As discussed in "Funding Higher Education Capital Outlay" in the Crosscutting Issues portion of this section of the Analysis, funds are not available to complete the proposed and previously approved projects for the three higher education segments. Consequently, we have recommended that, for projects proposed in the budget, the Legislature (1) fund specific projects that have been previously approved (for preliminary plans or working drawings) by the Legislature; (2) defer several new projects; and (3) delete or modify several projects. We believe that this approach will get the state on an appropriate course of funding and completing capital outlay projects within available fund sources.
Based on our approach, we recommend that of the 32 projects in the budget for UC, the Legislature take the following actions:
Previously Approved Projects. Of the 15 previously approved projects:
New Projects. Of the 17 new projects:
The budget includes a $5,432,000 request for the construction phase of a project to renovate parts of York Hall at the San Diego campus. In 1996-97 the Legislature approved $215,000 for working drawings for a project to correct safety deficiencies, renovate class laboratories, and upgrade utility systems in York Hall. At the same time, the Legislature, based on UC's information, authorized a future cost for this project of $4,413,000. Adjusting this authorized cost for inflation results in a $4,523,000 cost for the budget year. The amount proposed in the budget represents a $900,000, or nearly 20 percent, augmentation to the construction cost authorized by the Legislature in 1996-97. The UC has not explained the cost overruns except to state that there are added costs associated with certain elements of the project. Further, UC has not indicated what steps, if any, it took to reduce the costs to the legislatively approved amount.
Lacking information substantiating the need for an additional $900,000 for the York Hall renovation project, we recommend that the Legislature delete this amount from the budget. (Reduce Item 6440-301-0658  by $900,000.)
Process Undermines Legislature's Role. This proposed augmentation is also discussed in "Capital Outlay Budgeting" in the Crosscutting Issues portion of this section of the Analysis. In that discussion we address an administration process issue that we believe seriously undermines the Legislature's role in the budget process. This has resulted from steps taken by both the Department of Finance and the State Public Works Board to approve increases in project costs without first advising or seeking approval from the Legislature. (See our analysis of this issue in the Crosscutting Issues portion of this section of the Analysis.)
The budget includes a request of $10,784,000 in state funds for working drawings ($522,000) and construction ($10,262,000) to construct a 62,741 gross square foot (gsf), (36,190 assignable square feet [asf]) building to replace Walker Hall--a two-story, 36,475 asf building on the Davis campus. The UC has prefunded preliminary plans for this project ($862,000). This is, therefore, the first time the project has been presented to the Legislature for review. The UC will also contribute $6,741,000 to the working drawings ($361,000) and construction ($6,380,000) phases of the project. Future costs to the state are estimated to be $1.1 million for demolition of Walker Hall. Thus, the total cost of the proposed project is $19.5 million.
Walker Hall currently houses programs in the Departments of Civil and Environmental Engineering, Applied Sciences, and Environmental Design. The proposed facility would be occupied by the two engineering programs currently housed in Walker Hall and other engineering programs and administrative functions currently located in other campus buildings. The Department of Environmental Design is scheduled to be moved at an unknown time in the future to a new Environmental Design building, even though state funds have not been requested to construct the facility.
Need to Spend Over $10 Million Not Justified. The UC has supported its request to replace Walker Hall on the basis that the building has been rated seismically "poor" by the UC system, and that the cost of retrofitting the building would be too great. The UC has not, however, substantiated those conclusions. For example, the UC estimate for constructing the replacement facility represents a cost of $218 per gsf. Not only is this replacement cost very high--in comparison, the California State University (CSU) cost guideline for engineering laboratories is $186 per gsf, or 17 percent less, than the UC request--but UC has not provided any data on the cost of altering Walker Hall for seismic purposes. Hence, before state funds are provided for this project, UC should demonstrate clearly why seismic retrofitting the existing building is less cost-effective than spending over $10 million to replace the building.
