Financing & Treasury

 

COMMITTEE ON FINANCE
PUBLIC/PRIVATE (PUBLIC/PUBLIC)
REAL ESTATE PARTNERSHIPS

BRIEF

Action Item

Agenda Item

March 22-23, 1994

Presentation By

Molly Corbett Broad

Executive Vice Chancellor

SUMMARY

In January an information item was presented to the Board regarding the establishment of public/private or public/public partnerships. Several campuses have undertaken joint development real estate projects during the past couple of years. There have been no systemwide guidelines to assist the campuses with these highly specialized projects. During 1993 Trustee Vitti chaired a group of individuals interested in ensuring that policies and procedures are in place to facilitate and encourage such partnerships. The attached policy and procedures were developed by this task force and with input from the campus presidents. The policies are presented for action at this meeting.


ITEM

2

Agenda Item

March 22-23, 1994

COMMITTEE ON FINANCE

PUBLIC/PRIVATE (PUBLIC/PUBLIC) REAL ESTATE PARTNERSHIPS

Background

The following is the general policy and procedure to be used in the development of public/private (or public/public) real estate partnerships. The intent is to identify the process within the CSU, and in doing so, facilitate expeditious development of projects consist with ensuring utilization of appropriate expertise.

Projects vary significantly in scope and form, and no single detailed procedure should be applied to all projects. For example, the process should be significantly less complex for development of a single faculty housing facility as compared to a multi-use development of a large amount of campus land. Thus, the following outlines only the general process to be followed. Early in the process, procedures will be developed to meet the unique needs of the campus related to the specific project. This will involve close collaboration of campus and Chancellor's Office staff, with input from professional expert in the business and legal aspects of public/private (or public/public) ventures.

Principles:

The purposes of public/private (or public/public) developments on CSU land is to further the educational mission of the campus through the acquisition of physical assets, income, and/or educationally related opportunities for students and faculty.

The process of selecting a specific project and developer will be aimed at gaining the greatest benefit to the campus, and include an assessment of risks that are inherent in the project. As part of the process of seeking maximun benefit, the campus will involve appropriate means of open competitive solicitation of developers.

Roles:

Campus:

The campus has the primary responsibility for initiating and directing the project. From the first conceptual explorations through the eventual reversion of the project to CSU ownership of the improvements, the campus president will be the prime party responsible for taking actions to ensure success of the public/private (or public /public) project in meeting campus needs. The projects will normally require a large commitment of staff resources, especially during the period from formulation of the conceptual program through completion of construction. In most cases the process will also include close oversight of any activities of auxiliary organi- zations that may be used to facilitate the project.

Chancellor's Office:

The chancellor will be delegated authority to enter into agreements which will facilitate the development of the projcet. Additionally, the chancellor is charged with the responsibility of overseeing these projects. This role will normally involve legal, business, and physical planning review from the inception of the project through build-out. Expert development and legal professionals will be retained and assigned to indivudual projects to assist the campus in ensuring that the ventures are well structured to maximize the benefit to the campus. These services may be obtained by contracting for outside services and/or hiring of qualified staff. Chancellor's office staff will help ensure that state laws and regulations, and CSU policies and procedures, are followed.

Board of Trustees:

The board will provide direction through:

  1. review and approval of the conceptual program developed by the campus,
  2. delegation to the chancellor to enter into agreements related to the project,
  3. approval of negotitated development plans, including notification of the proposed developer, prior to execution of any agreements (by the CSU or its auxiliary organizations) that would tie up campus land and/or authorize construction of the project, and
  4. physical master plan changes, schematic designs, and related documents.

Also, the board may wish to be informed of the ongoing progress of such projects either through briefing of the full board or a standing or ad hoc committee.

General Procedures:

  1. The first step involves the campus development of a general description of the proposed project including factors related to scope, timing, relation to the educational mission, etc. In general, the description should include the level of detail that the campus feels appropriate for the presentation to the trustees when seeking conceptual approval of the project. Chancellor's office staff can be contacted for examples of descriptions from prior projects.

  2. Campus and chancellor's staff will meet to formulate a process tailored to the specific project and develop a schedule. The meeting will take place prior to the campus and/or its auxiliary organizations entering into agreements with external entities related to the proposed project. The process will cover many issues and actions, ranging from the method of obtaining appropriate competitive proposals, to the applicability of specific laws and policies, to the future steps of coordination of effort between the campus, chancellor's office staff, trustees, and if necessary, the State Department of General Services. Three areas of the chancellor 's office will normally be involved: the office designated by the chancellor to oversee public/private developments, the Office of General Counsel, and Physical Planning and Development.

  3. Prior to soliciting a developer, the campus will seek support of the trustees to proceed with the project. The agenda item will describe the project, the process of developer selection, and the timeline. Generally, the proposed resolution will include the following:

    A. Conceptual support for the project and authorization to proceed.
    B. Delegation to the chancellor the authority to enter into agreements necessary to moving the project forward.
    C. Indication of what actions will be brought to the trustees for action (i.e., physical master plan changes, approval of a specific development agreement or similar document prior to final committment to the developer, and schematic plans.)

  4. Chancellor's office staff, in consultation with the campus, will retain professionals with expertise in the development and legal aspects of the proposed project. It has been suggested that they be selected in a manner similar to that used for design architects an engineers. (A pool of qualified professionals will be developed that will permit selection based on the unique character of the specific project.) The cost of these services will be paid for by the campus with the expectation of reimbursement by the developer. Also, consideration is being given to hiring of full-time staff within the chancellor's office to provide a portion of the needed expertise.

  5. The selection of a developer must involve an appropriate form of open solicitation and competitive selection. The process will vary from project to project and every effort will be made to accommodate the approach desired by the campus. However, close coordination with chancellor's staff is necessary in the review of the process and specific solicitation documents (to ensure compliance with law and policy). The campus will conduct the selection process. Prior to executing any agreement which permits the developer to proceed with construction, the campus must seek trustee approval of the specific development plan. The general counsel's office will work with the campus in determining what documents should be presented to the trustees for review and approval.

The following resolution is recommended:

RESOLVED, by the Board of Trustees of the California State university that the policy and procedures for public/private (public/public) real estate partnerships be adopted as general policy governing these developments projects at the campuses of the CSU.



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