Construction of the Merced 2020 Project represented a major financial commitment by the people of California to fulfill the mission of UC Merced.
Financing for the project included a combination of UC Board of Regents-issued revenue bonds, developer funds and UC Merced’s own funds.
Design and Construction Budget: $1.3 billion
In July 2016, the UC Regents approved a budget of $1.3 billion for the Merced 2020 Project. Of that total, $600 million came from UC external financing; the developer, Plenary Properties Merced, invested $590.35 million; and campus funds accounted for $148.13 million.
The university’s ability to afford the project was determined based on a holistic, long-range financial model. The model included a combined estimate of design and construction costs as well as preventative maintenance lifecycle costs.
Innovative Public/Private Partnership Structure: Availability Payment Concession
The Merced 2020 Project was a type of public-private partnership known as an "availability-payment concession," in which a single private development team designs, builds, operates and maintains major building systems and partially finances the entire project under a single contract known as the "Project Agreement".
During construction, the university made predetermined progress payments to the developer. Once the buildings became available for use, the university made performance-based "availability payments" that cover remaining capital costs, as well as the operations and maintenance of major building systems. From start to finish, the duration of the agreement is 39 years.
As structured, this hybrid model captures the time and cost advantages of the familiar "design-build" method of developing buildings and effectively adds a preventative capital-maintenance program and capital-renewal program. It does not transfer the university's property rights, does not assign revenue streams, and is not a lease.
