40.06 – Privately Funded Capital Projects
Created 26 September 2008
A. General. University of Idaho (University) capital projects may be funded in whole or in part through private donations. Such funding must be ensured for the success of the project, and the project must take into account ongoing maintenance cost for the resulting facility.
Capital Project. Capital projects shall include both renovation and construction of University owned or leased capital assets to include, without limitation, buildings, structures, site improvements, utilities and infrastructure (“capital projects”).
Capital Project Budget. This represents the budget established and managed by Facilities in support of the delivery of a capital project. It includes all project ‘soft’ and ‘hard’ costs, such as planning, site analysis, design, engineering, administrative support, construction, commissioning, contingency, etc.
Facility Maintenance Endowment Fee. A fee attributed to the overall project cost for those projects funded in whole, or in part through private donations. (see APM 40.07 for policy regarding the Endowment).
Institutional Project Budget. This includes the total project cost, inclusive of capital project costs as well as applicable fees such as the Facility Maintenance Endowment Fee and Gift Acceptance Fee. Fundraising targets for privately funded capital projects must be established to support the institutional project budget.
C. Applicability. Except for projects that are specifically excluded from this policy by the President, this policy applies to all capital projects constructed in whole or in part with private donations, whether the donation is to the University or the University of Idaho Foundation, Inc., ( “Foundation”), and for which the construction phase began after implementation of this policy. Any exception to any requirement in this policy must be granted in writing by the President. This policy applies regardless of the University college or unit credited for cultivating the gift and regardless of the project’s formal recognition as a University priority or as part of a formal capital campaign.
D-1. Establishing Institutional Project Budget. When establishing the overall budget for a contemplated project that will be wholly or partly funded with donations, the budget must include all the usual project costs (e.g., design, engineering, construction, etc.) as well as a contribution to the Facilities Maintenance Endowment equal to 10% of the private funding net of the gift acceptance fees. Any portion of the project completed using other fund sources (e.g., gift in kind, student fees, state funds, etc.) will be exempt from the facilities maintenance endowment fee. The institutional project budget will be agreed upon and signed off by both Facilities and the college/department/unit responsible for fundraising.
D-2. Establishing the Capital Project Account. The determination of private funding available in support of a capital project will be calculated using 90% of the current balance in an established gift account (gifts received less gift acceptance fees).
D-3. Funding Commitment. Before a contract for any portion of the project is awarded where 100% of the contract amount is not available in cash, the responsible college/department/unit administrator will sign an agreement to continue with fundraising until the entire amount is raised, including any remaining contribution to the endowment fund. In the meantime, the college/department/unit must provide the necessary funding to allow the contract action to proceed. In the event that the full fund raising target is not achieved, the college/department/unit is responsible for either working with Facilities to reduce the overall project scope to fit within the reduced funding amount or identifying college/department/unit funding to replace the unrealized private funding.
D-4. Facility Maintenance Endowment Fee. The endowment fees shall be encumbered in the gift account such that they are not available in support of the capital project budget. Expenses against the capital project budget will be reimbursed monthly from the project gift account. At the same time, the corresponding facility maintenance endowment fee will be transferred to the endowment.
D-5. Gift Policy. The standard gift acceptance policies of the University of Idaho Foundation will apply including the current gift acceptance fees.
D-5.1 Liquid Assets. Gifts of cash and marketable securities will be considered available for the project upon receipt. Foundation policies provide that marketable securities will be sold upon receipt by the Foundation. The value of the gift will be based on the average of the high and low market price on date of gift per IRS guidelines. This valuation will be the value for the donor receipt as well as the project, and as well as the amount of funding that is transferred to the University from the Foundation for the project. Exceptions to this policy can be made if the project sponsor (college/unit) is willing to accept the financial risk or reward of holding a security, and as approved by the Vice President of Finance and Administration. In that case, the project will receive the actual value of the marketable security upon sale by the Foundation.
D-5.2 Illiquid Assets. Gifts of real property, personal property or other illiquid assets, to include, without limitation, closely held corporations, may only be considered available for a project upon conversion to cash. Upon request by the University, Foundation policy provides that every reasonable attempt will be made by the Foundation to convert illiquid assets to cash in a timely and economically sound method. The costs of selling or otherwise converting the assets will be netted against the proceeds of the sale to determine the amount available to the project.
D-6. Ownership of gift asset. Except for gift assets that are directed specifically to the University, gift asset(s) received for a capital project will be managed in the same manner as other gifts and processed, owned and invested by the Foundation on behalf of the University of Idaho in accordance with the then current MOU in place between the University and the Foundation and any applicable policies and procedures of the Board of Regents, the University and the Foundation.
E. Accelerating Capital Projects. If the University elects to use an alternate funding mechanism to allow a capital project to proceed that was intended to be funded in whole or in part with pledged cash donations before such pledges have been realized, the alternate funding mechanism, subject to applicable laws, must also concurrently fund the equivalent ten percent (10%) facility maintenance endowment fee for the unrealized pledge-funded portion of the project.
F. Unrealized Capital Project. Over the course of fundraising and development of the capital project, it is possible University circumstances may change, such that the planned project is not actually realized. However, endowment funds that already have been transferred to the Endowment are irrevocable and shall remain in the Endowment to be used consistent with the purpose of the Endowment.
G. Seeking State Occupancy Funding. The receipt of state occupancy funds for any capital project will not result in a reduction or reallocation of the facility maintenance endowment fee.