State report questions UC Merced expansion plans

UC Merced’s plan to double the size of its campus by 2020 got a splash of cold water Wednesday with the state Legislative Analyst’s Office releasing a report questioning the project. University and city officials, however, said they were confident the expansion will go forward.

The nonpartisan analyst office says the university’s $1.1 billion expansion plan uses an untried method that is less flexible and harder to predict than more traditional methods. To assess the hurdles, the report recommends the state Legislature immediately begin reviewing plans, and schedule hearings in late February and early March.

The “public-private” partnership, which will use a single long-term contract with one development team, has never before been used at a university in the country, according to officials.

The university is looking to have enough classroom, laboratory, dormitory and other space to accommodate up to 10,000 students by 2020, up from its current enrollment of 6,685 undergrad and graduate students.

Patti Waid, a spokeswoman for UC Merced, said the report’s findings were not a surprise. The University of California’s Board of Regents had many of the same concerns, and subsequent meetings with the school’s planners ironed out those bumps, she said.

“At this point, we don’t expect any delays,” she told the Sun-Star Wednesday.

Legislative hearings on public projects are not uncommon, she noted.

UC officials have said the public-private plan could allow buildings to go up quickly while cutting costs, a departure from the usual methods. The Legislative Analyst’s report says the state’s more traditional methods allow for flexibility, because officials can reassess the project’s needs in phases.

“UC’s latest proposal, by contrast, bundles together many facilities under one project,” the report says. “This approach reduces the number of times the state would be able to review and (assess) the campus’s growth priorities.”

The report concedes that the bundling has the potential to spring buildings up faster.

The Legislative Analyst estimates more than 40 percent of the new space and 50 percent of the cost for the expansion would be used for research facilities, the costliest type of construction.

It would be the prerogative of the state Legislature, the report says, to prioritize the types of instructional space to reduce costs and make room for more students.

The UC system has a few options when going about designing and building. The public-private method has no advantage over one of the other options, according to the report. It goes on to say that estimating the savings of the public-private method are unreliable.

“Although these savings are plausible, estimating costs associated with a public-private partnership are highly uncertain because the state has entered into only a few partnerships and evidence from other states is limited,” the report says.

The method would “almost certainly” cost more when it comes to borrowing money, the report says, because the private partner would face greater interest rates than other methods financed by the UC system.

The public-private partnership allows the UC system to avoid risks, instead putting those burdens on the private partner. The report says those risks may not be avoidable as “the partner most likely will factor these risks into its bid.”

Any unforeseen roadblocks or unclear language in the contract could turn into lengthy court battles, the report says. “Such disputes have occurred in other public-private partnership projects in California and created increased costs for the state agencies involved in the disputes,” the report says.

Not all of the report is critical of the plan. The UC system’s preferred method has a high potential for avoiding a maintenance backlog, the report says.

The campus expansion is often seen by local leaders and residents as happening hand-in-hand with the greater city of Merced. City Manager Steve Carrigan said he’s confident the university leaders and legislators will work out a plan that will benefit Merced.

Carrigan said he met recently with UC Merced leaders to talk about the $45 million Downtown Center, a 67,400-square-foot office space expected to employ more than 300 people in Merced’s downtown. “I’m more excited than ever,” he said. “They want to be our partner; we want to be their partner.”

The Legislature has until April 1 to review the proposal for expansion.

This story was originally published February 10, 2016 at 6:08 PM with the headline "State report questions UC Merced expansion plans."