University of Michigan board of regents meeting (Dec. 17, 2010): Only two regents were physically present at Friday’s board meeting, which had been rescheduled from Thursday so that university officials could attend the funeral of Mark Pescovitz. The husband of Ora Pescovitz, who leads the University of Michigan Health System, died earlier this month in a car accident.
Despite some logistical challenges presented by a conference call format – which allowed the other regents to participate remotely – the board dispatched with its last meeting of 2010 in 20 minutes. They approved the schematic designs for two major building projects: a renovation of the Alice Lloyd Hall student dorm, and an addition to the G.G. Brown mechanical engineering building. Regents also authorized the university to guarantee a portion of the debt to be incurred by Merit Network, a nonprofit that provides Internet services for research, government and educational entities. The debt is related to a $102.9 million federal stimulus grant awarded to Merit.
As an information item, the regents received an annual report on leases that the university holds for space over 50,000 square feet. Tim Slottow, UM’s chief financial officer, reported that leased space compared to a year ago is essentially flat. While some units have moved out of leased space and into the North Campus Research Complex – the former Pfizer site – other leases have expanded.
President’s Opening Remarks
UM president Mary Sue Coleman began the meeting by thanking everyone for accommodating the change in date – moving the meeting from its original Dec. 16 date to the following day. It had been postponed so that many of them could attend the funeral of Mark Pescovitz on Thursday, she said. Calling his death a tragic loss, Coleman expressed deep sadness for Ora Pescovitz and her family. “Ora and her family are very much in our thoughts and prayers and will be in the days and months ahead,” she said.
Coleman noted that last week marked the conclusion of the Accelerate Michigan Innovation Competition, held at the university’s North Campus Research Complex. More than $1 million had been awarded, she said, and the top two company prizes went to UM start-ups: Armune BioScience, which received $500,o00; and Arbor Photonics, which got $150,000. In addition, UM student teams swept the student competition, Coleman reported. The results show that “Michigan has a vibrant, innovative future,” she said.
Coleman stated that she was looking forward to UM’s winter commencement on Sunday, Dec. 19, and to the keynote speech by Daniel Kahneman, recipient of the 2002 Nobel Prize in economic sciences. Kahneman received an honorary degree during the ceremony, along with astronomer Sandra Faber and investment manager Charlie Munger.
Finally, Coleman wished the UM football team well in the upcoming Gator Bowl, and gave her holiday greetings to the university’s students, faculty, staff and regents.
New Dean for School of Public Health
As part of their approval for a raft of appointments and promotions, regents approved Martin A. Philbert as the new dean of the School of Public Health. He currently serves as a UM professor of toxicology and the school’s senior associate dean for research. His five-year contract runs from Jan. 1, 2011 through June 30, 2016.
In noting the appointment, provost Phil Hanlon told the regents that the university had conducted a rigorous international search for this position, and that Philbert’s selection was widely supported.
Though it’s common for new deans to attend the regents’ meeting at which they are officially appointed, Philbert was not present at Friday’s meeting.
Regents approved three building-related projects at Friday’s meeting, and heard presentations from architects for two of the projects.
Alice C. Lloyd Hall Renovations
In June 2010, regents gave general approval for a $56 million “deep” renovation of Alice C. Lloyd Hall, a dorm located on South Observatory that houses about 560 students. On Friday, regents were asked to approve schematic designs for the project.
Paul Stachowiak, president of the Troy-based architectural firm Integrated Design Solutions, presented the designs and an overview of the project.
In addition to updating the building’s infrastructure, the project includes repurposing the former dining hall that was vacated when the Hill Dining Center opened in 2008. More spaces for living-learning activities will be created, as well as areas for dance practice, art studio space and music practice rooms. The building will be designed to meet Energy Star guidelines, Stachowiak said – the only other UM residence hall to meet those standards is Couzens Hall on East Ann, which is currently being renovated.
