Learning Curve

By Diane Greer

University Construction Programs Adjust to a Changing Market

Shrinking endowments, state funding reductions and fewer donations are forcing some area universities to cut, delay or restrain spending on construction projects.

And there might be more to come later this year as growing state budget deficits and endowment losses force institutions to tighten their belts further.

One silver lining in the economic slowdown is that the market for design and construction services is becoming more competitive, which has cut prices, and the rapid escalation of materials prices is abating. Prospective stimulus plans targeting public construction projects could also benefit state-funded institutions.

Cornell University

New York State sliced $3 million from Cornell University’s funding in 2008 and more reductions are expected. In the face of state budget cuts, lower donations and projected endowment losses, the university enacted a hiring freeze and a 90-day suspension of construction projects to reassess its capital budget.

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“We are proceeding with projects that are already in construction and projects with signed contracts,” says Kyu-Jung Whang, Cornell's vice president for facilities services.

Projects critical to the educational mission or with significant amounts of funding that can’t be repurposed for other projects will also move forward. The Plantations Welcome Center, a new 6,000-sq-ft visitor center with classrooms for the Botanical Gardens, is one of those projects.

Projects funded under SUNY’s five-year capital plan are also ongoing. “The state has indicated it will not slow down those projects,” Whang says. State-funded projects include the renovations of Fernow and Rice halls and new construction and renovation at the 136,000-sq-ft Stocking Hall/Food Science facility.

Meanwhile the new $80 million Humanities and 120,000-sq-ft Health Services buildings, both in design, are on hold due to the budget problems, Whang says.

City University of New York

CUNY submitted a five-year capital budget request for $5.2 billion covering major bonded projects already authorized by the City University Construction Fund. Currently there are $1.97 billion worth of projects under construction and $3.16 billion in active design and planning.

CLOCKWISE FROM TOP LEFT: Iris Weinshall, CUNY; Ann St. Mauro, Princeton Universtiy; Tony Calcado, Rutgers University; and Jim Bradley, UCONN.

The request is somewhat restrained in the face of the changing financial conditions and does not include any new initiatives, says Iris Weinshall, vice chancellor for facilities planning, construction and management.

Construction will start shortly on two science buildings at City College in Harlem, costing $700 million and occupying 400,000-sq-ft. Work will also begin on a $110-million 120,000-sq-ft academic building for Bronx Community College and a $325-million project that will replace Fiterman Hall at Manhattan Community College, which was heavily damaged on Sept. 11.

Design or planning is under way for a performing arts center at Brooklyn College, an academic building for City Tech, a science facility at Queens College, a School of Social Work for Hunter College and a new Law School in Queens.

Construction will start shortly for CUNY Advanced Science Research Center focusing on biosciences and biosensing at City College in Harlem. A second science building, housing the Science Facility, will also be built at City College. Together the new facilities will cost $700 million and occupy 400,000 sq.ft. (Photo courtesy of CUNY.)

Weinshall has received 21 proposals for the Law School, which will be built under a public-private partnership. “There is a lot of interest out there in particular because CUNY has the credit ability and the cash to move ahead with these projects,” she says.

CUNY successfully raised money in November when the State Dormitory Authority sold $150 million worth of bonds for the university. “The offering sold out right away,” Weinshall says. “The cash, at least for now, is there for us.”

Weinshall says she expects bids to start coming in lower as the market softens. She is already seeing reductions in materials pricing. “On one of our projects the steel came in about 10% under what we were carrying on our books,” she says.

Weinshall and her staff are also poised to take advantage of any potential state stimulus targeting construction projects. “We are putting together a list of projects that have been designed, are in design and are ready to go,” Weinshall adds.

Princeton University

Princeton University announced in November a $300 million reduction in its 10-year, $3.9 billion capital plan. “We have done a first cut based on what we know today,” says Anne St. Mauro, assistant vice president of design and construction. “But we need to keep paying attention to what is going on in the world.”

