1. UCSF Ten-Year Comprehensive Capital Plan Academic Senate Committee on Academic Planning and Budget June 26, 2014 Teresa Costantinidis Associate Vice Chancellor Budget & Resource Management

2. In May, the campus Budget and Investment Committee: Approved the UCSF 10-year Comprehensive Capital Plan for 2014-15 through 2023-24 Reviewed the process for preparing UCSF’s 10-year Regents Capital Plan Approved the three-year Facilities Investment Needs (FIN) project plan Began consideration of an emerging new facilities investment and renewal strategy 2

3. Budget & Resource Management The 10-year Comprehensive Capital Plan (CCP) reflects a $208 million increase from last year’s CCP Campus Segment Capital Spending 10-Yr Projections (2014-15 – 2023-24) Aligns with UCSF Core Financial Plan 10-Year ProjectionsNew PlanLast Year Difference Campus Segment$1,571M$1,363M $208M Program Projects$341M$287M $54M Auxiliary Projects$ 64M$ 36M $28M Seismic Projects$444M$502M - $58M Infrastructure/Renewal - Remediation Projects $ 17M$ 24M - $7M - Renewal Projects $176M$ 56M $120M - Facilities Investment Needs $205M$161M $44M - Departmental Projects $178M$173M $5M Work in Progress$146M $124M $22M 3

4. Budget & Resource Management Key changes include the Mission Bay land purchase and new facilities improvements made possible by the I&O Fund Revisions From Last Year Program projects (+$54 million) Mission Bay Blocks 33/34 land costs and projects added Classroom renovation projects added Laurel Heights renovation project removed Mission Hall and Diller 4 th Floor projects moved to Work in Progress Auxiliary projects (+$28 million) Mission Bay Blocks 33/34 parking added Mission Bay childcare added Seismic projects (-$58 million) Decant projects moved to Work in Progress Parnassus Streetscape Phase 2 project added Infrastructure/Renewal/Remediation/Departmental (+$162 million) FIN shown as only one line to allow flexibility in reprioritizing projects in real time $100 million added in last year of plan for MSB full renewal Work in Progress (+$22 million) A more thorough effort was made to include all work in progress projects 4

5. Budget & Resource Management Campus Segment Capital Spending (by type and funding)_________________________ 2014-15 to 2023-24, Campus SegmentFunding Assumptions ($million)%Capital Expenditures DebtEquityGiftsStateOther Program projects - Mission Bay Land Purchase - Mission Bay Land Related Costs - Mission Bay Building Project 1 - Schools Renovation Projects - Classroom Renovation Projects 22%341270 74 35 161 71 65 6 Auxiliary projects - Parnassus housing - Mission Bay surface parking - Mission Bay childcare - Parnassus garage spall repair - Mission Bay Building Project Parking 4% 6459 19 4 15 21 5555 Seismic projects - CSB/UC Hall Seismic renovation - Parnassus Streetscape - SFGH Seismic 28%444352 189 9 154 67 52 8 7 25 Infrastructure, Renewal, Remediation - Facility Investment Needs (excl seismic/renewal) - Renewal - Remediation - Departmental capital projects 37%576140 40 100 428 165 77 8 178 8888 Work in Progress - Misc. infrastructure & renovation projects 9%1466765104 Total1,57188863610298 100%56%40%1%2%1% 5 We continue to use significant borrowing to address our capital needs; though we are within our permitted debt affordability levels, we need to continue to carefully monitor our totals.

6. Budget & Resource Management These revisions to the CCP are reflected in the Spring Update to the 10-year Core Financial Plan (CFP) CCP Total Project Costs: The current plan assumes $1.571 billion of total project costs for the time period covered between 2014-15 and 2023-24 $888 million of the projects will be paid for by borrowing, and we are comfortably within our overall short-term and long-term campus debt capacity and the financial capacity of the CFP. However, we must continue to be mindful of the effect of growing debt service obligations on the campus and the CFP. 6 Total CCPCFP Portion Debt$888 million$733 million (up $201m from $532m) Equity$636 million$382 million (up $20m from $362m) Gifts, Units, Other$47 million Total$1,571 million

7. Budget & Resource Management The CCP is a key document we use to manage UCSF and our balance sheet, and serves as the basis for the 10-year UCSF Regents Capital Plan that we submit to UCOP in July Major differences between the Regents Plan and the CCP are the: Inclusion of Medical Center projects in Regents plan Deletion of projects already approved Inclusion of potential State funds not already on the CCP And, deletion of deferred maintenance, remediation, work in progress projects, and land costs In the past, the B&I committee separately approved both the CCP and the Regents Capital Plan; because the two plans are so similar, we no longer intend to bring the Regents Capital Plan back to you for formal approval. However we will provide copies to B&I at the time of submittal. 7

8. Budget & Resource Management 8 Scheduled Renewal and Facilities Investment Strategy

9. Budget & Resource Management There are two basic types of facilities infrastructure projects reflected in the Comprehensive Capital Plan Facilities Investment Needs –Deferred Maintenance Equipment or systems that have not been renewed or replaced on schedule –Capital Improvements Fire & life safety upgrades (e.g. fire sprinklers, alarms) Environmental regulatory requirement upgrades (e.g. underground tank replacement) Building and infrastructure reliability improvements (e.g. emergency generator) Scheduled Renewal –Replacement of equipment or a system at the end of its useful life (e.g. new roof) 9

