared space as well. Also in New York, Hudson Valley Community College partnered with the New York State Energy and Research Development Authority, a public nonprofit, to build The Training and Education Center for Semiconductor Manufacturing and Alternative and Renewable Technologies (TEC-SMART). The $13.5 million project, now under construction, was designed by Perkins+Will. And at Moravian College (Pa.), a new residence hall with classroom space is all thanks to a partnership with Bethlehem Area Moravians. Representing six area congregations, the nonprofit undertook financing and constructing the $25 million building, which it owns and operates on land leased from the college. The college oversees daily operations.
25. Prove to donors that you’re serious. No building is constructed on a whim, but strategic plans can help with budgeting and fundraising. Edward Steinmetz, vice president of finance at The University of Scranton, admits the $90 million science center wouldn’t be possible if it were being planned today. But planning started five years ago, which allowed officials to adjust the overall budget to allocate funds and to incorporate the building into their capital campaign. “We needed to demonstrate [to donors] our commitment to such a huge undertaking by putting money toward its financing,” he explains.
26. Double dip (where you can). With nearly all funding in place for a $5 million expansion of the Philip and Muriel Berman Museum of Art, Ursinus College (Pa.) needed just enough to put the goal over the top. The chief development officer visited the head of the Berman Foundation in California, once to lay the foundation for a gift, and the next, a few months later, to confirm. The foundation agreed to add $250,000 to the initial pledge of $1 million, pleased that the project was going to go forward despite the tight economy. Half the gift was contingent on breaking ground, which occurred in May, and the other half at completion.
27. Get your architect’s help in selling a project to donors. While budgets and funding constraints have always been issues related to designing campus facilities, notes Valli Sorci of Orlando-based Florida Architects, recent state budget shortfalls have meant even more projects falling off the “funded” list or getting pushed back indefinitely. Campus officials will always be responsible for implementing funding strategies, but don’t forget that architectural firms can help. Sorci’s firm will provide presentation boards, graphics, and other materials to help an institution present a project to the community, its board, or staff. The architects will also help ensure the most cost-effective construction methods and materials are used.
28. Have a green education focus. For Hudson Valley Community College’s TEC-SMART building, additional funds must be raised for program equipment and supplies as well as an endowment to ensure programs that train workers for a green economy remain state-of-the-art. The facility itself, built to LEED Gold standards with features such as wind turbines and photovoltaic panels, will also be used as a teaching tool. With all of the national attention on green jobs, raising money for a facility like this is no doubt easier.
29. Reach out to donors through social media. The development team at Ohio Northern University created a “Campaign for Tomorrow” Facebook page, which invites students and faculty to share testimonials about how donations will benefit them. As of press time it had 300 fans. Construction projects are prominently featured under links to “campaign priorities,” along with scholarships and funding for research. The takeaway: Every donor has a different communication preference, so don’t leave any channel untapped.
30. Let donors see where their money is going. For each of the last five years, Connecticut College has helped spur donor interest in funding infrastructure and maintenance projects through the Asset Reinvestment Program. Including high-visibility projects amid more mundane repair and upgrade projects has helped in building toward a goal of $53 million over seven years. Officials, along with construction partner KBE Building Corporation, design consultants, and other contractors and suppliers, spend September through May designing, estimating, and planning what can be completed over the 12-week summer session. This year’s program was more modest, with $1.5 million for 2009 versus $9 million for 2007 and $7 million for 2008. But putting the focus on the most visible projects, including a new fitness center, exterior upgrades, and new walkways, kept donors motivated.
31. Target donors, particularly for a specific plea. As Ursinus College put the final brushstrokes on its campaign to expand its art museum, a letter was sent to friends and supporters explaining that to showcase its permanent collection—which includes more than 3,000 paintings, drawings, sculptures, and cultural artifacts not currently accessible to visitors because of space constraints—the museum would need seven state-of-the-art open-storage vitrines. The climate-controlled, light-regulating display cases are modeled after those at the Smithsonian American Art Museum. Appealing to targeted donors did the trick, and the $225,000 cost was raised.
32. Name the parts as well as the whole. To raise funds for its $60 million Ridley Athletic Complex, Loyola University Maryland is offering naming rights to playing fields, locker rooms, offices, concession venues, the seating area, and other elements of the complex. Two fields have already been named. And at Roger Williams University (R.I.), officials solicited sponsors for each of the seven rooms in the $26.8 million Global Heritage Hall based on previous giving history as well as cultural heritage. Offering naming opportunities not only maximizes revenue opportunities but also allows donors a wider variety of donation amounts. Florida Architects and other architectural firms will often include in project plans areas in which donors or business partners are recognized. For example, a building might have places for them to display their products or for them to meet, teach, or learn.
33. Form a club. To encourage alumni to contribute specifically to the new Alumni & Admissions Center, leaders at Roger Williams created the “Cupola Society.” This move gave fundraising efforts a theme. Society members have been recognized during homecoming and are encouraged to add to a time capsule that will be placed in the building’s wall.
34. Partner with the community on fundraising. When a 105-year-old former department store building was donated to Mount Vernon Nazarene University (Ohio), officials realized it would be a good home for the Visual Arts Department. Community leaders knew having MVNU in the empty building would continue their effort to revitalize the downtown area?and they responded by raising the $2 million needed for renovations. An open house took place in September, and workshops and other community events are planned.
35. Don’t start until you can afford it. Institutions map out new building needs and plans years in advance, so why not work on the financing early as well? Indiana Wesleyan is moving forward with three new projects totaling $38 million, despite the economic downturn, because leaders collected funds to cover the total project cost before breaking ground. Gifts and grants are placed in a reserve fund earmarked for capital and infrastructure development. Before breaking ground in 2008, leaders at Saint Vincent College (Pa.) gathered the $27 million necessary for the first phase of new construction and renovations to existing classroom buildings to create the Sis and Herman Dupre Science Pavilion. Additional phases of the complex will only be pursued as funds are available. By ensuring they had the cash on hand for each building, leaders also ensured they could build a facility without building debt.
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