The UC Should Reevaluate Need for Seismic Retrofit. In addition, we believe UC should reassess the need to seismically retrofit Walker Hall. The Division of the State Architect (DSA) is responsible for the seismic evaluation of all state buildings except higher education. Under this program DSA has evaluated about 7,000 state buildings through a five-step process that takes into account relative risks to building occupants and building systems in the event of an earthquake. Using the DSA's methodology, the state only funds structural retrofits of buildings that, at a minimum, present a substantial risk to life and would incur substantial damage. Based on the DSA's methodology and evaluation criteria, it is not clear that Walker Hall would require retrofitting for seismic purposes. This is especially the case given (1) the Davis campus is located in an area of the state that is considered low risk for major earthquakes and (2) Walker Hall is a rather small, two-story building. Hence, we recommend that Walker Hall be reexamined by the DSA before the Legislature approves any project to replace or remodel the building.
Historic Building. Finally, Walker Hall was constructed in 1927, and is hence a building with intrinsic historical significance. The Legislature should consider the historical aspect of this building before approving a project to demolish Walker Hall.
Based on the factors discussed above, we recommend the Legislature delete the $10,874,000 proposed for the Walker Hall project on the Davis campus. (Reduce Item 6640-301-0658  by $10,784,000.)
The budget includes a request for $299,000 for preliminary plans for a 55,000 gsf, 33,000 asf building to house a portion of the activities currently located in UC Hall on the San Francisco campus. The building would be constructed on a site adjacent to the existing building, at an estimated future state cost of $7.9 million. The total cost of the project, however, is estimated to be $25.1 million. The remaining $17.2 million would be funded by the Howard Hughes Medical Institute, which would occupy 22,164 asf (67 percent) of the new building.
The UC Hall is a 146,853 gsf (91,274 asf) instruction and research building that has been rated seismically "poor" by the UC system. Because of this rating, UC wants to relocate activities in UC Hall to other buildings and then demolish it. The existing building houses several functions: academic instruction, academic offices, research laboratories for the Schools of Medicine and Pharmacy, Medical Center clinical activities, and campus academic and administrative support functions. The Howard Hughes Medical Institute occupies 22,164 asf in the existing building. The UC has indicated that it intends to relocate certain functions currently housed in UC Hall to the building proposed in this request, including biomedical research programs, instructional functions, and academic and administrative support functions. Thus, much of the research, instructional, and support functions, and all of the clinical activities, will not be relocated after completion of the project in the budget. The Howard Hughes Medical Institute would occupy the same amount of space in the new building (22,614 asf) as it does in UC Hall.
Subsequent to construction of the proposed facility, UC plans to construct another building (or buildings) of an unknown size and cost on an unspecified second campus location to house most of the other functions currently located in UC Hall (UC refers to the second building as "Phase II" of the replacement project). The UC then intends to demolish UC Hall at a cost of approximately $5 million.
Under Senate Concurrent Resolution 180, Statutes of 1974, the UC San Francisco campus site is limited to a maximum of 3,350,000 gsf on all facility construction. The campus currently exceeds this limit by about 200,000 gsf and the proposed building would add another 55,000 gsf. Even with the demolition of UC Hall, the San Francisco campus would still exceed the space limit and, as mentioned above, UC has provided no definite plan or cost for the ultimate demolition of the building.
The basic premise of the proposed project is that the activities in UC Hall must be relocated and the building demolished. The proposal presented to the Legislature does not accomplish this objective. Instead the proposal relocates only about one-third of the space activities at a state cost of over $8 million. The UC has not presented a plan including time frames and costs to complete UC's objective.
Based on the lack of a complete plan coupled with the space constraints on the San Francisco campus, we recommend that the Legislature delete the $299,000 requested for preliminary plans for the UC Hall Seismic Replacement, Phase I. (Reduce Item 6640-301-0658  by $299,000.)
