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Sunday, 08 June 2014 22:00

$335 million: Higher ed building projects turn to other sources of capital as state funding wanes

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The $7.5 million expansion to the Kleiner Commons at Grand Valley State’s Allendale campus serves as a dining hall and will feature a Qdoba opening in fall 2014. The $7.5 million expansion to the Kleiner Commons at Grand Valley State’s Allendale campus serves as a dining hall and will feature a Qdoba opening in fall 2014. COURTESY PHOTO

The next year and a half is shaping up to be a busy period for higher education building projects.

That’s because West Michigan colleges and universities say they have more than $335 million in new construction, expansion and renovation projects planned and approved through 2015.

List: Higher Education Building Projects in West Michigan

In a change from just a few years ago, many of the institutions are pushing forward on building projects without state support because they see appropriations for capital projects as unreliable sources of funding given state budget constraints.

That means public universities are primarily relying on donor support to get projects off the ground, while many community colleges continue to depend on the support of area residents through voter-approved millage increases.

“Funding is the number one challenge, but we are fortunate and grateful to have an electorate that continues to invest in its community college,” said Eric Greene, director of public information and marketing for Kellogg Community College in Battle Creek. “KCC’s renovation projects are funded in large part by a capital millage.”

In addition to the millage that was renewed by voters in 2012, KCC has been able to leverage other grants and donations for capital improvements, Greene said.

By tapping tax dollars and donations, the college is able to avoid dipping into its general fund, which would raise tuition and decrease accessibility for students, he said.

Additionally, to access a one-time increase in state funding (3 percent for community colleges and 6.1 percent for universities) that Gov. Rick Snyder put forward in February in his proposed 2015 fiscal year budget, higher education institutions must hold annual tuition increases to less than 3.2 percent as well as meet a number of other performance-based metrics.

It’s essentially impossible for schools to pull from their general funds to support major capital projects and at the same time maintain tuition costs within the threshold, sources said. That helps to explain why philanthropic and voter-supported investments are so important to higher education today.

Other sources noted that while the funding increases from the state were lauded by colleges and universities when they were announced earlier this year, the additional dollars barely remedy the disinvestment in state institutions that’s taken place over the last decade.

Earlier this year, the Detroit Free Press reported that since 2000, universities had their state funding cut seven times, including a 15-percent cut during Snyder’s first year in office, according to data from the House Fiscal Agency. The last time the state-funded colleges and universities received a significant increase in state funding (also 6.1 percent) was in 2001.

GVSU focuses on STEM

In light of the funding challenges, many colleges and universities have been re-evaluating their broader strategy for building projects and serving students. At larger public institutions such as Grand Valley State University, “there’s a few things we need to look at” in the years ahead, said President Tom Haas.

More than 20,000 students “live, work and play around Allendale,” Haas said, and the university needs to consider upgrades to recreational facilities “to make sure they have options when it comes to wellness and the like.”

In downtown Grand Rapids, GVSU is planning for the development of land it acquired last year north of I-96. The site is across from the Cook-DeVos Center for Health Sciences that opened 11 years ago and is now fully utilized, Haas said. The Cook-DeVos Center houses GVSU’s College of Health Professions and the Kirkhof College of Nursing, as well as a business incubator and research labs.

“We’re going to visualize what’s going to happen there,” Haas said. “It’s pretty exciting to see what’s going to happen in these next five years that is going to have an impact for generations ahead.”

In total, the university recently completed or is working on approximately $69.2 million in projects with a footprint of roughly 192,000 square feet. The university is also one of few institutions in the region to receive a capital outlay contribution from the state. A new Science Laboratory Building will expand GVSU’s capabilities to educate students interested in pursuing fields in the science, technology, engineering and math (STEM) and health professions. The new $55 million, 151,000-square-foot building will feature nine classrooms, 15 teaching laboratories, 14 faculty and student research laboratories, study spaces, offices and a greenhouse. The state is contributing $30 million of the project’s development cost.

Gov. Snyder has tasked universities with shortening the time it takes to produce students educated in the STEM fields, and the majority of GVSU’s projects are aligned with that request, said James Moyer, associate vice president of facilities for GVSU.

“The programs with the most pressing space needs are the health sciences and the movement sciences,” Moyer said. “Current construction projects are all centered on the need to improve the space available for the STEM programs. The August 2015 completion of the new Science Laboratory Building in Allendale is the centerpiece of this effort.”

To put perspective on what the state funding means to the university’s current efforts, the last time GVSU received a capital outlay was in 1994. In other words, state assistance is hard to get and the wait time can be lengthy, Moyer said.

Even with capital outlays few and far between, the university’s financial partners and donors have played a big role in keeping infrastructure investments steady, he said.

Gifts help WMU grow

Given the scarcity of state funding, schools such as Western Michigan University are leveraging massive philanthropic contributions to fund new projects.

