UPDATE: Cost of Plenary-led JV expansion of UC Merced rises to $1.34B

UPDATE: After the university's Board of Regents' meeting, the budget for UC Merced's project has increased from the previously approved $1.142 billion to $1.338 billion. The Plenary-led JV also increased its investment from $386 million to $590.35 million.

Dive Brief:

The University of California, Merced announced that a Plenary-led joint venture, Plenary Properties Merced (PPM), will execute the design, construction and maintenance of a 1.2-million-square-foot, $1.14 billion campus expansion, according to The Los Angeles Times.
The university — which is the smallest of 10 UC campuses — will add a new quad surrounded by "state of the art" research facilities along with dining, recreation and living space that will increase the school's student capacity by 6,000, essentially doubling its size, according to the Merced Sun-Star.
University officials said that as part of their public private partnership (P3), PPM will raise $386 million from developers, with the remainder of financing coming from $600 million in UC regents revenue bonds and a direct contribution of $157 million from the school.

Dive Insight:

UC Merced Chancellor Dorothy Leland said the facility expansion should increase enrollment rates in the economically disadvantaged San Joaquin Valley of the state. University officials also said P3s have never been used on a state university project as large as this, and Leland told the Sun-Star that the 39-year maintenance deal will ensure UC Merced will "have buildings that are in top-notch condition and will not be saddled, like many other public entities across the nation, with significant deferred maintenance."

The project, which is scheduled for completion in 2020, is expected to create more than 12,000 statewide jobs, including 10,000 directly related to construction, and result in a $2.4 billion economic boon to the state.

Public entities are increasingly choosing P3s to tackle major construction projects, particularly when it comes to those, like UC Merced, with a significant maintenance component. P3s can also assist in project financing, and UC Merced officials said PPM's ability to come up with hundreds of millions of dollars made their proposal more attractive to the university. Such financing help, like in the case of the $513 million Long Beach Civic Center, which is also Plenary-led, allows state and local governments to stretch their infrastructure dollars farther because they don't have to dedicate all their cash to just one project.

In March, Skanska USA Executive Vice President Larry Casey told Construction Dive that P3s allow municipalities and local governments to access the financing resources of the private sector, which is invaluable in an environment of ever-tightening government budgets. Casey said he expects P3s to play even bigger roles in public projects, as the price tag for U.S. infrastructure maintenance alone is expected to reach $3.6 trillion by 2020.