116 3rd St SE
Cedar Rapids, Iowa 52401
IOWA CITY - University of Iowa executives this fall traveled to Madrid and Paris to vet a deal approved this week that will land the campus a lump sum of over $1 billion and turn its utilities operation over to private management for five decades.
In all, the UI spent more than $26,000 in travel expenses exploring the public-private partnership. Officials expect the deal, approved Tuesday by the Board of Regents, to generate about $15 million a year the UI can use to support its educational mission and strategic plan.
Most of those travel expenses - $25,319 - went toward one overseas trip to Paris and Madrid from Sept. 8-14. Traveling were UI President Bruce Harreld, Senior Vice President of Finance and Operations Rod Lehnertz, Chief Financial Officer and Treasurer Terry Johnson and UI General Counsel Carroll Reasoner.
One other trip Harreld, Lehnertz and Johnson took Sept. 19-20 to Minneapolis cost $1,136, according to documents the UI provided.
Harreld's transportation expenses for the overseas trip - $6,432 - were more than three times those for Lehnertz and Johnson and nearly double Reasoner's. The UI said that was due to 'the timing of President Harreld's flights and also the cost in effect when the flight reservations were made.”
The UI did not incur any other travel expenses related to its inquiry.
Two French companies - energy firm Engie and asset management firm Meridiam - won the deal and had representatives in Urbandale Tuesday for regent approval of the agreement.
Officials told The Gazette that bidders who entered into the extensive inquiry process knew they would incur 'significant costs” in putting together a proposal, and the UI 'has not reimbursed and will not reimburse bidders for their proposal costs, including travel expenses.”
UI spokeswoman Anne Bassett said the university's travel costs were for 'due diligence.”
'A small group of senior administrators met face-to-face with leadership of the potential operating entities,” Bassett said. 'It was one more step in helping make sure any outcome was in the best interest of the university and its constituents.”
UI administrators met with four partnership finalists - including Meridiam and Engie, which are based in and near Paris; Veolia, also headquartered in Paris; Sacyr, based in Madrid; and Ever-Green Energy, of St. Paul, Minn.
The travel expenses are included in a total estimated $13 million of consulting fees the administration plans to pull from the $1.165 billion payment before investing the lump sum in an endowment it can tap to cover utility costs and strategic initiatives.
In addition to that $13 million, the university plans to take $153 million to pay off its utility bonds - leaving about $999 million for the endowment that, if it produces a 4 percent return annually, is expected to cash flow more than $3 billion over the life of the deal.
Accounting for most of the $13 million in consulting fees are payments owed to four companies - three of which the university hired without soliciting public bids, per the campus' standard procurement process.
Wells Fargo Securities, among those hired without a public bid, will get the majority of the $13 million after signing on in November 2018 to provide financial advice.
Although the UI won't pay off its bond debt and consulting fees until after the deal's close - which is expected to take 90 days - Wells Fargo is expected to get about $11.65 million.
Jones Day was hired in October 2018 to serve as legal counsel for the inquiry and to date has been paid $1.05 million, according to UI officials.
Jacobs Engineering in January signed on to prepare a utility system condition assessment report for a lump sum of $185,000 plus expenses. To date, the university has paid Jacobs $192,453.
And UI hired Ernst and Young as an 'energy sector tax expert,” paying it $33,562.
The winning bidders - Engie and Merdiam - will share the upfront investment and form the University of Iowa Energy Collaborative to operate the utility system.
The endowment the UI plans to create will produce a new source of revenue for the campus' strategic initiatives.
In a presentation Wednesday, UI Associate Vice President for Enrollment Management Brent Gage warned that higher education pressures are expected to mount in the coming years with an enrollment 'cliff” on the horizon that will shrink the pool of prospective students.
During an annual 'Think Iowa City” gathering in Coralville, Gage said campuses nationally will be working harder to recruit students from larger geographic regions, requiring Iowa to be vigilant with its resources and in honing its reputation.
UI Provost Montse Fuentes, at the same event, stressed the importance of spreading the UI message and promoting its statewide impact while also securing resources - mentioning the new public-private partnership as another avenue to doing so.
Comments: (319) 339-3158; firstname.lastname@example.org