Financial plan brings hope for new clinic

The Board of Regents also approved the U’s six-year capital plan.

Dina Elrashidy

University of Minnesota officials presented a plan to finance the long-discussed Ambulatory Care Center to the Board of Regents March 8 — this time without the state’s help.

The proposal would place the center on land currently owned by the University, but the University of Minnesota Physicians and Fairview Health Services would own the clinics inside.

The University wouldn’t pay for any of the $182.5 million project.

Essentially, the University will be the landlord of the building with UMP and Fairview as its tenants, said University Chief Financial Officer Richard Pfutzenreuter.

The new financing plans come after several failed attempts in the past decade to obtain state funding for the new clinic. University officials hope to build the new clinic, which some see as desperately needed, while still keeping up on other construction priorities with state funds.

“This project is an essential step to bringing our Medical School and our [Academic Health Center] to the level of our competitors,” President Eric Kaler said.

The proposal is expected to go to the University Board of Regents for approval in May.

The University would issue $132.5 million in bonds to construct the project, which will be secured by leases and debts by Fairview and UMP.

UMP and Fairview would pay $40 million for medical equipment. The University has received $10 million in philanthropic funds for the project.

This financing strategy has never been tried by the University, Pfutzenreuter said.

The financial plan laid out by the University, UMP and Fairview represents real and substantial progress, he said.

The new center would house the clinics currently in the Phillips-Wangensteen Building, which is three times over its intended 150,000 patients-per-year capacity.

“We envision a very collaborative environment,” UMP CEO Bobbi Daniels said.

The current facilities in the Phillips-Wangensteen Building are not up to modern standards and have inefficient work flow.

Daniels said that patients get lost within the building, and exam rooms are not large enough. All of these issues lead to a backlog in many clinics.

The project’s financial details have to be accepted by all three partners. They’ll hold meetings throughout the next few months, Pfutzenreuter said.

The current outlined plan would begin construction in fall 2013 after its approval by the board to be opened no later than January 2016.

The center would be located off Ontario and Fulton streets, with the land adjacent to it used for surface parking. The University also hopes to acquire other land surrounding the block, but negotiations would come as space becomes available for sale, Pfutzenreuter said.

The Ambulatory Care Center was left off the University’s capital request this year because of other priorities.

“There’s only, frankly, so much bonding capacity the state’s going to do, and there’s only so much that the University is going to receive in that process,” Pfutzenreuter said.

The University requested approximately $170 million for construction projects from the state in the bonding bill. Gov. Mark Dayton’s recommendation for the school’s total request cut that amount by more than half.

The University attempted to partner with Fairview and UMP more than six years ago, but the recession in 2008 halted the project again, Kathleen O’Brien, vice president of University Services, previously told the Minnesota Daily.

A project in Ohio was awarded a $150 million federal grant about two years ago, which the University was also vying for. The Ambulatory Care Center returned to the back burner.

Regents approve six-year capital plan

The Board of Regents approved the University’s six-year capital plan March 9.

The six-year capital plan serves as a long-range projection of what the University plans to ask the state for construction funds. It also includes renovations of existing facilities and the decommissioning and destruction of others.

At Friday’s meeting, the board outlined the cost and content for the next six years. The state would contribute 75 percent of the estimated $1.3 billion plan that extends through 2018, while the University would put forth 18 percent.

The remaining 7 percent of the plan is designated for self-funded University projects.

Included in the plan is an $85 million renovation of the Tate Laboratory of Physics, which is slated for 2014. The 200,000 square-foot building in the Northrop Mall is more than 80 years old and was last remodeled in 1965.

Renovation of the laboratory would begin once the construction of the new physics and nanotechnology building is complete. Construction began in October 2011.

Tate would serve as the new home for the Department of Earth Sciences, which is currently housed in Pillsbury Hall.

Also included are renovations for Wilson Library and a new center for the psychology department to replace Elliott Hall.

A significant component of the University’s plan is $495 million for Higher Education Asset Preservation and Replacement, which helps fund renovations of existing buildings.

The plan also calls for decommissioning and possible deconstruction of buildings on campus over the next six years.

The plan could change, however, as the University updates the plan annually and shifts priorities.