GB1C Office of the President TO MEMBERS OF THE COMMITTEE ON : For Meeting of ACTION ITEM AMENDMENT OF THE BUDGET FOR CAPITAL IMPROVEMENTS AND THE CAPITAL IMPROVEMENT PROGRAM AND APPROVAL OF EXTERNAL FINANCING, TELEMEDICINE AND PRIME-HEQ EDUCATION FACILITY, SAN DIEGO CAMPUS EXECUTIVE SUMMARY Campus: Project: Proposed Action: Total Cost: Previous Actions: San Diego Telemedicine and PRIME-HEq Education Facility Approval of budget augmentation of $1,057,000 and external financing in the amount of $20,457,000. $60,227,000, to be funded from State funds ($35,000,000), external financing ($20,457,000), capitalized leases ($1,950,000), campus funds ($2,320,000), and University funds ($500,000). November 2006: The Regents approved the project for inclusion in the 2007-08 State Budget for Capital Improvements. March 2007: A budget augmentation of $500,000 was administratively approved. Project Summary: The San Diego campus will construct a facility of approximately 48,800 assignable square feet to accommodate expanded medical school enrollments for a new program, called the Program in Medical Education- Health Equity (PRIME-HEq), and to support a major new initiative in the use of telemedicine to improve health care access. Issues: Approval of external financing of $20,457,000 to replace gift funding Approval of budget augmentation of $1,057,000 associated with financing costs Building cost per gsf: $534
COMMITTEE ON -2- GB1C The President recommends that: RECOMMENDATION 1. The Committee on Grounds and Buildings recommend to The Regents that the 2007-08 Budget for Capital Improvements and the Capital Improvement Program be amended as follows: From: San Diego: Telemedicine and PRIME-HEq Education Facility preliminary plans, working drawings, construction, and equipment $59,170,000, to be funded from State funds ($35,000,000), gift funds ($20,375,000), campus funds ($3,295,000), and University funds ($500,000). To: San Diego: Telemedicine and PRIME-HEq Education Facility preliminary plans, working drawings, construction, and equipment $60,227,000, to be funded from State funds ($35,000,000), external financing ($20,457,000), capitalized leases ($1,950,000), campus funds ($2,320,000), and University funds ($500,000). 2. The President be authorized to obtain external financing not to exceed $20,457,000 to finance the Telemedicine and PRIME-HEq Education Facility, subject to the following conditions: a. Interest only, based on the amount drawn down, shall be paid on the outstanding balance during the construction period. b. Repayment of financing shall be from the San Diego Campus share of the University Opportunity Fund. c. The general credit of The Regents shall not be pledged. 3. The Officers of The Regents be authorized to provide certification that interest paid by The Regents is excluded from gross income for purposes of federal income taxation under existing law. 4. The Officers of The Regents be authorized to execute all documents necessary in connection with the above. A key to abbreviations and the project description are attached.
COMMITTEE ON -3- GB1C KEY Capital Improvement Program Abbreviations S P W C E Studies Preliminary Plans Working Drawings Construction Equipment - State Funds (no abbreviation) F G HR I LB LR N R U X Federal Funds Gifts Hospital Reserve Funds California Institutes for Science and Innovation Bank Loans or Bonds (External Financing includes Garamendi, Bonds, Standby, Interim, and Bank Loans) Regents Loans (Internal Loans) Reserves other than University Registration Fee (Housing and Parking Reserves) University Registration Fee Reserves Regents Appropriations (President s Funds, Educational Fund) Campus Funds CCCI California Construction Cost Index EPI Equipment Price Index
COMMITTEE ON -4- GB1C 2007-08 Budget for Capital Improvements and Capital Improvement Program Scheduled for Regents' Allocation, Loans, Income Reserves, University Registration Fee Reserves, Gift Funds and Miscellaneous Funds Campus and Project Title (Total Cost) Approved Proposed 2007-08 San Diego Campus Telemedicine and PRIME-HEq Education Facility P $ 1,460,000 P $ 500,000 X P ($ 398,000) X P $ 500,000 U P $ 398,000 LB W $ 1,840,000 W $ 125,000 X W ($ 1,042,000) G W $ 1,042,000 G W $ 1,042,000 LB C $ 29,700,000 C $ 2,043,000 X C ($ 17,960,000) G C $ 17,960,000 G C $ 19,017,000 LB E $ 2,000,000 E ($ 577,000) X E $ 627,000 X E ($ 1,373,000) G E $ 1,373,000 G E $ 1,950,000 LB ($60,227,000) BACKGROUND The San Diego campus requests approval to obtain external financing of $20,457,000 and a budget augmentation of $1,057,000 resulting from associated financing costs for the Telemedicine and PRIME-HEq Education Facility. The revised total project cost would be $60,227,000. In November 2006, The Regents approved the 2007-08 State Budget for Capital Improvements, which included the Telemedicine and PRIME-HEq Facility project at a total project budget of $58,670,000. In March 2007, an increase in the project budget of $500,000 was administratively approved in order to accelerate the preliminary planning phase prior to the availability of State funds, revising the project cost to $59,170,000. When the project was approved, it was anticipated that $20,375,000 would be funded from gifts. As of July 2007, gift funds have not been raised for this project and in order to keep the project moving forward at the approved scope, approval of external financing is requested in the amount of the gift funds plus an estimate of interest during construction.
