ucsf ten-year comprehensive capital plan

UCSF Ten-Year Comprehensive Capital Plan

Academic Senate Committee on Academic Planning and Budget

June 26, 2014

Teresa CostantinidisAssociate Vice ChancellorBudget & Resource Management

Budget & Resource Management

In May, the campus Budget and Investment Committee:

• Approved the UCSF 10-year Comprehensive Capital Plan for 2014-15 through 2023-24

• Reviewed the process for preparing UCSF’s 10-year Regents Capital Plan

• Approved the three-year Facilities Investment Needs (FIN) project plan

• Began consideration of an emerging new facilities investment and renewal strategy

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The 10-year Comprehensive Capital Plan (CCP) reflects a $208 million increase from last year’s CCP

Campus Segment Capital Spending10-Yr Projections (2014-15 – 2023-24) Aligns with UCSF Core Financial Plan

10-Year Projections New Plan Last Year Difference

Campus Segment $1,571M $1,363M $208M

• Program Projects $341M $287M $54M

• Auxiliary Projects $ 64M $ 36M $28M

• Seismic Projects $444M $502M - $58M

• Infrastructure/Renewal - Remediation Projects $ 17M $ 24M - $7M - Renewal Projects $176M $ 56M $120M - Facilities Investment Needs $205M $161M $44M - Departmental Projects $178M $173M $5M

• Work in Progress $146M $124M $22M

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Key changes include the Mission Bay land purchase and new facilities improvements made possible by the I&O Fund

Revisions From Last YearProgram projects (+$54 million)• Mission Bay Blocks 33/34 land costs and projects added• Classroom renovation projects added• Laurel Heights renovation project removed• Mission Hall and Diller 4th Floor projects moved to Work in Progress

Auxiliary projects (+$28 million)• Mission Bay Blocks 33/34 parking added• Mission Bay childcare added

Seismic projects (-$58 million)• Decant projects moved to Work in Progress• Parnassus Streetscape Phase 2 project added

Infrastructure/Renewal/Remediation/Departmental (+$162 million) • FIN shown as only one line to allow flexibility in reprioritizing projects in real time• $100 million added in last year of plan for MSB full renewal

Work in Progress (+$22 million)• A more thorough effort was made to include all work in progress projects

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Campus Segment Capital Spending (by type and funding)_________________________

2014-15 to 2023-24, Campus Segment Funding Assumptions

($million) % Capital Expenditures Debt Equity Gifts State Other

Program projects- Mission Bay Land Purchase- Mission Bay Land Related Costs- Mission Bay Building Project 1- Schools Renovation Projects- Classroom Renovation Projects

22% 341 2707435

161

71

656

Auxiliary projects- Parnassus housing- Mission Bay surface parking- Mission Bay childcare- Parnassus garage spall repair- Mission Bay Building Project Parking

4% 64 59194

1521

5

5

Seismic projects- CSB/UC Hall Seismic renovation- Parnassus Streetscape- SFGH Seismic

28% 444 352189

9154

675287

2525

Infrastructure, Renewal, Remediation- Facility Investment Needs (excl seismic/renewal)- Renewal- Remediation- Departmental capital projects

37% 576 14040

100

428165

778

178

8

8

Work in Progress- Misc. infrastructure & renovation projects

9% 146 67 65 10 4

Total 1,571 888 636 10 29 8

100% 56% 40% 1% 2% 1%

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We continue to use significant borrowing to address our capital needs; though we are within our permitted debt affordability levels, we need to continue to carefully monitor our totals.


These revisions to the CCP are reflected in the Spring Update to the 10-year Core Financial Plan (CFP)

CCP Total Project Costs:• The current plan assumes $1.571 billion of total project costs for the time

period covered between 2014-15 and 2023-24

• $888 million of the projects will be paid for by borrowing, and we are comfortably within our overall short-term and long-term campus debt capacity and the financial capacity of the CFP. However, we must continue to be mindful of the effect of growing debt service obligations on the campus and the CFP.

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Total CCP CFP Portion

Debt $888 million $733 million (up $201m from $532m)

Equity $636 million $382 million (up $20m from $362m)

Gifts, Units, Other $47 million

Total $1,571 million

Budget & Resource Management 7

The CCP is a key document we use to manage UCSF and our balance sheet, and serves as the basis for the 10-year UCSF Regents Capital Plan that we submit to UCOP in July

Major differences between the Regents Plan and the CCP are the:• Inclusion of Medical Center projects in Regents plan

• Deletion of projects already approved

• Inclusion of potential State funds not already on the CCP

• And, deletion of deferred maintenance, remediation, work in progress projects, and land costs

In the past, the B&I committee separately approved both the CCP and the Regents Capital Plan; because the two plans are so similar, we no longer intend to bring the Regents Capital Plan back to you for formal approval. However we will provide copies to B&I at the time of submittal.


Scheduled Renewal and Facilities Investment Strategy


There are two basic types of facilities infrastructure projects reflected in the Comprehensive Capital Plan

Facilities Investment Needs– Deferred Maintenance

• Equipment or systems that have not been renewed or replaced on schedule

– Capital Improvements• Fire & life safety upgrades (e.g. fire sprinklers, alarms)

• Environmental regulatory requirement upgrades (e.g. underground tank replacement)

• Building and infrastructure reliability improvements (e.g. emergency generator)

Scheduled Renewal – Replacement of equipment or a system at the end of its useful

life (e.g. new roof)

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For our Facilities Investment Needs, we began a new approach in 2011-12 to address a backlog of projects estimated at $450 million

“FIN List” Approach:

• We created a process where we prioritized deferred maintenance and capital improvement projects using multiple detailed criteria creating a comprehensive facilities investments needs “FIN List”