Before the vote, Mary Sue Coleman commented that the new design gives the building a cleaner, more coherent look. She clarified that the new main entrance would be off of the Palmer Field side of the building, rather than from Observatory. The renovation will be a huge, positive change to the campus, Coleman said.
The project is expected to be finished by the fall of 2012. Coleman noted that it’s the last significant renovation planned for a student residence hall, part of a major multi-year overhaul known as the Residential Life Initiative. She observed that this will be a relief for Royster Harper, UM’s vice president for student affairs. Harper laughed at the statement.
Outcome: Regents unanimously approved the schematic design for Alice Lloyd Hall renovations.
G.G. Brown Building Addition
At their June 2009 meeting, regents gave initial approval for a $56 million, 66,000-square-foot addition to the G.G. Brown Memorial Laboratories, which was built in 1958 on UM’s north campus and houses the Department of Mechanical Engineering. Since then, the project has been scaled back – the addition is now expected to cost $46 million, adding 62,500 square feet. The addition will house research labs, and faculty and graduate student offices for emerging research areas, including bio-systems, energy systems, and nano-systems.
Robert Goodwin, a principal of the New York architectural firm Perkins + Will, gave a brief presentation about the project. He said that part of the project’s design was an effort to connect UM student housing to the north, with the rest of the north campus buildings located south of G.G. Brown.
Another element that Goodwin highlighted is a proposed LED light display on the western facade of the addition. In the evening, the lights would create an abstract image derived from actual images of research that’s occurring in the building, he said, adding that the display would be a distinctive element for north campus.
The project is expected to be finished by the winter of 2014.
Slottow clarified that this project is separate from a renovation of the existing G.G. Brown building that recently received $30 million in funding as part of the state capital outlay bill. He told regents that they’d be asked at a later date to approve that project – an estimated $50 million effort. Mary Sue Coleman commented that the building is currently in “terrible shape.”
Outcome: Regents unanimously approved the schematic design and revised scope and budget for the G.G. Brown building addition.
Edward Henry Kraus Building Renovation
Regents were also asked to approve a $1.7 million project to renovate 4,200 square feet of lab and support space on the second and third floors of the Edward Henry Kraus building, located at 830 N. University Ave. The space is used by the Department of Molecular, Cellular, and Developmental Biology. The project is expected to be finished in the fall of 2011.
Outcome: Regents unanimously approved the $1.7 million renovation project of labs in the Edward Henry Kraus building.
Merit Network Debt
At Friday’s meeting, regents were asked to authorize a guarantee of debt for Merit Network. Merit is a member-owned organization that was founded by the state’s public universities, including UM, to provide computer networking services for its members as well as other research, government and educational entities.
In introducing the item, Tim Slottow – UM’s chief financial officer – called it a “phenomenal opportunity” for the nonprofit. Merit has been awarded a $102.9 million federal stimulus grant under the American Recovery and Reinvestment Act to build roughly 2,300 miles of an advanced fiber-optic network throughout Michigan. The network, called the REACH Michigan Middle Mile Collaborative, will focus on underserved and remote areas. As part of the award, Merit must cover $8.2 million in cost-sharing expenses.
According to a cover memo regarding this item, the Michigan Strategic Fund, a state economic development entity, plans to issue up to $8 million of limited obligation tax exempt bonds at an estimated interest rate of 3.2% – the MSF would lend the funds to Merit, which would be responsible for the bonds’ debt service.
JP Morgan Chase Bank plans to purchase and hold the bonds. The bank has asked that the members of Merit – including UM – guarantee the loan through an assessment agreement. The agreement requires that each Merit member would pay, as part of its annual fee, an additional assessment called the Member Debt Service Amount, which would be a guarantee to cover the debt service of the bonds.
UM’s portion of the guarantee would be $470,000 for five years, after two years of interest-only payments of $70,000. The maximum annual liability of the university could reach $870,000 of debt service for $4 million of secured debt, plus interest and fees.
