University of Iowa

P3 FAQ

What is the University of Iowa doing?

The University of Iowa is entering into a 50-year partnership involving its utility system with ENGIE North America and Meridiam. The UI is one of the first universities in the country to engage in a utility public-private partnership (P3).

The selection of ENGIE and Meridiam followed a rigorous 10-month competitive bidding process, which involved university shared governance members and academic leadership.

What is a P3?

A P3 is a relationship between a government agency and a private sector company, which is valuable for both entities.

Is the UI selling its utility system?

No. Under the P3, the UI will maintain ownership of its utility system and ENGIE will perform all operations with respect to steam, cooling, water, and electricity. There will be no change in the utility system’s capacity to provide continuous and predictable service to support the critical functions of the University of Iowa Hospitals and Clinics.

Why were ENGIE and Meridiam selected? 

This partnership will allow the university to invest $15 million per fiscal year via grants dedicated to supporting the UI’s strategic plan and core missions of teaching, research, and scholarship.

ENGIE is a world-class operator that provides financing, design, construction management, energy procurement, utility, and operations and maintenance services to 150+ higher education and healthcare facilities in the United States. Learn more here: http://www.engie-na.com/

Meridiam is a leading worldwide developer, equity investor, and long-term partner specializing in the development, financing, and management of sustainable P3 infrastructure. Learn more here: http://www.meridiam.com/en/

Read more about ENGIE and Meridiam’s response to the university’s request for proposals.

Is the UI maintaining its commitment to sustainability and the environment?

Yes. Under the agreement, ENGIE and Meridiam will work with the university to ensure:

  • That the UI meets its goal of being coal-free by Jan. 1, 2025, if not sooner.
  • That sources of renewable fuels and incorporating sustainable, lower-cost fuel options into the existing utility systems will be explored.
  • A seamless transition to welcome all current UI utility system employees.
  • Students, faculty, and staff will have opportunities to benefit from experiential learning and innovation via internships, projects, and research opportunities in energy and other areas.

Are the employees of the utility system losing their jobs?

No. The intent of the P3 is not to reduce staff. ENGIE will offer a position to all utility system employees without anyone having to formally interview. Utility system employees who choose not to move to ENGIE will retain a university position.  

University Human Resources will treat all employees respectfully and make decisions consistent with the following guiding principles:

  1. UI utilities system employees in scope of the P3 agreement will have the opportunity to meet with the partner company.  After this occurs, impacted employees will have a choice of employment with the partner company or a position elsewhere in the UI system.
    1. Employees in scope of the P3 agreement and remaining with the UI will be provided an opportunity to do so.
    2. Provided that they meet their training and performance expectations, employees remaining with the UI will keep their current salaries in their new positions and will receive the same benefits that current UI employees receive.
    3. Employees who remain with the UI will be subject to applicable UI policies and regular operational expectations and standards.
  1. Because of considerations including the P3’s status as a UI partner, the continued ownership of the utilities system throughout the term of the partnership, and role of the workforce in the UI’s ability to attract an appropriate partner for the P3 opportunity, employees affected by the P3 will be offered supportive resources not available to UI employees affected by other business decisions (e.g., severance of a unit’s relationship with the UI) or other events not resulting from business decisions (e.g., grant funding ending).

How does the agreement work?

The UI will place the upfront payment from ENGIE and Meridam of $1.165 billion into an endowment in order to acquire the additional funding for institutional priorities. After paying off $153 million in existing utility system bonds and $13 million in consulting fees, the endowment will have about $999 million.

ENGIE and Meridiam will receive an annual fee of $35 million for providing the utility services for the length of the contract while realizing beneficial tax treatments related to the energy sector.

How is the university determining how to use the money from the endowment?

The Board of Regents also approved the formation of a new 501(c)(3), the UI Strategic Initiatives Fund. The board overseeing fund will include the UI’s senior vice president for finance and operations; a designee from Faculty Senate; and a designee from the Board of Regents. The board will meet quarterly to review the operation and earnings of the endowment fund, and determine the yearly allocation to the university.

The expected $15 million available per fiscal year will be allocated through an open and transparent grant process. Anyone in the campus community will be able to submit a proposal for a one- to five-year grant that supports the university’s strategic plan. Proposals will then go through a vetting process during which the UI Path Forward Steering Committee and Budget Review Board, comprised of shared governance members and administrators, will make the final decisions regarding requests.

Resources will first be allocated in FY22.

How did the campus provide input into this process?

The UI is committed to doing everything it can to be transparent. The university publicly announced its intention to investigate a public-private partnership on Feb. 8, 2019. Since then the university has held six forums/comment sessions for the public and campus, as well as one information session with each of the four shared governance bodies. Additionally, shared governance has been involved since the start of the dialogue to explore a public-private partnership.

There are two additional information sessions on December 12.

Why did the UI explore a P3?

The governor asked the state’s public universities to explore options that would allow them to discover additional resources through partnerships. The UI began exploring a potential P3 involving its utility system in February 2019 as a way to invest in its core missions of teaching, research, and scholarship.

The higher education marketplace will also face significant challenges due to demographic shifts in population over the next decade. This will cause the Midwest and Northeast to experience significant downward changes in the population, which will impact the number of potential students.

Over the past decade, P3 opportunities for public universities have positively impacted the mission of those institutions that take advantage of pursuing a successful connection. The Ohio State University, a peer institution of the UI, is an example of a successful P3 relationship involving its utility system and ENGIE-Axium, a partnership of ENGIE North America and Axium Infrastructure.

In addition to OSU’s agreement, the following universities have also engaged in P3 analysis and relationships over the past decade:

Is the university considering any other P3s?

At this point the UI is not considering any other potential P3 partnerships and would only consider them after consultation with shared governance.

What role does the Board of Regents have with the UI Utilities System P3?

The Board of Regents oversees all operations of the UI and has been engaged with the university during the entire process. The board evaluated the proposal during the fall 2019 semester and approved the agreement between the UI, ENGIE and Meridiam in Dec. 2019.

Who should I contact with questions regarding the UI Utilities System P3?

For questions, please contact Terry Johnson by email at terry-johnson@uiowa.edu or by phone at 319-335-2791.