The budget proposes $2,654,000 for working drawings ($250,000) and construction ($2,404,000) to make repairs to various elements (sewer, electrical, heating, fire alarm, and roadway systems) of the infrastructure at the UC Lick Observatory complex on Mt. Hamilton. The complex consists of approximately 50 buildings, including telescope domes, support buildings, dormitories for visitors to the site, housing for employees and their families, and a school for children of those families. The UC proposes to (1) replace the existing septic tank sewage system with new tanks and leach fields, (2) replace elements of the heating systems at the main building, the visitors' dormitory, and 17 single-family residential buildings, and improve the building insulation for energy conservation, (3) replace components of the electrical distribution systems, (4) replace the fire alarm system, and (5) repair and replace 200,000 square feet of roadways. The UC request is for working drawing funds to design the entire project and construction funding for phase 1, which includes the septic tank system and heating system replacements. Construction funding for the remaining work would not be requested until 1999-00. The estimated cost for the phase 2 work is $2.8 million. Thus, the total cost of the project before the Legislature is $5.4 million.
This entire project is a compilation of a series of maintenance problems at the site. For each element of the project UC has justified the need based on the age or the poor condition of these infrastructure systems. While there may be problems that should be addressed at this site, the proposed work is clearly of a maintenance nature and as such is part of the ongoing costs associated with operating a campus complex. Consequently, the proposed work should be accomplished on a priority basis with other maintenance work funded through the UC operating budget. Therefore, we recommend the Legislature delete the $2,654,000 request for infrastructure improvements at the Lick Observatory. (Reduce Item 6640-301-0658  by $2,654,000.)
The budget includes a request for $2,115,000 for working drawings ($137,000) and construction ($1,978,000) to convert space within the Applied Sciences building at UC Santa Cruz to support a planned electrical engineering program. Estimated future cost is $1.2 million for equipment. The proposal involves renovating about 11,400 asf for teaching and research laboratories and offices. The UC also proposes to make improvements to the building's heating, ventilation, and air conditioning (HVAC) system.
The UC request fails to provide sufficient information to justify the need for the components of the proposed project. For example, UC has provided detailed data on how the altered space will be used, but has not addressed why the space cannot be used as is or with minimal alterations. In addition, UC has not provided details of what alterations are necessary. The UC cost estimate is simply a general statement indicating alterations will cost $1,328,000, and HVAC system improvements will cost $460,000. Based on the limited information, it appears that the proposed major alterations will cost in excess of $250 per asf. The UC has not substantiated the need to make such extensive alterations to existing laboratory space.
Furthermore, the broader justification for this project is to adapt space within the Applied Sciences building to accommodate a new electrical engineering program. Enrollment information provided by the University indicates that there will be no undergraduate or graduate electrical engineering students at UC Santa Cruz at least until academic year 1999-2000. The earliest specific projections the UC makes on the number of UC Santa Cruz electrical engineering students are for academic year 2001-02. Thus, it is not clear why UC would initiate a costly alteration project in 1997-98. A more prudent step would be to use the existing space as is (or with minor alterations) until the program is underway and space needs based on enrollments and developed programs are known. A proposal based on this experience would warrant legislative consideration.
Therefore, we recommend that the Legislature delete the $2,115,000 requested for alternations of the Applied Sciences building at UC Santa Cruz. (Reduce Item 6440-301-0658  by $2,115,000.)
The budget includes a request for $21,637,000 to provide state funds to partially finance a project to replace part of the University of California, Los Angeles (UCLA) Center for Health Sciences. Further, contrary to standard capital outlay budgetary practice, the budget also includes language that would make these funds continuously available to UC without regard to fiscal year.
The UC has received a commitment of $432 million from the Federal Emergency Management Agency (FEMA) for what UC estimates to be a $492 million project to replace part of the 3.1 million gsf UCLA Center for Health Sciences. According to UC, the FEMA funding requires UC to provide $60 million in matching funds. Under the budget proposal the state would provide $44 million and UC would provide $16 million. The UC also indicates that this is the first phase of a $1 billion plan for the center and that UC would seek about $10 million annually from the state plus some amounts from donors to finance the other phases.