COMMITTEE ON -5- GB1C Program Description UCSD School of Medicine recently established an innovative program known as the Program in Medical Education-Health Equity (PRIME-HEq). PRIME-HEq will produce a cadre of physicians who will focus on providing health care to medically underserved populations and other at-risk populations, such as the deaf and developmentally disabled. The program will add one year of academic education to create a five-year experience, but the focus on PRIME-HEq will begin with the first year of medical school. The goals of the program are to: Train clinicians, research scientists, and advocates who will address health disparities among medically underserved ethnic and socioeconomic groups Create a diverse community of scholars who will develop, transmit, and apply new knowledge regarding healthcare disparities and methods for addressing those inequities Promote a multidisciplinary community/university partnership to reduce/eliminate health disparities This program has been a catalyst for major curricular reform in the UCSD School of Medicine. With the initiation of this program, the medical school (both faculty and students) will be reorganized into Learning Communities that will serve as semi-autonomous groupings of faculty and students from different stages of training. The communities will promote interactions among the faculty and students, as well as provide mentorship and facilitate the development of professional patterns of behavior. The UCSD School of Medicine has a long history of partnership with community programs and clinics that deliver health care to needy populations. The telemedicine program will play a central role in continuing to provide opportunities for service and student study centered on health disparities. The campus will establish a network of community clinics linked by telemedicine, substantially increasing the number of patients receiving specialty care and helping to bring advances in care from the bench to the bedside. This project will provide space to accommodate expanded medical school enrollments for PRIME-HEq and to support a major new initiative in the use of telemedicine to improve health care access. Project Description Significant changes in medial education over the past several years include small group teaching, computer-based learning, and use of simulation and technology. These are all aspects of the PRIME-HEq curriculum for which UCSD does not have facility capabilities. Teaching facilities dating from the early years of the School of Medicine are inadequate to accommodate the additional PRIME-HEq students, and the medical school lacks state-of-the-art audiovisual, computer, and communications capability essential for telemedicine. This project will construct approximately 48,800 asf of instruction, academic office and support, patient care, and student support space for the School of Medicine. The new facility will connect
COMMITTEE ON -6- GB1C the resources of UCSD s tertiary care center to underserved clinics and allow the campus to extend outreach efforts to the Indian reservations and other underserved areas. The scope of the project has not changed since approval of the project budget in November 2006, and includes the following space program. Telemedicine and PRIME-HEq Facility Space Program Program Total ASF State-funded Space Components Telemedicine Training Center 10,200 Telemedicine Consultation Center 1,000 Clinical Skills Training and Medical Simulation Center 8,500 Other PRIME Requirements 5,500 (classrooms, academic offices, student services, administrative support, learning communities) Subtotal State-funded 25,200 Non-State funded Space Components Auditorium 5,250 Large Group Learning Rooms 2,400 Classrooms 6,000 Learning Communities facilities 1,800 Student services and food service facilities 8,150 Subtotal Non-State-funded 23,600 Total Project 48,800 The Telemedicine Training Center will include a smart classrooms, group breakout and computer testing rooms, information technology and support space, equipment storage space, and staff offices. The Telemedicine Consultation Center will be comprised of consultation rooms and telemedicine staff offices. Included in the Clinical Skills, Training, and Medical Simulation Center will be mock examination rooms, monitoring rooms, simulation suite and control space, and staff office, conference space, and support space. Construction is expected to begin in October 2008, with completion in October 2010. The project will be located within the School of Medicine Neighborhood adjacent to the Medical Teaching Facility. Additional project cost information may be found in Attachment 1.