• We have been updating the FIN List annually, adding new projects and reprioritizing the list

• We have integrated our FIN process with the Health System process in order to better manage and steward all UCSF facilities resources

• Overall, the process has been very successful, and each year we have added sophistication to the model

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Using the FIN list, we have completed or are in progress on multiple facilities renewal/improvement projects over the last three years

• Highlights include:– New Roof on Medical Sciences Building

– Mt Zion and Mission Bay boiler burner retrofits to meet air quality regulations

– Renewal of the MSB animal tower elevator

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B&I approved the plan to address the following priority FIN projects over the next three years

Title 2014-15 2015-16 2016-17 Total

Replace PCUP Fuel Oil Storage Tanks with Seismically Strong Tanks

$2,000K $2,500K $4,500K

Campus wide Fire and Smoke Damper Renewal Phase 2

$500K $500K $500K $1,500K

Replace Parnassus High Voltage Elect. Backbone – Phase 2

$500K $1,500K $2,000K

HSIR Utilities – Improve Systems to Withstand Major Seismic Event Phase U1 and U2

$500K $1,000K $1,500K

Renew Aging Elevators – Nursing, Dentistry, MCB, LPPI

$1,730K $1,000K $1,000K $3,730K

Buchanan Dental Clinic – Install Emergency Power

$500K $500K $1,000K

Under $5M Misc. Facility Projects $12,270K $13,000K $14,500K $39,770K

Total $15,000K $18,000K $21,000K $54,000K

Funding Sources: Core Financial Plan (CFP) Equity & Debt, Medical Center Equity

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In approving the overall CCP, B&I approved the following set of FIN List projects; though the projects are spread out over three years, the actual year in which a project is done may change. Our intention is to allow project managers flexibility in start dates for launching projects.


Though we have made progress, facilities funding continues to be a critical campus need

• Challenges– Our deferred maintenance and required capital

improvements backlog is ~$450 million

– The backlog will continue to grow if we do not make adequate investment in on-time scheduled renewal

– Even with about $15 million per year in support, it could take over three decades to clear the existing backlog

We do not want to let things get worse!

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We have a new strategy for solving our facilities needs challenge• Approach:

– To keep projects from being added to the list, we need to repair more things on-time

– We will start making investments in scheduled renewal for buildings that are turning 25 years old

– To reduce the backlog• We will continue to go after the most critical FIN needs

using the FIN List process

• We will take major chunks out of the FIN List backlog by doing complete building overhauls

– Our overhauls of Clinical Science Building and UC Hall could take as much as $120 million off the FIN List

– We propose a similar $100 million overhaul of Medical Sciences Building in the 2023-24 time frame

However, we need to identify the funding . . .

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Obtaining adequate funding for these projects remains a critical priority

• Funding Plan– UCSF revenue generating strategies, such as the

Infrastructure and Operations Fund and the 85% pooled allocation approach, has already allowed us to increase support for facilities efforts by $68 million during the 10-year CCP and CFP plan periods

– We are also using our revolving $50 million Century Bond fund to facilitate our ability to pay for FIN List projects over time

– By continuing to maintain tight controls on on-going commitments from the CFP we will generate increased flexible capacity (i.e. one-time funds) to do additional capital projects work

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With this new model, we hope to eliminate our deferred maintenance backlog while making important required capital improvements

• Outcomes:– Systems will not fall into disrepair

– We will continue to make required regulatory updates

– There will be far fewer emergency repairs

– We will gain greater economies of scale and lower contractor pricing on our projects

– We will be better able to coordinate renewal efforts with planned programmatic changes

Our facilities will be in far better shape to enhance our efforts to become the world’s pre-eminent health sciences innovator and thereby advance health worldwide

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Appendices


Campus Segment Capital Spending (By Year)

$341

$205

$279

$210

$124 $73 $52 $59 $57

$171

$0

$50

$100

$150

$200

$250

$300

FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

Non-Medical Center

18

Ma

y 2

01

4 P

lan

In $M

• Campus Segment capital “run rate” averages $157M/year“Run rate” without major programmatic or seismic projects averages $79M/year

(in $M) FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22` FY23 FY24

Non-Medica l Center $341 $205 $279 $210 $124 $73 $52 $59 $57 $171


FIN List Project Prioritization Categories

• # of People Impacted

• Life/Safety Impact

• Impact on Patient Care

• Impact on Animal Care

• Impact on Research

• Impact on Facility Use

• Impact on Institutional Reputation

• Non-Facility-related Downside Cost

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Research/Instructional/AdministrativeBuilding Age by GSF (does not include Medical Center)

Parnassus

Mount Zion

Mission Bay

Laurel Heights

Mission Center

Other

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Age > 50

Age 20-50

Age < 20GS

F

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UCOP’s Facility Investment Renewal Model (FIRM) System Life Assumptions

SubsystemExpected Sub-

System life (yrs)a. Roofing 25 b. Building Exteriors, Doors, Windows 30 c. Elevators and Conveying Systems 25 d, HVAC – Equipment/Controls 30 e. HVAC – Distribution Systems 50 f. Electrical - Equipment 25 g. Plumbing - Fixtures 30 h. Fire Protection – Wet 40 I. Built-in Equipment and Specialties 25 j. Interior Finishes: Walls, Floors, Doors 15 k. Painting – Public Areas 15

FIRM is high level planning tool that uses statistical average life expectations for major building sub-systems. For planning purposes we have used an average 25 years cycle for building sub-systems renewal (including 50 year renewal cycle for certain subsystems).

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ucsf ten-year comprehensive capital plan

Documents

renewal projects

departmental projects

yearprogram projects

floor projects

reprioritizing projects

milliondecant projects

mprogram projects

mauxiliary projects