Eastern Michigan University’s Board of Regents gave approval to the University to finalize an innovative utilities and infrastructure partnership that will deliver significant and lasting enhancements to the overall campus experience for students, faculty and staff. The partnership will generate a multi-million-dollar influx of outside funds to the University to:
- Further support Eastern’s strong sustainability efforts and energy conservation measures, while making the University even more “green”;
- Provide immediate and long-term solutions to deferred maintenance of older buildings and modernize the aging utility infrastructure; and,
- Create a continuous income stream to support academic programs and strategic enrollment and retention initiatives, while including a distinctive opportunity for students, faculty and staff to develop projects to support enrollment and retention objectives.
“The higher education environment is as challenged as it has ever been in my 14 years as a university president,” said Eastern Michigan University President James Smith. “Institutions must become nimbler and more creative than ever to identify new sources of revenue to invest in student and employee success.
“This innovative initiative will deliver significant and sustainable enhancements to the overall campus experience for students, faculty and staff. The University will immediately begin working to implement the full scope of projects under this partnership, with some of the enhancements taking place within a matter of months. Others will roll out over time in the months and years ahead and will benefit the University for decades in the future.”
Similar partnerships have been formed at universities across the country, such as Ohio State University, University of Iowa, Georgetown University, University of Idaho, Louisiana State University.
How it works
Eastern Michigan University has entered into a 50-year partnership with Eagle Energy Partners as the Concessionaire, wholly owned by CenTrio, which will bring deep energy-sector expertise to modernize utility systems and improve sustainability efforts.
Eastern and Eagle Energy Partners have identified a series of projects that will result in reductions in energy use and in operating costs, while enhancing the redundancy and reliability of the University’s electrical grid and its capacity.
Under the agreement, Eastern will receive approximately $115 million (final amount to be determined on financial close later this summer) to address the following needs:
- Reduce existing University debt by $25 million, which will generate approximately $1 million in annual debt service savings.
- Provide $90 million for the University to establish the Strategic Initiatives Fund, which is projected to generate $5 million annually in investment returns.
Other key elements of the partnership:
- Eagle Energy Partners will invest $20-25 million of its own funds in immediate infrastructure improvements, which will generate approximately $900,000 annually in utility and operations savings for the University.
- Eagle Energy Partners will invest $26 million of its own funds (pending final agreements) in energy conservation projects, which will generate $1-1.5 million in annual utility and operations savings for the University.
- Eastern will pay Eagle Energy Partners $5.3 million annually to manage, operate, maintain and improve the University’s utility infrastructure.
Taking into account the investment returns, debt savings, utility and operational savings, and the University’s payment to the partner, the overall annual net benefit to the University will be $2.7 - 3.2 million.
Eagle Energy Partners was selected for the project by Gilbane, EMU’s master developer. Gilbane is the construction and development firm leading the University’s new $200 million residential housing transformation, “Welcome Home 2025.”