The proposed replacement facility will include research and teaching space and a 500-bed medical hospital facility, for a total of around 2.3 million gsf. (To put into perspective the size of the proposed 2.3 million gsf replacement facilities, this amount of space is greater than all the building space at the entire San Francisco State University campus, a campus with an enrollment of about 20,000 students.) The UC asserts that much of the complex, which includes the UCLA Medical Center, the schools of nursing, dentistry, and public health, and the Neuropsychiatric Institute and Hospital, is in need of replacement due to damage sustained during earthquakes, including the Northridge earthquake.
The proposed $44 million state funding for this phase of the plan consists of two elements--$22.4 million from higher education bond funds already allocated by the Department of Finance (DOF) and the $21.6 million in the 1997-98 budget. The $22.4 million already allocated is from Chapter 15, Statutes of 1994 (SB 131, Roberti), which appropriated $75 million from higher education bond funds for allocation by DOF to match federal funds for UC, CSU, and community college buildings damaged by the Northridge earthquake. The DOF has allocated the $75 million as follows: $36.4 million to UC; $32 million to CSU; and $6.6 million to community colleges.
We recommend that the Legislature not provide the proposed $21.6 million for the reasons discussed below.
Legislature Has No Information on Project. Basically the only information submitted by the UC for this project is a summary table showing the total amount of gsf of building space to be replaced and the cost sharing allocation for the $492 million plan. The UC has not identified,
In short, the Legislature does not have any information supporting the need for this proposal other than UC's belief that a replacement facility is necessary and FEMA has provided $432 million.
The UC Should Provide Matching Funds for FEMA Grant. As discussed in the Crosscutting Issues portion of this section of the Analysis, there are insufficient state funds available to complete the projects the Legislature previously approved for higher education. Given UC's access to other sources of funding for health care, teaching facilities and research, the state should not commit limited state funds to what UC advises is a $1 billion replacement project when the state is faced with unmet capital outlay needs at all campuses of higher education. For example, UC could set aside portions of its hospital operations budget to finance over time the $21.6 million requested in the budget. These funds would not need to be available immediately because construction of the replacement facility will take many years. Therefore, UC could develop a financing plan that does not include state funds to meet its obligation to match the FEMA grant.
For the reasons discussed above, we recommend the Legislature delete $21,637,000 for Phase I replacement of the UCLA Center for Health Sciences. (Delete $21,637,000 from Item 6640-302-0658.)
The budget proposes funding the working drawings and/or construction phase of 19 projects for UC. For ten of these projects, the budget is the first time the projects have been presented to the Legislature. The budget request for these projects totals $62.4 million, and the estimated total future cost is $7.3 million. The UC indicates that it will spend $2.5 million of nonstate funds developing preliminary plans for these projects. This continues a recent practice for UC to spend funds on projects the Legislature has neither reviewed nor approved. As discussed in our Analysis of the 1996-97 Budget Bill, UC spent a total of $4 million on similar projects in preparation for the 1996-97 budget. We continue to believe it is inappropriate for UC to use these monies on projects that have not and may not be approved by the Legislature. The UC's practice places the Legislature in the untenable position of either approving projects it may not otherwise approve (in whole or part) or disapproving the proposal for which the UC has spent several million dollars. As a result, this practice undermines significantly the Legislature's oversight and budgeting authority. To assure that UC discontinues this practice, we recommend that the Legislature, as a matter of ongoing policy, no longer approve any capital project for which UC has initiated funding before presenting the proposal to, and receiving approval from, the Legislature. This intent would appropriately be stated in supplemental report language as follows:
It is the intent of the Legislature to not provide state funds for any capital outlay project for which the University of California has initiated by funding any portion of design or construction before presenting the project to, and receiving approval from, the Legislature.
In the 1996-97 Budget Act, the Legislature appropriated $693,000 to prepare preliminary plans ($282,000) and working drawings ($411,000) for hazardous materials abatement, seismic retrofit, Americans with Disabilities Act compliance, other code-related improvements, and replacement of the main electrical switchgear and panels at the 198 McAllister Street Building on the Hastings College of the Law campus in San Francisco. The budget includes $8,332,000 for the construction phase of this project. According to the Department of General Services, which manages the project, the preliminary plans are scheduled to be completed in May 1997. We recommend approval of the construction funding proposal contingent upon completion of preliminary plans that are consistent with the scope and cost as previously approved by the Legislature.
