Regents Approve Public-Private Partnership for University of Iowa Utility System
URBANDALE, IA – The Board of Regents, State of Iowa recently approved the establishment of a $1.165 billion public-private partnership (P3) with the University of Iowa (UI) utility system and ENGIE North America and Meridiam. The P3 agreement will help provide the UI with the resources it needs to support its core missions of teaching, research and scholarship.
“This agreement is an excellent step forward for the University of Iowa,” says Board of Regents President Dr. Michael Richards. “We must continue to be creative in leveraging our assets to find ways to provide the funding that Iowa’s public universities need to be their best.”
Under the agreement, ENGIE and Meridiam will pay $1.165 billion to the University of Iowa for a 50-year operating agreement for its utility system. Most of this upfront payment will be placed into an endowment. Annual proceeds from this endowment, projected at $15 million, will help provide the predictable, sustainable funding necessary for the UI to carry out its strategic plan. The UI retains ownership of the utility system and operation of the utility system will return to the university following the 50-year deal. No university staff positions will be eliminated under this agreement.
The University of Iowa will pay ENGIE and Meridiam a $35 million annual fee in years one-through-five of the deal, with the fee increasing by 1.5 percent annually thereafter. The UI will use $166 million of the lump sum to pay off existing utility bonds and consulting fees.
As part of the P3, ENGIE and Meridiam will adopt the UI’s existing goal of operating coal-free by 2025 or sooner and continue campus-wide sustainability efforts. In addition, ENGIE and Meridiam will continue to explore new sources of bio-fuels to create sustainable, lower-cost energy options.
The university began soliciting feedback from the UI Faculty Senate, Staff Council and Student Government in February and submitted a request for qualifications using that feedback in April. Informational sessions were held in both March and May prior to requests for qualifications and requests for proposals, respectively. This timeline provided significant opportunity for campus feedback. Additionally, the three-member 501c3 board in charge of operating the P3 fund will include a representative from the UI Faculty Senate.
“I applaud the university for its open, inclusive process leading to this agreement,” President Richards says. “Iowa’s public universities believe in shared governance and value input from all stakeholders.”
Governor Kim Reynolds encouraged the Board of Regents and the universities to “think outside the box” when it came to finding new sources of funding. President Richards charged the Regents and university leaders with maximizing existing resources and finding creative new funding sources during a discussion on resource management at the April 2018 Board meeting. This agreement is a prime example of generating much-needed resources from existing university assets.
“University of Iowa leadership, particularly President Harreld, are to be commended for this tremendous deal,” Richards says. “Without their guidance and efforts, as well as that of previous Boards, none of this would have happened.”