The new Homer Stryker M.D. School of Medicine at the W.E. Upjohn Campus in Kalamazoo is an example of the level of donor support being funneled to capital projects.

The seven-story former pharmaceutical research facility was a gift in 2011 from William U. Parfet and MPI Research of Mattawan. The donated facility was intended to serve as a home for the new private medical school that is a collaboration involving WMU and Kalamazoo’s Borgess Health and Bronson Healthcare Group. The building sits on the land Parfet’s great-grandfather, W.E. Upjohn, purchased in 1885 to start the Upjohn Co. The $68 million, 350,000-square-foot medical school will open in fall 2014.

“The new private medical school is an unusual model for public higher education,” said David Dakin, director of campus planning for WMU. “In the absence of opportunity to secure state funding for new professional programs, WMU and its community partners and donors opted to launch a private medical school to meet the region, state and nation’s needs.”

Without the benefit of a capital outlay, all of the university’s current projects are funded with donor resources and other traditional financing sources.

To that end, sustainable design and retrofitting has been a big factor in the university’s effort to maximizes its resources, Dakin said.

“New and renovated facilities are all built to LEED standards,” he said. “In addition, the demolitions of older buildings that are facing functional obsolescence but still consume maintenance and operating dollars is a major concern. We’re also seeing a strong trend in less square footage per student for the future, and we know that new space will be very different from what exists today.”

In addition to projects already underway, Dakin said a new dining hall is the next major project project on the planning front.

Amenities key for private colleges

For small private colleges like Aquinas College in Grand Rapids and Kalamazoo College, capital projects are focused on expanding and improving athletics facilities, updating residential offerings as well as creating unique programmatic buildings that can attract new students.

“We want to ensure that all of our facilities support the academic mission and promote a sense of community,” said James Prince, vice president of business and finance at Kalamazoo College. “Investing in the college’s infrastructure also enhances our competitiveness by helping us continue to enroll a diverse and talented student body, as well as meet the needs of high caliber faculty and staff that will teach them.

“New construction also has to be done with an eye toward the marketplace. Higher education has become highly competitive and any institution that wants to compete for the best minds — in students, staff and faculty — must have the best built environment, especially in terms of laboratories, classroom technology (and) wellness facilities.”

In addition to the current projects, Kalamazoo College is also fundraising for an indoor pool facility and a fitness and wellness center. The college’s 10-year master plan also allows for a new welcome center, improved building signage and projects to improve campus traffic flow for vehicles and pedestrians. However, not all of these projects are likely to be completed within the current 10-year master plan that kicked off in 2012, Prince said.

At Aquinas College, the school is working on a new $6.4 million sports and recreation facility. The 70,000-square-foot Alksnis Sports and Recreation Building is being constructed next to the Sturrus Sports and Fitness Center. The building will add indoor track and field event venues as well as a multipurpose turf field for intercollegiate sports and student intramural activities. Elsewhere, the college is also building a new 72-unit apartment building. The $4.8 million, 30,000-square-foot Apartment E is expected to house juniors and seniors. The new facility will add to the four existing apartment-style buildings on campus.

Community colleges continue to modernize

While universities focus on capital projects dedicated to STEM education and smaller colleges look to bolster their amenities, many community colleges are in a state of maintaining, modernizing and establishing new partnerships with the business community.

At Grand Rapids Community College, the majority of the school’s $35.3 million in capital projects are for the renovation and modernization of existing facilities. Almost every project includes upgrades to HVAC, lighting and electric services as well as exterior wall and window replacements.

The largest of the college’s ongoing projects is an approximately $15.7 million renovation of the Cook Academic Hall. This project, funded in part through a state of Michigan capital outlay, is a complete renovation, creating state-of-the-art learning spaces for nursing and allied health programs and general purpose classrooms for math, English and business.

Similarly, Kalamazoo Valley Community College announced last year the college was pursuing partnerships to launch a new health-focused campus.

The new $42 million campus is being developed on 13.3 acres of unused land donated by Bronson Healthcare. The property, near Bronson Methodist Hospital in downtown Kalamazoo, includes 8.4 acres along Crosstown Parkway east of the city of Kalamazoo’s Crosstown Center, 3.6 acres between Walnut and Dutton streets and 1.3 acres north of Crosstown Parkway and south of Dutton Street.

The current plans are for three facilities to be built on the site. KVCC will develop one for food production and distribution, a second for health career education and culinary programs and the third will be a new psychiatric clinic for Kalamazoo Community Mental Health and Substance Abuse Services.

“Working with our partners and multiple community groups, our goal will be to impact the health of our communities by providing the next generation of culinary and agriculture leaders with the skills and knowledge needed to work at the intersection of health, environmental and social concerns,” President Marilyn Schlack said in a statement.

MiBiz Senior Writer Mark Sanchez contributed to this report.

Read 2677 times Last modified on Sunday, 08 June 2014 21:57
Elijah Brumback

Staff Writer

ebrumback@mibiz.com

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