As a result of the cuts, the university is delaying for one year construction of new neuroscience and psychology buildings. The job was expected to start in the summer. Construction of an Art Museum satellite and storage facility, the renovation of Green Hall and new faculty and staff apartments will be postponed beyond 2016, the end of the current capital plan.

At Princeton work is moving forward on Butler Hall, a 113,000-sq.-ft., 288 bed dormitory. The facility will feature a green roof, underground storm water collection and triple pane windows. (Photo courtesy of Brian Wilson, Princeton University.)

Mauro says the economic slowdown has its benefits. “Our chemistry and dormitory projects are moving along incredibly, without the stumbling we’ve seen two years ago because of a lack of resource, whether it be materials or manpower,” she says.

She is also no longer rushing to get projects to market. “Escalation is less of an issue than it was a year ago,” Maura says. “I am now in a better position to make sure that I have a really good set of documents in hand before I run out to the market.”

Rutgers University

A projected New Jersey State budget deficit of $1.2 billion and discussions in Trenton of midyear budget cuts has Rutgers looking hard at its budget. In October, Rutgers Executive Vice President Phil Furmanski sent notices to all academic and administrative units asking for contingency plans for possible midyear operating budget cuts.

About $500 million worth of cocnstruction work is underway at Rutgers University, including the new $10 million, 21,000-sq.-ft. College of Nursing.

University President Richard McCormick told a Board of Governors meeting in October that the university was “taking a hard look at all of facilities projects, from those on the drawing board to those under construction, to be certain that we proceed prudently.”

About $500 million in construction projects are under way and another $400 million are in design and planning, says Tony Calcado, vice president for facilities and capital planning.

“We have the ability to bond on our own,” Calcado says. “Rates are good, and as long as we have a revenue stream and are able to pay whatever it is we are borrowing, it is not a big issue for us.”

Calcado adds that the financial crisis is having an impact on short-term markets for commercial paper and lines of credit, which could affect contractors.

“Contractors live on credit lines,” he says. “If they start to dry up then these guys get into trouble. We are keeping an eye on that.”

Framing of the exterior of the new $10 million, 21,000-sq.-ft. College of Nursing at Rutgers University was completed earlier this year. The facility will include an emergency room, patient rooms and laboratories.( Photo courtesy of Rutgers University.)

Ongoing projects include the $18.2 million modernization and expansion of the Livingston Student Center, a new 21,000-sqft College of Nursing, $10 million seven-acre solar farm, $10 million in energy-efficiency infrastructure projects and a new 45,000-sq-ft bookstore and office space development.

Planning is proceeding for a new $100 million business school on the Livingston campus and additional housing.

University of Connecticut

Facing budget shortfalls, Connecticut has reduced state aid to UConn by 3%. In anticipation of further cuts, UConn President Michael Hogan has formed a task force to identify cost savings, efficiencies and new revenue sources by spring.

UConn is in phase three of a $2.5 billion, 20-year infrastructure program, representing about $1 billion of work on its campuses and $300 million at the university’s health center. The projects are paid for through general obligations bonds.

“Most of our large projects are completing design or almost finished, and we are hoping that we will be able to proceed,” says Jim Bradley, associate vice president of architectural and engineering services. “These are legislatively and board approved. We do not think we will be impacted by the slowdown.”

A $51 million project to renovate 88,000 sq ft for a stem cell research center will go out to bid early this year. Two classroom buildings, valued at $95 million, are in design.

Preplanning and programming is under way for a $65 million renovation of a classroom and laboratory building and a $125 million biology research and classroom building. Also in preplanning are a student recreation center and a basketball practice facility.

Phase three also is focusing on deferred maintenance and upgrading of building systems. At any point in time about $40 million worth of these projects are ongoing, Bradley says.

Bradley is seeing the market become more competitive as the economy slows. He says that a year or two ago, four to seven firms were bidding on a large project, but now there are 15 or 16.