COMMITTEE ON -7- GB1C Policy on Sustainable Practices This project will comply with the University of California Policy on Sustainable Practices. As required by this policy, the principles of energy efficiency and sustainability will be adopted to the fullest extent possible, consistent with budgetary constraints and regulatory and programmatic requirements. Specific information regarding energy efficiency and sustainability will be provided when the project is presented for design approval. CEQA Classification In accordance with University of California guidelines for the implementation of the California Environmental Quality Act (CEQA), an Initial Study/Mitigated Negative Declaration will be prepared for consideration by The Regents in conjunction with the project design review and approval at a future meeting. Financial Feasibility The total project cost of $60,227,000 would be funded from State funds ($35,000,000), external financing ($20,457,000), capitalized leases ($1,950,000), campus funds ($2,320,000), and University funds ($500,000). Based on long-term debt of $20,457,000 amortized over 30 years at 5.75 percent interest, the estimated average annual debt service would be $1,447,000. The campus has pledged its share of the University Opportunity Fund as a source of repayment. The University Opportunity Fund Debt Repayment Policy requires that campuses meet two financial tests: (1) that the amount pledged for debt payments shall not exceed 65 percent of the campus s total Opportunity Funds allocated each year, and (2) that no more than 33 percent of the campus s total Opportunity Funds allocated each year are used for debt service payment. The San Diego campus meets both tests. In FY 2012-13, the second full year of occupancy and first full year of principal and interest for the project, 61 percent of the campus s total Opportunity Funds allocated would be pledged for debt service. Gift fund raising is still ongoing. To the extent gifts are raised and depending on the timing of receipt of the gifts, the need for external financing may be reduced. In compliance with Regents policy, all funds necessary to complete construction will be in hand prior to issuing the project for bid. Additional financial feasibility information may be found in Attachment 2. (Attachments)
PROJECT STATISTICS UCSD TELEMEDICINE AND PRIME-HEQ EDUCATION FACILITY CAPITAL IMPROVEMENT BUDGET SAN DIEGO CAMPUS CCCI 4890 ATTACHMENT 1 Cost Category % of Total Site Clearance $ 510,000 0.9% Building 43,995,000 78.2% Exterior Utilities 962,000 1.7% Site Development 1,186,000 2.1% A/E Fees 4,365,000 7.8% Campus Administration (a) 1,290,000 2.3% Surveys, Tests, Plans, Specs 312,000 0.6% Special Items (b) 1,257,000 2.2% Contingency 2,350,000 4.2% Total $ 56,227,000 100.0% Group 2 & 3 Equipment 4,000,000 Total Project $ 60,227,000 Comparable University Projects at CCCI 4890 Date of Latest Approval* Campus Project Ratio gsf/asf Building Cost/GSF* 03/20/07 Davis Telemedicine Resource Center & Rural _ PRIME Facility 59% $481 03/09/07 Irvine Telemedicine / PRIME - LC Facilities 60% $524 * Date of latest approved CIB Statistics Gross Square Feet (gsf) (c) 82,350 Assignable Square Feet (asf) (c) 48,800 Ratio asf/gsf 59% Building Cost/gsf $534 (a) Campus administration includes project management and inspection. (b) Special items include environmental documentation; value engineering; special design consultants for simulation and telemedicine space, totaling $200,000, and interest during construction of $1,057,000. (c) Gross square feet (gsf) is the total area, including usable area, stairways, and space occupied by the structure itself. Assignable square feet (asf) is the net usable area.
SUMMARY FINANCIAL FEASIBILITY ANALYSIS ATTACHMENT 2 Project Title: UCSD Telemedicine and PRIME-HEq Education Facility Total Estimated Project Cost $ 60,227,000 Proposed Sources of Funding External Financing $ 20,457,000 State Funds 35,000,000 Capitalized Leases 1,950,000 University Funds 500,000 Campus Funds 2,320,000 Total $ 60,227,000 Proposed Financing Terms External Financing - $20,457,000 Interest Rate: 5.75% Duration: 30 years San Diego Opportunity Fund Information (2012-13) (1) : Estimated Annual Revenue Pre-Off-the-Top Generated (Garamendi) $ 13,020,000 Opportunity Funds Generated 39,452,000 Total Estimated Annual Revenue $ 52,472,000 Estimated Average Annual Debt Service Existing Garamendi Projects Debt Service and OMP $ 13,020,000 Potential Debt Service on Proposed External Financing 1,447,000 Pledged Expenditures Other Capital Projects 17,571,000 Total Estimated Annual Expenses $ 32,038,000 % Opportunity Fund Pledged for Debt 61% Debt Service Coverage 1.64x (1) Fiscal Year 2012-13 represents first full year of principal and interest payments.