F 1 STANDING COMMITTEES. Finance and Asset Management Committee. UW One Capital Plan INFORMATION ITEM

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1 STANDING COMMITTEES F 1 Finance and Asset Management Committee UW One Capital Plan INFORMATION ITEM This item is being presented for information only. BACKGROUND This is a standing agenda item. Attachments 1. One Capital Plan Process 2. Major Capital Assets Summary Scorecard (As of April 30, 2016) 3. Monthly Debt Report F 1/206-16

One Capital Plan Process Planning Cycle The Prioritized One Capital Plan captures three bienniums of planned projects with overall targets established for each fund source.

2 One Capital Plan Process Planning Cycle The Prioritized One Capital Plan captures three bienniums of planned projects with overall targets established for each fund source. The Plan will be re-evaluated on a two-year cycle corresponding with the State Capital Budget Request and modified depending on the State's actions and newly emerging priorities. Funding Targets by Source Planning targets are set by examining historical funding trends for both total value and the intended use to ensure the feasibility of each planning target. The Capital Plan can be adjusted based on these targets. Note funding shown below is based on the approval date by the Regents. F 1.1/ ATTACHMENT 1 Page 1 of 3

One Capital Plan Process Campus Planning Assumptions Student enrollment in Seattle (46,000 FTE) will remain flat for the next few years, then grow 1.

grow at 2% annually Student enrollment at Bothell (4,900 FTE) is expected to grow to 6,000 FTE by 2023 Student enrollment at Tacoma (4,600 FTE) is expected to grow to 6,000 FTE by 2023 Campus

6 million GSF by 2023 Total square footage in Bothell (currently 700,000 GSF) should grow by roughly 200,000 GSF by 2023 Total square footage in Tacoma (currently 735,000 GSF) should grow by roughly

3 One Capital Plan Process Campus Planning Assumptions Student enrollment in Seattle (46,000 FTE) will remain flat for the next few years, then grow 1.5% annually - 49,000 FTE by 2023 Faculty and staff growth in Seattle (21,500 FTE) will follow a similar trend - 23,000 FTE by 2023 Research expenditures to remain flat for the next few years, then grow at 2% annually Student enrollment at Bothell (4,900 FTE) is expected to grow to 6,000 FTE by 2023 Student enrollment at Tacoma (4,600 FTE) is expected to grow to 6,000 FTE by 2023 Campus Planning Targets Total square footage in Seattle should grow by roughly 1.6 million GSF by 2023 Total square footage in Bothell (currently 700,000 GSF) should grow by roughly 200,000 GSF by 2023 Total square footage in Tacoma (currently 735,000 GSF) should grow by roughly 165,000 GSF by 2023 Capital reinvestment in existing facilities should be between % of the CRV or $ M per year in Seattle Deferred maintenance backlog should be reduced in part by removing poorly utilized buildings - target ,000 GSF Overall Capital Plan Goals In addition to helping achieve the planning targets listed above, individual projects can be linked to larger Strategic Initiatives with corresponding Goals and Implementation Strategies, which create a framework for the individual projects. This ensures alignment with the Campus Master Plan, Academic Facilities Planning, and the Capital Campaign. Strategic Initiatives Capital Plan Goals Implementation Strategy 1. Student Experience 2. Innovation Mindset - Improve learning environments - Focus local/minor capital on classroom improvements - Accommodate areas of growth - Create new flexible spaces, considered as shell/fit out - Recapture underutilized space - Provide quality student housing - Proforma driven projects with increasing equity - Innovation District in West Campus - Combine University investments with private development to attract research partners 3. Public as a Philosophy - Improve public realm - Attach development of open spaces to major projects and private development 4. Transforming Administration - Consolidate non-core functions in - Develop tower above Sound Transit for office and other U District to decant other sectors uses - flexible space designed for churn - Address infrastructure & renewal - Leverage new and existing funding sources F 1.1/ Page 2 of 3

One Capital Plan Process Strategic Alignment The draft One Capital Plan (see following page) can be checked against initial planning targets by aligning projects with Strategic Initiatives and

The bar chart shows the current draft One Capital Plan compared to established funding targets. State Debt Dono Local Other Deferred Maintenance Needs Based on a total replacement value of $6.