In our Crosscutting Issue "Funding Higher Education Capital Outlay" (earlier in this section of the Analysis), we indicate that there are insufficient funds available to complete the proposed and previously approved projects for the three higher education segments. Consequently, we have recommended that, for projects proposed in the budget, the Legislature (1) fund specific projects that have been previously approved (for preliminary plans or working drawings) by the Legislature; (2) defer several new projects; and (3) delete or modify several projects. We believe that this approach will get the state on an appropriate course of funding and completing capital outlay projects within available fund sources.
Based on this approach, we recommend that of the 35 projects in the budget for CSU, the Legislature take the following actions:
Previously Approved Projects. Of the 22 previously approved projects:
New projects. Of the 13 new projects:
The budget includes $7.4 million for the construction phase for the McLane Hall Renovation project at CSU Fresno. This amount includes $862,000 to install conduits and wiring to increase the capacity of the building's telecommunications systems. This represents a cost of over $26 per gross square foot (gsf) for the building's telecommunications infrastructure. The CSU's only explanation for this high cost is that it is based on the master plan.
Further, CSU has decided to remove campus telecommunications infrastructure projects from the capital outlay program, and fund this work from other sources. According to CSU's plans, the first priority for the overall telecommunications plan is to develop the campus inter-building underground system and then modify buildings in a priority sequence. It is not clear when these infrastructure projects will be completed. Until the campus infrastructure is available to serve McLane Hall, we see no need to make modifications inside the building. Moreover, when the inter-building system is available, McLane Hall should be modified based on campuswide priority with other buildings. According to the CSU Fresno plan, McLane Hall has not been identified as a high priority building for modifications.
Therefore, we recommend that the Legislature not fund the telecommunications portion of this renovation project. (Reduce Item 6610-301-0658  by $862,000.) Further, we recommend that the Legislature approve the remaining $6,497,000 for construction funding contingent on the receipt of preliminary plans that are consistent with scope and cost as previously approved by the Legislature.
The budget includes a request for $5,745,000 for working drawings ($67,000) and construction ($5,678,000) for a project to renovate and expand the existing building maintenance and storage/warehouse areas (along with their associated administrative space), the duplicating center, the shipping/receiving areas, and various campus stores at CSU San Bernardino. This project was funded for preliminary plans and working drawings in the 1992-93 Budget Act, and preliminary plans were completed in April 1993.
The CSU's budget summary indicates that work related to telecommunications, Americans with Disabilities Act (ADA), seismic, and hazardous materials has been added to the project after the Legislature approved the project in 1992. According to the budget summary, this work will cost $614,000. The CSU, however, has provided no information on the need for any of this added work, what work will be accomplished, or a basis for the estimated costs. Therefore, we recommend that the Legislature delete the $614,000 from this request. (Reduce Item 6610-301-0658  by $614,000.)
The budget includes a request for $25.7 million to fund the construction phase of a project to renovate the San Jose campus Central Plant and utility infrastructure, including a telecommunications infrastructure upgrade. The project was funded for preliminary plans and working drawings in the 1996-97 Budget Act, and preliminary plans are scheduled to be completed in February 1997.
As indicated earlier, CSU has removed all campus telecommunications infrastructure projects from the capital outlay program. Consistent with that decision, we recommend the Legislature delete the campus telecommunications infrastructure work from this project and use the higher education bond funds ($10,510,000) for other capital outlay priorities. On this basis, we recommend reducing Item 6610-301-0658  by $10,510,000.
Further, we recommend approval of the $15,227,000 balance of proposed construction funding contingent on receipt of completed preliminary plans for this portion of the project.
The budget includes $271,000 for preparation of preliminary plans and working drawings for an infrastructure upgrade project at CSU Fresno. Estimated future cost is $3.9 million. The request indicates that the project would improve the campus' storm drainage system and convert the campus heating distribution system from high pressure steam to low pressure hot water. The CSU has been unable to document the need, costs, or benefits associated with either improving the storm drainage system or converting the heating system.