10. Budget & Resource Management For our Facilities Investment Needs, we began a new approach in 2011-12 to address a backlog of projects estimated at $450 million “FIN List” Approach: We created a process where we prioritized deferred maintenance and capital improvement projects using multiple detailed criteria creating a comprehensive facilities investments needs “FIN List” We have been updating the FIN List annually, adding new projects and reprioritizing the list We have integrated our FIN process with the Health System process in order to better manage and steward all UCSF facilities resources Overall, the process has been very successful, and each year we have added sophistication to the model 10

11. Budget & Resource Management Using the FIN list, we have completed or are in progress on multiple facilities renewal/improvement projects over the last three years Highlights include: –New Roof on Medical Sciences Building –Mt Zion and Mission Bay boiler burner retrofits to meet air quality regulations –Renewal of the MSB animal tower elevator 11

12. Budget & Resource Management B&I approved the plan to address the following priority FIN projects over the next three years Title 2014-15 2015-16 2016-17 Total Replace PCUP Fuel Oil Storage Tanks with Seismically Strong Tanks $2,000K$2,500K$4,500K Campus wide Fire and Smoke Damper Renewal Phase 2 $500K $1,500K Replace Parnassus High Voltage Elect. Backbone – Phase 2 $500K$1,500K$2,000K HSIR Utilities – Improve Systems to Withstand Major Seismic Event Phase U1 and U2 $500K$1,000K$1,500K Renew Aging Elevators – Nursing, Dentistry, MCB, LPPI $1,730K$1,000K $3,730K Buchanan Dental Clinic – Install Emergency Power $500K $1,000K Under $5M Misc. Facility Projects$12,270K$13,000K$14,500K$39,770K Total$15,000K$18,000K$21,000K $54,000K Funding Sources: Core Financial Plan (CFP) Equity & Debt, Medical Center Equity 12 In approving the overall CCP, B&I approved the following set of FIN List projects; though the projects are spread out over three years, the actual year in which a project is done may change. Our intention is to allow project managers flexibility in start dates for launching projects.

13. Budget & Resource Management Though we have made progress, facilities funding continues to be a critical campus need Challenges –Our deferred maintenance and required capital improvements backlog is ~$450 million –The backlog will continue to grow if we do not make adequate investment in on-time scheduled renewal –Even with about $15 million per year in support, it could take over three decades to clear the existing backlog We do not want to let things get worse! 13

14. Budget & Resource Management We have a new strategy for solving our facilities needs challenge Approach: –To keep projects from being added to the list, we need to repair more things on-time –We will start making investments in scheduled renewal for buildings that are turning 25 years old –To reduce the backlog We will continue to go after the most critical FIN needs using the FIN List process We will take major chunks out of the FIN List backlog by doing complete building overhauls –Our overhauls of Clinical Science Building and UC Hall could take as much as $120 million off the FIN List –We propose a similar $100 million overhaul of Medical Sciences Building in the 2023-24 time frame However, we need to identify the funding... 14

15. Budget & Resource Management Obtaining adequate funding for these projects remains a critical priority Funding Plan –UCSF revenue generating strategies, such as the Infrastructure and Operations Fund and the 85% pooled allocation approach, has already allowed us to increase support for facilities efforts by $68 million during the 10-year CCP and CFP plan periods –We are also using our revolving $50 million Century Bond fund to facilitate our ability to pay for FIN List projects over time –By continuing to maintain tight controls on on-going commitments from the CFP we will generate increased flexible capacity (i.e. one-time funds) to do additional capital projects work 15

16. Budget & Resource Management With this new model, we hope to eliminate our deferred maintenance backlog while making important required capital improvements Outcomes: –Systems will not fall into disrepair –We will continue to make required regulatory updates –There will be far fewer emergency repairs – We will gain greater economies of scale and lower contractor pricing on our projects –We will be better able to coordinate renewal efforts with planned programmatic changes Our facilities will be in far better shape to enhance our efforts to become the world’s pre-eminent health sciences innovator and thereby advance health worldwide 16

17. Budget & Resource Management 17 Appendices

18. Budget & Resource Management Campus Segment Capital Spending (By Year) 18 May 2014 Plan In $M Campus Segment capital “run rate” averages $157M/year “Run rate” without major programmatic or seismic projects averages $79M/year

19. Budget & Resource Management FIN List Project Prioritization Categories # of People Impacted Life/Safety Impact Impact on Patient Care Impact on Animal Care Impact on Research Impact on Facility Use Impact on Institutional Reputation Non-Facility-related Downside Cost 19

20. Budget & Resource Management Research/Instructional/Administrative Building Age by GSF (does not include Medical Center) 20

21. Budget & Resource Management UCOP’s Facility Investment Renewal Model (FIRM) System Life Assumptions Subsystem Expected Sub- System life (yrs) a. Roofing 25 b. Building Exteriors, Doors, Windows 30 c. Elevators and Conveying Systems 25 d, HVAC – Equipment/Controls 30 e. HVAC – Distribution Systems 50 f. Electrical - Equipment 25 g. Plumbing - Fixtures 30 h. Fire Protection – Wet 40 I. Built-in Equipment and Specialties 25 j. Interior Finishes: Walls, Floors, Doors 15 k. Painting – Public Areas 15 FIRM is high level planning tool that uses statistical average life expectations for major building sub-systems. For planning purposes we have used an average 25 years cycle for building sub-systems renewal (including 50 year renewal cycle for certain subsystems). 21