According to the cover memo, Merit expects to pay for the project’s debt service from increased demand for its fiber-optic network, savings in current circuit expenses, and the paydown of an existing loan.
Slottow told the regents that this agreement, by guaranteeing the debt, will allow Merit to reduce its financing fees by $1.7 million.
Regent Andy Richner, a partner with the law firm Clark Hill, recused himself from the vote, without citing a specific reason for his recusal.
Outcome: Regents authorized a guarantee of debt for Merit Network. Andy Richner recused himself from the vote.
Leased Space Report
The university staff must make an annual report to the regents regarding leases it holds for space exceeding 50,000 square feet. Tim Slottow, UM’s chief financial officer, reported that there are currently five locations in that category. Four of those locations are in Ann Arbor:
- 214,773 gross square feet at the Domino’s Farms complex is used by several University of Michigan Health System (UMHS) departments, including Sports Medicine, Plastic Surgery, Preventive Cardiology, and various Medical School groups, including Internal Medicine.
- 125,815 gross square feet at the KMS Building on South State Street is leased from Kosmos Associates for Hospital Clinical Billing and other UMHS groups.
- 65,693 gross square feet on East Eisenhower Parkway is leased from Burlington Property LLC for use by Physical Medicine and Rehabilitation, Spine Rehabilitation and the Dental School.
- 63,920 gross square feet at 2301 Commonwealth Boulevard is leased from First Properties Associates for use by various UMHS groups.
The university also leases 51,534 gross square feet at 1051 North Canton Center Road in Canton from Saltz Center for the UMHS Canton Health Center.
Slottow mentioned that while some leases were reduced as units moved into the North Campus Research Complex – the former Pfizer facility acquired by UM – leases had increased in other areas. The result is that the university’s lease obligations are essentially flat, he said.
Regents authorized three items that required disclosure under the state’s Conflict of Interest statute. The law requires that regents vote on potential conflict-of-interest disclosures related to university staff, faculty or students. Often, the items involve technology licensing agreements or leases.
This month, the disclosures involved deals with the following entities:
- An agreement between UM and Internet2, a nonprofit consortium of universities and industry focused on high-speed computer networking infrastructure and services. UM president Mary Sue Coleman serves on its board, and Doug Van Houweling, Internet2′s CEO, is also a UM professor and associate dean of the university’s School of Information. Internet2 is providing $18,000 for a project by Daniel Atkins, a professor at the School of Information and UM associate vice president for research cyberstructure. Called CI Days at UM, the project aims to raise awareness of new cyberinfrastructure services available on campus.
- A license agreement between UM and Fusion Coolant Systems, a company owned by Stephen Skerlos, a UM engineering professor. The company plans to license technology developed at the university to cool manufacturing casting and tooling systems.
- A license agreement between UM and Ascentage Pharma Group Corp., a business which is owned in part by UM medical professor Shaomeng Wang. The company wants to license technology to commercialize compounds with potential anti-cancer applications.
There was no discussion about these items.
Outcome: Regents unanimously approved the full slate of conflict-of-interest disclosures.
Another item that was initially on the agenda was withdrawn from consideration during the meeting by Stephen Forrest, UM vice president for research. The item had been for the approval of a license agreement between UM and Life Magnetics Inc., partially owned by Brandon McNaughton, an assistant research scientist in biomedical engineering. The company is planning to commercialize a device to measure the growth of bacteria, using technology licensed from UM. There was no explanation given during the meeting for this item’s removal.
Present: Mary Sue Coleman (ex officio), Julia Darlow, Kathy White. Also participating via conference call: Larry Deitch, Denise Ilitch, Olivia (Libby) Maynard, Andrea Fischer Newman, Andrew Richner and Martin Taylor.
Next board meeting: Thursday, Jan. 20, 2010 at 3 p.m. at the Fleming Administration Building, 503 Thompson St., Ann Arbor. [confirm date]