Given the complete lack of information for the two components of this project, we recommend that the Legislature delete the $271,000 requested for preliminary plans and working drawings. (Delete $271,000 from Item 6610-301-0658 . Future savings of $3,878,000.)
The budget includes a request for $23.5 million to construct a 104,770 gsf (78,580 assignable square feet [asf])two-story laboratory building for engineering. The new facility will replace undergraduate teaching laboratories, self-instructional computer laboratories, specialized instructional laboratories, and graduate research space. The project will also alter nearly 15,000 asf currently used by engineering programs for occupancy by the art department. The proposal will add space to accommodate an additional 29 full time equivalent student (FTES) future enrollment. The proposed project, however, will actually reduce the amount of engineering teaching laboratories by about 5,500 asf and increase nonteaching laboratory space.
The CSU is spending $1.1 million in nonstate funds for preliminary plans and working drawings for this project. Thus, this is the first time the Legislature has had an opportunity to review the proposal.
Although there may be a basis for replacing some of the existing engineering space, CSU has not demonstrated the need to construct a facility at a cost of over $20 million. According to CSU enrollment data for Pomona, enrollments in engineering laboratory courses have declined 20 percent since 1992 and are not expected to reach the 1992 level through 2001-02. Similar enrollment declines occur in art laboratory courses where CSU shows an 18 percent decline between 1992 and 1998-99 with enrollment remaining below the 1992 level beyond 2000-01. Furthermore, CSU has not provided any information that substantiates the need to provide the art department nearly 15,000 asf. Finally, the Pomona campus has a sufficient amount of laboratory capacity to accommodate a 25 percent increase in enrollment. Rather than construct a $23.5 million building, the campus should thoroughly evaluate alteration of existing space to meet any of these engineering needs.
Given the enrollment and space situation discussed above, we believe that the space issues presented by CSU do not warrant a $23.5 million expenditure of limited general obligation bond money in the context of other statewide needs. Therefore, we recommend the Legislature delete $23,494,000 requested for construction. (Reduce Item 6610-301-0658  by $23,494,000.) A less costly proposal to alter existing space to address campus needs may warrant legislative consideration.
The Governor's budget includes a $1,032,000 request for preliminary plans ($490,000) and working drawings ($542,000) to renovate Hensill Hall on the San Francisco State campus. The estimated future cost is $20 million.
Hensill Hall houses lecture rooms, laboratories, and faculty offices for the biological sciences. The proposed work includes seismic corrections, remodeling for ADA, correction of building code deficiencies, and various alterations for instructional purposes. The alterations for instructional purposes include remodeling animal research facilities, renovating a greenhouse, repairing the building sea water system, and adding a fenced utility yard for vehicle storage. Additionally, the third floor of the building (currently an open concourse) would be enclosed to provide for a multimedia laboratory and production area in which multimedia instructional materials would be prepared, and multimedia and distance learning would take place. This project would not add space to accommodate any future enrollment growth.
In general, CSU has failed to justify the expenditure of over $21 million for this project. First, CSU has not substantiated the need for improvements to address seismic and building code deficiencies. For example, the request is not clear on either the level of seismic risk of the building or how the project will improve the risk level. Further, the CSU has not identified what portion of the proposed project construction cost is devoted to seismic work compared to other proposed improvements. Also, the CSU has not explained the need for the correction of specific code deficiencies, nor presented cost estimates associated with any of this work. In fact, the need for any of the seismic or building code work does not appear to be essential because CSU has included this request in the lower priority category of projects to meet campus deficiencies rather than the higher priority category to correct structural, health, and code deficiencies.
Second, the San Francisco State campus already has a state-of-the-art multimedia facility that presumably has the capacity to support both preparation of multimedia instructional materials and multimedia and distance learning activities. The CSU has not explained, however, why similar activities are planned for Hensill Hall.
Finally, the proposal to alter the building for other program needs is based on a brief description of the alterations. CSU has not identified the problems with existing space, how the alterations will address space problems, or the costs associated with the alterations.