4 One Capital Plan Process Strategic Alignment The draft One Capital Plan (see following page) can be checked against initial planning targets by aligning projects with Strategic Initiatives and funding targets. Diagrams below show the current draft plan with heavy investments in the student experience. The bar chart shows the current draft One Capital Plan compared to established funding targets. State Debt Dono Local Other Deferred Maintenance Needs Based on a total replacement value of $6.4 billion for the campus buildings and grounds, the University should reinvest $ million per year ( % CRV) in its existing facilities - including capital projects, minor modifications and preventative maintenance. The chart to the left illustrates the amount of spending projected in the draft One Capital Plan relative to these targets. Any annual shortfall results in increased levels of deferred maintenance in the future. The chart on the right illustrates the source and uses of funds for minor capital projects. Total Investment Target Minor Capital Renewal Funds Sources F 1.1/ Uses Page 3 of 3

5 Major Capital Assets Summary Scorecard (As of April 30, 2016) Project Target Cost Est. ($M) Phase Bldg. Type Gross Square Footage BoR Approved Cost ($M) Current Forecast *1 Cost to Date Scheduled Use Date Appr'vd Forecast *2 Selections A/E Contractor % Utilization Business Equity Award in $M Major Construction Projects Animal Research and Care Facility $ Const. Research 83,000 $ $ $ /17 4/17 ZGF Skanska 2.6% $ 1.4 Burke-Gilman Trail Phase 1 & Phase 2 Design 6.1 Const. Infrastruct. n/a /16 6/16 KPFF CA Carey Corp 10.1% 0.9 Computer Science and Engineering Exp Planning Research 130, /18 LMN Mortenson X X Denny Hall Renovation 56.9 Const. Classroom 86, /16 8/16 THA BNBuilders 10.0% 2.4 Fluke Hall Renovation 28.5 Design Research n/a /16 8/17 HDR Hoffman X X GIX Tenant Improvements 19.6 Design Classroom 99, /17 9/17 Bora Skanska X X Life Sciences Building Design Classroom 189, /18 7/18 Perkins+Will Skanska X X NanoEngineering and Sciences Building 58.9 Const. Research 78, /16 4/17 ZGF Hoffman 8.5% 2.2 New Burke Museum 79.0 Design Other 110, /17 4/18 Olson Kundig Skanska X X North Campus Housing Replacement Design Housing n/a /18 6/18 Kieran Timberlake WG Clark X X Police Department Facility 19.5 Const. Other 29, /16 6/16 Miller Hull BNBuilders 10.7% 1.6 UW Medicine South Lake Union Design Research 180, /17 7/18 Perkins + Will Sellen X X Tacoma Urban Solutions Center 28.0 Bidding Student 43, /17 8/17 Miller Hull Mortenson X X UWMC Expansion Phase II * Const. Medical 244, /17 10/17 NBBJ Mortenson 27.0% 22.2 West Campus Utility Plant * 30.5 Const. Infrastruct. 17, /17 1/17 Miller Hull Mortenson 7.0% 0.7 Other Capital Projects $ 31.4 HR Payroll Modernization* $ 75.9 IT n/a n/a $ 75.9 $ 75.9 $ /14 6/17 Totals $ 1,365 1,290,786 $ 1,317 $ 1,437 $ 358 Legend 1. Forecast to Budget Variance: On Budget = Green; 1-10% Over Budget = Yellow; >10% Over Budget = Red 2. Schedule Variance: On Schedule = Green; Within One Month = Yellow; > One Month = Red X = Selection of the design firm for this project was made prior to Capital Planning & Development's expanded definition of and enhanced focus upon business equity. There is no business equity utilization reported on this project to date. * forecasts that have changed since previous meeting F 1.2/ ATTACHMENT 2 Page 1 of 1

