UCSF Leaders Present Capital Strategy to UC Regents

UC San Francisco Chancellor Sam Hawgood, MBBS, last week presented a plan to a UC Regents committee to invest in four projects that are critical to achieving the University’s overall capital strategy to strengthen its research, education and patient care programs and to support the work of its faculty, staff and students.

The four projects are part of UCSF’s long-term capital strategy to:

• Expand and renovate buildings to meet growing clinical and research needs;
• Address seismic safety and long deferred maintenance of aging buildings; and
• Add to its limited stock of student housing, childcare and parking.

Hawgood and Mark Laret, chief executive officer of UCSF Health, shared plans for the four projects – two slated as action items and two for discussion only – at the UC Regents’ Committee on Grounds and Buildings meeting at UCSF Mission Bay.

During the development process of each building, UCSF will continue to work closely with the surrounding communities to present the plans and address areas of concern for its neighbors.

At the July 21 meeting, the Regents committee approved $11 million in planning funds to renovate UC Hall on the Parnassus Heights campus and $10.9 million in planning funds to construct a new building to replace space occupied by UCSF employees in seismically challenged buildings at the site of the city-owned San Francisco General Hospital and Trauma Center (SFGH). UC President Janet Napolitano had recommended to the Regents that planning funds for both projects be approved.

UC Hall at Parnassus Heights

The oldest building on the flagship Parnassus campus, UC Hall was constructed in 1917 as the University’s first hospital. Today, the 148,200-square-foot building currently houses office, research laboratory, clinical and educational space, but requires seismic remediation to comply with the University's Seismic Safety Policy.

In an effort to address the limited housing on campus and reduce its impact on the Parnassus Heights neighborhood, UCSF is proposing to convert three floors of UC Hall for desktop workspace for faculty and staff, and three floors of housing with 134 beds for students and postdocs. Preliminary estimates to complete the retrofitting work at UC Hall range from $170 million to $183 million, which would be funded through external financing and campus funds, comprising non-state, non-tuition funds.

San Francisco General Hospital Research Building

UCSF is proposing the construction of a new, 175,000-square-foot research building at SFGH, which has been affiliated with UCSF as a teaching and research site since 1873.

The new research building would replace space occupied by UCSF employees in seven seismically compromised buildings – originally constructed during World War I – with modern facilities that would greatly enhance the work of UCSF’s principal investigators at SFGH.

The building would accommodate 800 UCSF employees, the majority of whom are currently working in programs in at least 16 clinical departments at SFGH. The construction cost of the new research building at SFGH, which is preliminarily estimated at $188 million, would be funded through external financing and campus funds.

In related news on Tuesday, the San Francisco Board of Supervisors unanimously approved a non-binding term sheet for UCSF to enter into a 75-year ground lease for the site of the new building that UCSF would own and operate.

The Regents committee also discussed two other projects at UCSF Mission Bay, a new cancer outpatient building and another building to house faculty and staff relocated from other sites. UCSF officials will present both projects for Regents’ approval of planning funding this fall.

Mission Bay Block 33 Building

In September, UCSF will request approval for $11 million for planning funding for a new Phase 1 building on the Mission Bay East campus, known as block 33, which UCSF purchased last year. The 340,000-square-foot building would provide office and research space for UCSF faculty and staff currently located in other owned and leased locations, including Laurel Heights which must be vacated in four-and-a-half years before the site is privately developed.

The building on block 33 would house a new Center for Vision Neuroscience, which will house clinical research and teaching space for ophthalmology programs, now at the Parnassus campus. If approved, construction of this new building projected to cost $237 million, is expected to begin in 2016 and be completed in 2018.

Precision Cancer Medicine Building

The recent recruitment of Alan Ashworth, PhD, FRS, one of the world’s preeminent cancer scientists, has spurred the development of a new strategic plan for advanced cancer care in the emerging era of precision medicine.

In September, UCSF will request approval of $16.6 million to plan a new outpatient cancer building adjacent to the UCSF Ron Conway Family Gateway Medical Building at Third and 16th streets at UCSF Medical Center at Mission Bay.

The proposed 170,000-square-foot building, which is described in the UCSF 2014 Long Range Development Plan, would enable UCSF's world-class cancer programs to treat more patients and is located with the new Bakar Cancer Hospital at Mission Bay. Construction costs for this building are estimated at $250 million.

UCSF’s Strong Financial Forecast

In his overview of UCSF’s capital strategy, Chancellor Hawgood pointed out that UCSF’s revenue profile is much different from the other nine UC campuses with large undergraduate populations. With only 3,000 graduate and professional students, UCSF receives 1 percent of its budget from student tuition and fees. And 4 percent of its budget comes from the state, mostly to support education, although fewer than 15 percent of UCSF faculty members receive any state funding.

UCSF generates more than 80 percent of its annual revenues from its highly competitive biomedical research and the health care services it provides. In 2013-2014, UCSF’s revenues totaled $4.5 billion, of which $2.4 billion came from the clinical enterprise and $1.1 billion from grants and contracts for research.

Hawgood told the Regents committee that UCSF projects that by 2023 it will grow its revenues to $7.4 billion, with $4.5 billion from clinical activities and $1.5 billion from grants and contracts. During that time, UCSF expects state funds to grow from $198 million (4.4 percent of total funding) to $231 million (3.1 percent of total funding).

Hawgood also noted that UCSF will carefully monitor its debt capacity and operating revenues to ensure they align with current projections in order to make these strategic investments in capital projects.

Funding sources for projects for UCSF Health will largely come from operating margins and philanthropy, Hawgood said. UCSF raised $445 million in 2013-2014, a record for the entire UC system, and record results for UCSF were achieved again last fiscal year, with a total of more than $600 million raised.

For more campus news and resources, visit Pulse of UCSF.