Bilzin Sumberg Baena Price & Axelrod LLP
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In our last article, we discussed how, in recent years, colleges and universities have been among the most successful users of the public-private partnership (“P3”) model. The rise of public service P3 projects in higher education comes as no surprise given the unique requirements and characteristics of most institutions, which often depend on government funding, donations and increased debt to sustain their operations and programs. In particular, higher education institutions across the country have turned to private sector expertise and capital to find cost-effective and innovative solutions that shift the institutional risks and burdens associated with operating and maintenance of energy and water distribution systems and related infrastructure, particularly in light of the increasing demand for aging facilities and systems.
For example, the University of Florida (“UF”) located in Gainesville, Florida does not currently have any source of island power generation to support critical operations in the event of a grid outage or outage. Additionally, its current utility system is insufficient to meet the needs of UF’s growing campus, and its cogeneration facility is nearing the end of its lifespan. UF has chosen to look to the private sector to address these issues and build a resilient system that can meet its needs well into the future. With the assistance of its technical advisor, Jacobs Engineering Group, UF is currently in the second phase of its Central Power Plant Project, a competitive solicitation seeking a private sector partner to design, build, finance, operate and maintaining a campus thermal power plant. , a thermal piping distribution loop and an electrical substation, in addition to other related facilities. Four teams were recently shortlisted and will each submit their proposals to UF later this year.
Nationally, many universities, including several of the “Big Ten” such as the University of Iowa, Ohio State University and the University of Maryland, have also turned to the P3 model to select dealers. to reorganize their public service systems.
Notably, on March 11, 2020, the University of Iowa officially transferred management of its utility system to global energy provider ENGIE North America and Meridiam, an investment company. As well as benefiting from the expertise and investment of its private partners – including achieving the university’s goal of being coal-free by 2025 – UI’s partnership exemplifies how a public services project in PPP fits into the overall strategic plan and mission of a higher education institution. As part of its agreement, the university has received more than $1 billion in funding, $15 million of which will be used annually to support teaching, research and scholarships. Recently, the university’s P3 board awarded eight projects using its $15 million fund, including an interdisciplinary project to develop a new National Cancer Institute grant in the treatment of lung cancer at an early stage and a clinical trial to examine the impact of certain innovative treatments.
The P3 projects at UF and the University of Iowa, as well as the multitude of similar higher education public service P3s occurring nationwide, illustrate the flexibility of the P3 model to deliver holistic solutions that don’t just address critical utility systems to meet current and future institutional demands. , but also support campus-wide programs and even create new revenue streams. In addition, higher education institutions are excellent partners due to their long-term economic stability. Accordingly, the private partners also benefit financially from the operation of said utility systems as well as the collection of other associated fees and costs. The result is a win-win situation that we hope will produce a wide range of benefits for years to come.
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