6 Long Term Credit Rating: Aaa/AA+ Internal Lending Rate: 4.75% Weighted Average Cost of Capital: 3.56% Monthly Debt Report As of 4/30/2016 Recent Events Long-term tax-exempt interest rates remain low, with the current 30-year fixed borrowing cost estimated to be 3.54% Short term interest rates continue to rise. The University re-priced commercial paper on May 4th with a 2-month term at 0.45% (up from 0.21%) Estimated Project Capacity FY (in millions) Total Debt Capacity $ A project capacity update was presented at the May Regents meeting based on 2015 audited financial statements and projections. Figures represent how much additional debt the University can issue over the next five years while aligning with peer minimum ratios $406 million of debt funded project capacity is available 755 Plus: Remaining CAP(1) Less: Authorized Projects(2) (430) Less: Court 17 Apartments(3) (19) Remaining Project Capacity $ 406 External Debt Portfolio - $2,349 Million The external portfolio as of 3/31/2016 was $2,356 million. This is $7.1 million lower than the previous report, which is a result of $7.1 million in principal payments Weighted average cost of capital: 3.56% Portfolio Composition: 98% fixed rate; 2% variable rate $123 million in internal funding provided by the CAP is excluded from the external debt portfolio Non-ILP Debt, 32% ILP Debt, 68% Millions Annual Debt Service Maximum Annual Debt Service $204M $210 $180 $150 $120 $90 $60 $30 $0 General Revenue Bonds State Issued Bonds, Payable by UW Lease Revenue Bonds Other CP (4) NWH Valley (5) (1) 10% of the Invested Funds (IF), less previously allocated Capital Assets Pool (CAP) dollars (2) Includes South Lake Union 3.2, Life Sciences,Housing Phase 4a and other authorized projects. Some of this debt has already been issued, leaving approximately $430 million of debt to be issued for authorized projects after the September 2015 General Revenue Bonds issue (3) Court 17 was approved by the Board in May 2016 (4) Excludes principal payments on Commercial Paper (5) Excludes Valley Limited Tax General Obligation Bonds F 1.3/ ATTACHMENT 3 Page 1 of 2

7 Monthly Debt Report As of 4/30/2016 Long Term Credit Rating: Aaa/AA+ Internal Lending Rate: 4.75% Weighted Average Cost of Capital: 3.56% Project Purpose Balance (1) Final Maturity Molecular Engineering Building Instruction and Research Dempsey Hall Instruction and Research Foege Building Instruction and Research UW Bothell Phase 3 Instruction and Research William H. Gates Law School Instruction and Research AAALAC Instruction and Research Ben Hall Instruction and Research Animal Research and Care Facilities Instruction and Research Denny Hall Instruction and Research Ocean Sciences Instruction and Research Physics-Astronomy Instruction and Research Other Instruction and Research Instruction and Research 28.5 various Subtotal Instruction and Research South Lake Union (Ph I, II, 3.1, & 3.2) UW Medicine UWMC Expansion UW Medicine Valley Medical Center UW Medicine NW Hospital UW Medicine UWMC Surgery Pavilion UW Medicine Other UW Medicine UW Medicine 29.9 various Subtotal UW Medicine Housing Expansion Student Life Husky Union Building Student Life IMA Building Student Life Radford Court Apartments Student Life Nordheim Court Student Life Bothell Student Center Student Life Ethnic Cultural Center Student Life UW Tacoma YMCA Student Life Other Student Life Student Life 29.9 various Subtotal Student Life UW Tower Academic Support Cobb Building Academic Support HR Payroll Modernization Academic Support 25.0 n/a 4225 Roosevelt Academic Support Building Academic Support Other Academic Support Academic Support 38.3 various Subtotal Academic Support Husky Stadium Athletics Husky Ballpark Athletics Other Athletics Athletics 7.4 various Subtotal Athletics Available Proceeds Unallocated 65.2 Total University Outstanding Debt $2,349 (1) Will not exactly match ILP balances due to bond premiums and use of the CAP. Outstanding External Debt (in millions) % by Purpose Instruction and Research, 13% UW Medicine, 35% Student Life, 28% Academic Support, 10% Athletics, 11% Unallocated, 3% 100% F 1.3/ Page 2 of 2

F 2 STANDING COMMITTEES. Finance and Asset Management Committee. Capital and Debt Update INFORMATION ITEM

F 2 STANDING COMMITTEES. Finance and Asset Management Committee. Capital and Debt Update INFORMATION ITEM STANDING COMMITTEES F 2 Finance and Asset Management Committee Capital and Debt Update INFORMATION ITEM This item is being presented for information only. BACKGROUND This is a standing agenda item. The