For the reasons discussed above, we do not believe that spending over $21 million on this project is advisable in the context of other statewide needs in higher education. Therefore, we recommend that the Legislature delete the $1,032,000 requested for alterations of Hensill Hall on the San Francisco campus. (Reduce Item 6610-301-0658 (25) by $1,032,000.)
The budget requests $2.5 million for preliminary plans, working drawings, construction, and equipment for a project at the CSU Stanislaus Stockton Regional Center for Education and Human Services (formerly the state Developmental Center under the Department of Developmental Services [DDS]) in Stockton. The project consists of: (1) renovating 15,145 asf at the Acacia Court facility to provide classroom, laboratory, administrative, storage, and library space ($1 million); (2) various improvements--including a street lighting upgrade, sidewalk improvements, a new fence, road and parking lot, and expansion of telephone access ($2.4 million); and (3) purchase of equipment ($118,000).
The former Stockton Developmental Center was one of several state properties declared surplus under Chapter 193, Statutes of 1996 (SB 1770, Johnston). Under this legislation, the Director of General Services was authorized to dispose of the property. The Director has determined that the property should be conveyed to CSU and the CSU Board of Trustees has agreed to accept the property. The CSU plans to use this site as a regional center involving four other CSU campuses, the University of the Pacific and San Joaquin Delta Community College. The CSU plans to move the current CSU Stanislaus center from the San Joaquin Delta College campus to the new location by fall 1997. According to information available at the time this Analysis was written, CSU will take title to the site on July 1, 1997. Under an agreement between CSU and the Department of General Services (DGS), DGS will manage the leasing of building space within the 102-acre, 56-building site to various nonstate entities. Revenues generated from the lease payments will go to the CSU (less a management fee to the DGS) to offset the costs necessary to operate instructional programs at the site. DGS staff has indicated that leases totaling $800,000 annually have been signed and negotiations are taking place for another $2 million in annual revenue.
As discussed below, CSU has not justified any of the components of the proposed project.
Alterations. For the alterations portion of the work, CSU simply calculated the amount of different space (such as classrooms, laboratories, and offices) in square feet at the Stanislaus campus per FTE student and concluded that the center requires the same ratio of space. The CSU then applied a cost per asf for alterations to provide the various categories of space. For example, CSU estimates a cost of $52 per asf for classrooms and offices and $75 per asf for laboratories. None of this request is based on an evaluation of the existing space and the proposed academic program. Furthermore, CSU has provided no basis for the estimated cost per asf amounts assigned to the various categories of space. Finally, since this facility was until recently occupied by state employees of DDS and programs were offered to clients of that department, it is not clear why significant alterations would be required to house CSU programs at this time.
Site Development. The $1.1 million proposed for the various site improvements are not supported by anything but a cost estimate and a short description of the work to be done. There is no explanation of why the improvements are needed. For example, CSU includes $633,000 to upgrade the street lighting but has not provided any explanation of the problem with the street lighting or what effect spending $633,000 would have on the lighting situation. Similarly the request includes $110,000 to replace a fence with no explanation of why the fence needs to be replaced or why a fence is even needed. As mentioned above, until recently the site was occupied by staff and clients of DDS. It is not clear why upon CSU's moving to the site the proposed site improvements would be necessary.
Equipment. The CSU has not provided any information on the request for $118,000 to purchase equipment. Furthermore, it is not clear why new equipment would be needed simply because the center is relocated from Delta College to this site.
Any Necessary Improvements Could Be Financed From Leasing of Existing Buildings Revenue Funds. As discussed above, revenues from leasing space at the center are expected to exceed $2 million annually. Any improvements needed at this site could be financed on a priority basis with these revenues. In addition, the proposal involves a consortium of CSU campuses, a private university, and a community college. We believe that costs to modify these facilities should be shared by members of the consortium.
Based on the above discussion, we recommend that the Legislature delete the $2.5 million requested for the Stockton center. (Reduce Item 661-301-0658  by $2.5 million.)
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