Education

Regents set to consider University of Iowa public-private partnership

December meetings planned on deal to run UI's $100 million utility system

Bruce Harreld, University of Iowa president, gives a report during a Board of Regents meeting at the Iowa Memorial Union in Iowa City on Thursday, Sep. 13, 2018. (The Gazette)
Bruce Harreld, University of Iowa president, gives a report during a Board of Regents meeting at the Iowa Memorial Union in Iowa City on Thursday, Sep. 13, 2018. (The Gazette)

IOWA CITY — The Board of Regents will hold a pair of special meetings next month to consider a massive public-private partnership between the University of Iowa and a company to operate the campus’ $100 million utility system — a pairing the university expects will provide it an education endowment.

Under a first-of-its-kind deal for a public university in Iowa, the UI for 50 years would pay the partner an annual fee to operate its utilities and reimburse for care and maintenance.

In return, the partner would provide an upfront lump sum the university would place into an endowment and pull funds from annually to support its strategic plan, according to UI President Bruce Harreld.

Campus groups would be able to apply for three-year grants funded by proceeds from the endowment, he has said.

The UI would retain ownership of its utilities system, which includes production and distribution of steam, electricity, chilled water and other water treatment activities for the campus.

Regents announced Tuesday they will host a Dec. 3 informational webinar from the university on a public-private utility partnership, before holding a special meeting Dec. 10 to, among other things, consider a UI-private partnership.

Despite the announcement, UI officials Tuesday told The Gazette they have nothing new to share with the public.

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For months, the UI has been in an “exploration of a potential public-private partnership” and seeking proposals from interested companies. UI spokeswoman Anne Bassett said it still is engaged in that process.

Regents spokesman Josh Lehman said the board must approve any UI-private partnership. If the board does so Dec. 10, he said, the UI’s existing utility system bond debt — about $150 million — would be paid off.

He didn’t clarify how the debt would be resolved — whether the university or a new partner would pay.

The UI power plant recently was the focus of a climate change protest in Iowa City and the subject of an open letter from activists telling Harreld he was moving too slowly to wean the plant from burning coal.

The UI for years has touted a goal of being coal-free by 2025. In a speech in October, Regent David Barker said the UI was in talks with potential partners about ramping up the goal.

Ohio State guide

In 2017, Ohio State University provided a guide for such a partnership by collaborating with Engie Services, a global energy infrastructure and building services company.

In a 50-year deal, Engie paid an upfront sum of $1.015 billion plus made a $150 million commitment to support academic priorities.

Engie’s agreement expressed its “intention and desire to retain all eligible Ohio State University employees currently engaged in the operation and maintenance of the utility system.”

UI’s Harreld during a speech last month said he has met with all 122 employees who work in UI utilities eight times to assure them they can stick with the university if they don’t want to transition to the partner.

Secretive process

Although the university put out for public response its initial request for qualifications from potential partners, it did not do so with its subsequent request for proposals from those interested.

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In rejecting requests from The Gazette for a copy of the request for proposals for the partnership, UI officials said the document won’t be released “until a financial close is obtained and the procurement transition is complete or in the event the university does not select a bidder.”

UI officials said release of the document and final bid results upon completion of the transaction is covered under regent policy, though that policy does not mention the actual request for proposals.

Early in its exploration of a potential partnership, the UI hired a trio of consultants without soliciting public bids. Officials defended their hiring of a law firm, engineer and Wells Fargo by citing the unique nature of the endeavor.

In then launching the initial request for qualifications, Wells Fargo shared a confidential letter and information memorandum with a select group of companies — before publicly posting the document on the UI website. The UI has declined to say how many companies got the head start.

Harreld said last month his administration started with inquiries from 100 firms, narrowed that to 67, then got 16 bids over the summer.

Comments: (319) 339-3158; vanessa.miller@thegazette.com

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