UI exploring public-private partnership for utility system

The UI is considering partnering with a private entity for up to 50 years for the maintenance and operation of its utility system.

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UI exploring public-private partnership for utility system

The Old Capitol is seen on Thursday, Nov. 30, 2017.

The Old Capitol is seen on Thursday, Nov. 30, 2017.

Joseph Cress

The Old Capitol is seen on Thursday, Nov. 30, 2017.

Joseph Cress

Joseph Cress

The Old Capitol is seen on Thursday, Nov. 30, 2017.

Marissa Payne, Managing Editor

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The University of Iowa is considering a public-private partnership with its utility system per Iowa Gov. Kim Reynolds’ request that the state’s three public universities explore such partnerships — a growing trend in higher education as funding for state institutions falls.

A public-private partnership is a typically long-term agreement between public and private entities formed to provide a public asset or service. Under this type of partnership, the UI would continue to own its utility system while entering into a professional services agreement with a private-sector partner for up to 50 years.

UI Utilities powers and provides water to the entire campus and UI Hospitals & Clinics, operating and maintaining a Power Plant, Water Plant, three Chilled Water Plants on the Main Campus, and satellite facilities at the Oakdale Campus.

The UI will pay the vendor the cost of utilities and an amount “commensurate with the ongoing care, maintenance and operation of the UI utility system, increased annually to account for standard inflation,” according to the UI partnership website.

The vendor would provide an upfront lump-sum payment that would be invested in the UI’s endowment, the proceeds of which would be allocated to areas that support the UI’s 2016-21 strategic plan and its teaching, research, and scholarship mission. The UI plans to use its budget model — which was rolled out at the beginning of the current budget year — to determine how to allocate resources earned from the endowment.

“The partner would obtain a long-term, steady source of income while leveraging the existing tax codes to obtain enhanced benefits the university cannot obtain as a nonprofit organization,” UI media-relations Director Anne Bassett said in an email to The Daily Iowan.

No moves have been made on the partnership yet. If the efforts proceed, no resources would be allocated until fiscal 2021, which begins July 1, 2020. The UI will not know how much money the partnership will involve until the completion in June of the request for qualifications and proposal processes, and there is not a goal in mind for the amount of money the UI would secure through this potential partnership.

“The UI is committed to delivering on our mission of education and research excellence,” UI President Bruce Harreld said in a statement. “Investigating this opportunity over the next nine to 10 months in order to determine if a P3 is right for our campus is a prudent and measured step.”

Expected commitments for the private entity seeking to partner with the UI include:

  • Ensuring the UI operates coal-free no later than Jan. 1, 2025
  • Explore new sources of bio-fuels to create sustainable, lower-cost fuel options
  • Maintain all facilities in similar or better condition
  • Continue campus-wide sustainability efforts

Additionally, the UI expects that the new operator would offer UI utilities employees a position with their company or employees will retain a university position.

“We value our employees and the intent of the P3 is not to reduce staff,” Rod Lehnertz, UI senior vice president for Finance and Operations, said in a statement. “It is our people in Utilities and Energy Management that have made our system a best practice model in higher education.”

Other universities have engaged with such partnerships in the last decade, including Syracuse University, the University of Oklahoma, California State University in Fresno, and Ohio State University — one of the UI’s peer institutions with higher enrollment.

OSU’s partnership involves its utility system and ENGIE-Axium, a partnership of ENGIE North America and Axium Infrastructure. The partnership comes at a value of $1.165 billion, including a $1.015 billion upfront payment to OSU and a $150 million commitment to support specific academic areas requested by the OSU community during the bidding process, according to an OSU news release.

Officials will engage the UI community in the process through information sessions with shared governance and the broader campus community.

“Through our creativity, collaborative spirit, and relentless determination, the UI will determine its own future. This is our charge, and this is our opportunity,” Harreld said.

 

Timeline of potential public-private partnership

  • Feb. 12: Faculty Senate information session
  • Feb. 13: Staff Council information session
  • Feb. 19: UI Student Government information session
  • March 4: UI Graduate and Professional Student Government information session
  • March 5: Information session on the West Side of campus (9:30-11 a.m. in 2117 Medical Education Research Facility)
  • March 6: Information session on the East Side of campus (9-10:30 a.m. in 348 IMU)
  • April 1: Request For Qualifications released
  • Early June 2019: Request For Proposals released
  • Early fall 2019: Vendor selected
  • Fall 2019: Board of Regents evaluation
  • Late fall 2019: Agreement signed
  • Fiscal 2021: Resources first allocated

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