IOWA CITY — Gov. Kim Reynolds plans Tuesday morning to be at the Iowa Board of Regents office in Urbandale for an “announcement.”
While her public schedule does not provide details, her 10 a.m. visit coincides with the start of a special board meeting to consider entering into what officials describe as a 50-year deal for a company to operate the University of Iowa utility system in exchange for creating a multimillion dollar endowment.
The nine regents who govern Iowa’s public universities just days ago received four finalist proposals to review — in advance of a vote to approve the massive deal, which would mark the first of its kind in Iowa.
Details of any chosen vendor will become public at the start of the Tuesday meeting. The UI and Board of Regents have declined to release the number of bidders who responded to an initial call for qualifications, the number offered the chance to respond to a follow-up request for proposals and the request for proposals itself — which typically is made public, but was not in this case.
The public also has not been privy to specifics of proposals, including how much each is being offered upfront.
UI administrators last week hosted a public webinar for the regents during which they spelled out some of their financial projections for the deal — noting the payment is expected to cash flow more than $3 billion over the life of the arrangement. UI administrators have said they will put those earnings toward initiatives aligned with the campus’ strategic plan and also toward covering some of its utility bills, which it still will be responsible for paying, along with staff salaries, capital expenses and a fixed fee owed to the operator.
State Sen. Joe Bolkcom, D-Iowa City, in a statement last week raised concerns about the “breakneck speed” at which the board was moving toward approving the “plan to privatize management of the institution’s electricity and water systems.”
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His noted the public won’t be allowed to comment during Tuesday’s meeting after hearing for the first time specifics of the proposed partner.
“Iowans deserve a far more transparent process and a timely sharing of the financial details of such a complicated long-term deal,” Bolkcom said in his statement.
When asked last week about the potential for public comment, regent spokesman Josh Lehman told The Gazette the board allows public comment at regularly scheduled meetings — not special meetings.
“The proposed public-private partnership has been discussed publicly for many months, including having numerous meetings on UI’s campus,” Lehman said.
UI spokeswoman Ann Bassett said in a statement the university has followed a competitive process that has “been in place for decades.”
“The university publicly announced its intention to investigate a public-private partnership on Feb. 8, 11 months ago. Since then the university has held six forums/comment sessions for the public and campus, as well as one information session with each of the four shared governance bodies,” her statement said. “President (Bruce) Harreld has spoken publicly about the process at seven regular Board of Regents meetings and provided a 90-minute information session for the Board on (Nov. 3), which was live-streamed and remains available on the Board’s website.”
Bolkcom raised red flags about possible risks in the deal, under which the campus agrees to make fixed payments to the new operator of $35 million, plus 1.5 percent more each year, along with standard costs for fuel, staff salaries and capital expenses.
What if the upfront lump sum the UI invests to help cover those costs and fund strategic initiatives doesn’t do as well as projected? he asked.
“The plan relies on the performance of the markets to succeed,” he said.
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During last week’s webinar, Harreld said his team modeled prospective returns on the endowment using historical trends.
“And we’ve tried to be quite conservative on that,” he said. “I think, if the future looks anything like the past — including the 2008 fiscal collapse — we could well see that annual return of this endowment be much higher than $15 million.”
When Regents Executive Director Mark Braun asked if Iowa taxpayers ever could be responsible for footing the annual fee, Harreld said “definitively no.”
“It’s the university,” he said.
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