computer science & engineering expansion (cse ii): stage 2

F–7 STANDING COMMITTEES Finance and Asset Management Committee

F–7/201-17 1/12/17

Computer Science & Engineering Expansion (CSE II): Stage 2 – Approve Budget and Funding Plan RECOMMENDED ACTION It is the recommendation of the administration and the Finance and Asset Management Committee that the Board of Regents approve:

1) the Project Budget; and

2) a Funding Plan, including the use of the Bridge Program with a maximum borrowing of $25million and a term not to exceed five years from the date of Board approval.

BACKGROUND Detailed project information is included in the attachments. Attachments 1. Computer Science & Engineering Expansion (CSE II) Project Summary 2. Computer Science & Engineering Expansion (CSE II) Bridge Financing Strategy 3. Computer Science & Engineering (CSE II) Building Renderings

Delegate authority to award design contract to LMN ArchitectsApprove alternative public works contracting (GC/CM)Delegate authority to select the GC/CM and award preconstruction contract

Approve preferred development alternative and mitigation effort

Proposed Budget Proposed FundingConsultant Services $ 10,129,000 10% State Funds 17,500,000$ 17%Construction Cost $ 78,849,000 75% UW Building Fund 15,000,000$ 14%FF&E & Other Costs $ 11,464,000 11% UW Central Funds 4,000,000$ 4%Contingency $ 3,402,000 3% UW - CSE Dept. Funds 3,000,000$ 3%Escalation $ 1,656,000 2% UW - College of Engineering 2,000,000$ 2%Total Project Cost $ 105,500,000 100% Gift Funding 55,700,000$ 53%

UW - Cash Reserves (backstop) 8,300,000$ 8%Total Funds 105,500,000$ 100%

Costs escalated to 2017 (project costs) Cornell University, William and Melinda Gates Hall ($887/GSF)University of Texas Austin, Bill & Melinda Gates Computer Science Complex ($1,048/GSF)Carnegie Mellon, Gates Center for Computer Science ($608/GSF)University of Washington, Paul G. Allen Center for Computer Science and Engineering ($713/GSF)

Current Targets Current Targets77,366 77,006 Construction Cost/GSF $582 $589

135,401 133,820 Project Cost/GSF $779 $788 Efficiency (NASF/GSF) 57% 58% Operating Cost/GSF $12.22 -

Schedule

Regent Actions

Approve site (Development Site 16c)

Approve project budget and funding plan

ObjectiveTo provide collaborative research and teaching space to meet increasing demand for growth in the Computer Science and Engineering program for the next ten years and enable the program to remain competitive.

DescriptionDesign and construct an approximately 135,000 gross square foot building to provide space for an additional 30 full-time faculty, associated post-docs, graduate students and researchers. The facility will have an undergraduate focus and foster interdisciplinary research and collaboration. The program includes 16 labs, a lecture hall, two classrooms, three seminar rooms, an event space, communal and study spaces, office and support spaces, and is planned for LEED Silver.

Financials

Benchmarks

Metrics & Indicators

Net Assignable SF (NASF)Gross SF (GSF)

Computer Science & Engineering Expansion (CSE II)

Stage 1 Actions: January 2015

Stage 1 Actions: February 2016

Stage 2 Actions: January 2017

ATTACHMENT 1F–7.1/201-17 1/12/17

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Bridge Financing Strategy

While private fundraising was initially impeded by the delay of the final site selection, progress has been strong since then. Microsoft President Brad Smith is leading the 14-person CSE Campaign Committee, working closely with CSE professor Ed Lazowska. Of the $64 million to be raised privately for this project, there is currently $55.7 million pledged, leaving $8.3 million remaining. Because confidence is high that this additional fundraising will be successful, UW cash reserves will be held as a backstop so the project can continue moving forward. Based on the cash flow diagram below, the risk is limited because the funding will not be required until spring 2018.

As of December 31, 2016, $18 million of pledged funds have been received by the University. This number will increase as pledges are fulfilled, with $32 million of pledged funds expected to be on-hand by the end of 2017. When combined with State and University funds, these funds are expected to fund project expenditures into Spring of 2018. At that point, project expenditures will exceed available funds and the Bridge program will be used to fund expenditures relating to unfulfilled gifts. Based on estimated gift flows, the maximum outstanding Bridge Loan will be $23.3 million. To allow for a slight lag in pledge realization, the maximum requested loan size is $25 million. Any Bridge Loan in excess of $25 million will require Board approval.

ATTACHMENT 2F–7.2/201-17 1/12/17

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The Bridge Loan will accrue interest at a short-term market rate determined at the time of the initial draw. This interest rate will be fixed for the life of the Loan. The interest will be paid monthly from CSE revenues. As gift pledges are realized, the gift funding will pay down the Loan as estimated above. The entire balance will be completely paid by January 31, 2022, five years from the Board approval of the Loan.

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Outstanding Bridge Loan Balance

Max Balance: $23.3 Million

F–7.2/201-17 1/12/17

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ATTACHMENT 3F–7.3/201-17 1/12/17

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computer science & engineering expansion (cse ii): stage 2

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