TO THE MEMBERS OF THE COMMITTEE ON GROUNDS AND BUILDINGS: DISCUSSION ITEM EXECUTIVE SUMMARY

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1 Office of the President 107 TO THE MEMBERS OF THE COMMITTEE ON GROUNDS AND BUILDINGS: DISCUSSION ITEM For the Meeting of January 18, 2005 ENGINEERING UNIT 3, IRVINE CAMPUS EXECUTIVE SUMMARY Campus: Irvine Project: Engineering Unit 3 Committee on Finance approval of external financing in the amount of $8,591,000 to be requested at its meeting of January 20, 2005 Total Cost: $65,730,000 to be funded from a combination of State funds ($53,963,000), external financing ($8,591,000), and campus funds ($3,176,000). Previous Actions: November 2003: Approval of the project as an element of the Regents Budget for Capital Improvements. November 2004: Approval of the Project as an element of the Regents Budget for Capital Improvements, including inflationary increase for C and E portions of Engineering Unit 3 budget. Project Summary: The new 86,895 assignable square fee (asf) (149,938 gross square feet (gsf)) Engineering Unit 3 building would provide 68,795 asf for the Henry Samueli School of Engineering for instructional and research laboratories and faculty and administrative offices, 5,400 asf for a 350-seat lecture hall, and 12,700 asf for surge space. Issues: External financing of $8,591,000 Building cost/gsf: $307

2 COMMITTEE ON 107 GROUNDS AND BUILDINGS January 18, BACKGROUND In conformance with University policy that all funds be in hand at time of bid, approval of external financing in the amount of $8,591,000 for the construction of Engineering Unit 3 building, Irvine campus, will be requested from the Committee on Finance at its January 2005 meeting. As the capital project budget has been approved by The Regents, that request will seek approval only to debt-finance a portion of the project funding. The budget for this project totals $65,730,000, to be funded from a combination of State funds ($53,963,000), campus funds ($3,176,000), and external financing ($8,591,000). The Engineering Unit 3 project would construct 86,895 asf (149,938 gsf), including space for the Henry Samueli School of Engineering, a 350-seat general assignment lecture hall, and surge space to address other high-priority academic needs. The Regents Budget for Capital Improvements, which included this project, was approved by The Regents at its meeting of November The approved project budget was $63,184,000, to be supported with $51,443,000 of State funds, $3,150,000 of University funds, and $8,591,000 of external financing. In accordance with standard University procedure, this approval by The Regents authorized only the project budget and specifically did not authorize the acquisition of financing. In November 2004, The Regents approved the Regents Budget for Capital Improvements. This project was included in the budget and was allotted an additional $2,546,000 for inflationary adjustments to the C (Construction) and E (Equipment) phases of the work. The project budget is now $65,730,000, supported with State funding of $53,963,000, University funds of $3,176,000, and external financing of $8,591,000. Project Description The Engineering Unit 3 project would construct 86,895 asf of space. Of this total, 68,795 asf would be for the Henry Samueli School of Engineering to provide teaching and research laboratories and academic and administrative office space, 5,400 asf would provide a 350-seat general assignment lecture hall, and 12,700 asf would be for surge space to address other highpriority academic needs. The project site is in the Engineering-Computer Science Quadrangle, adjacent to the Computer Science Unit 3 building currently in construction. This location is occupied by two woodframed buildings that would be demolished as part of the project. The site is in conformance with the campus s revised Long Range Development Plan. The project is scheduled for award in January 2006, with completion in spring CEQA Classification In accordance with University of California guidelines for the implementation of the California Environmental Quality Act, environmental documentation will be prepared for consideration in conjunction with the project design review. (Attachments)

3 ATTACHMENT 1 PROJECT STATISTICS ENGINEERING UNIT 3 CAPITAL IMPROVEMENT BUDGET IRVINE CAMPUS CCCI 4328 Cost Category Amount % of Total Site Clearance $628, % Building 46,066, % Exterior Utilities 964, % Site Development 1,782, % A/E Fees (a) 4,137, % Campus Administration (b) 1,949, % Surveys, Tests 729, % Special Items (c ) 1,165, % Contingency 1,958, % Total $59,378, % Group 2 & 3 Equipment 6,352,000 Total Project $65,730,000 Statistics Gross Square Feet (gsf) (d) 149,938 Assignable Square Feet (asf) (d) 86,895 Ratio asf/gsf (%): 58% Building Cost/gsf (d) $307 Building Cost/asf $530 Comparable University Projects at CCCI 4328 CIB Dated Campus Project Building Cost/GSF Ratio gsf/asf (N/A) (N/A) University of California Benchmark Model $ % 03/07/01 Irvine Cal-(IT)2 Facility at Irvine $ % 07/02/03 Riverside Materials Science and Engineering Building $ % (a) A/E fees include executive architect basic services, and other professional design contract costs. (b) Campus administration includes project management and inspection. (c) Special Items include independent seismic review, value engineering/constructability review, agency review, utility infrastructure coordination, subsurface soils consultant, topographic/as-built survey, environmental impact report, and interest during construction (d) Gross square feet (gsf) is the total area, including all usable areas, stairways, and space occupied by the structure itself. Assignable square feet (asf) is the net program area.

4 ATTACHMENT 2 FINANCIAL FEASIBILITY (for information only) The total cost for the Engineering Unit 3 project is estimated at $65,730,000. The project would be funded from State funds ($53,963,000), campus funds ($3,176,000), and external financing ($8,591,000). Based on long-term debt of $8,591,000 amortized over 30 years at percent interest, the estimated average annual debt service would be $632,000. Repayment for the Engineering Unit 3 debt would be from campus Opportunity Funds. Opportunity Funds are a portion of the indirect cost recovery generated by federal contracts and grants. By University policy, up to 65 percent of the campus s total Opportunity Funds may be pledged for debt service, but only up to 33 percent of actual debt service may be paid from Opportunity Funds. In fiscal year , the second full year of occupancy and first full year of principal and interest for the project, 61.2 percent of Opportunity Funds are pledged for debt service. Inclusive of this amount for the external financing, the campus is within the prescribed Opportunity Fund pledge and payment limits. Project Title: Engineering Unit 3 SUMMARY OF FINANCIAL FEASIBILITY ANALYSIS Total Estimated Project Costs: $65,730,000 Proposed Source of Funding: State Funds $53,963,000 Campus Funds $ 3,176,000 External Financing $ 8,591,000 Total $65,730,000 Projected Financing Terms: Interest Rate: 6.125% Duration: 30 years Annual Debt Service: $632,000 Campus Opportunity Funds Information (FY ): (1) Pre-Off-the-Top Existing Garamendi Projects $ 3,570,000 Opportunity Funds Generated $14,769,000 Total Estimated Annual Revenue $18,339,000

5 ATTACHMENT 2 continued Estimated Average Annual Debt Service/O&M Expenditures (FY ): (1) Proposed Project Debt Service $ 632,000 Existing Garamendi Debt Service and O&M Expenditures $ 3,570,000 Pledged Expenditures Other Approved Capital Projects $ 6,720,000 Planned Projects Not Yet Approved (2) $ 306,000 Total Estimated Annual Expenses $11,228,000 Percentage of Opportunity Funds Pledged for Debt: 61.2% Debt Service Coverage: 1.63x (1) Fiscal year represents first full year of principal and interest for the project (2) This project estimate is based on the information reported in the to Five Year Non State Capital Program section for the Irvine campus and is subject to change based on campus priorities