Putting UP’s resources into good use

Photo by Wendell Capili

In one corner of the Diliman campus of the University of the Philippines (UP), at the former site of the historic Narra Dormitory, rises a new building that is home of the UP Integrated School (UPIS).

The four-storey UPIS complex is curiously touted as a “green building,’’ what with the application of major principles of sustainable design and the use of green solar strategies, among them, employing dynamic shading using plants, green walls and green roofs, observing correct building orientation, day-lighting, and the preparation for photovoltaic lighting and energy for future use. The new UPIS complex utilizes land responsibly, following a master site development plan that emphasizes open spaces with trees, landscape spaces for lawns and for general assembly, and spaces for future expansion.

The former location of UPIS along Katipunan avenue, on the other hand, is now the site of UP Town Center,  a mixed-use project of Ayala Land Inc. consisting of both retail and office components, with academic support facilities.  It will also include areas for incubatees, a university bookstore and venues for school activities.

But more than just a new edifice that excites the present and future batches of UP elementary and high school students, the new UPIS complex is a stellar representation of how UP has been successfully partnering with the private sector to be able to achieve its goal of operational excellence and financial sustainability, particularly under the leadership of its president Alfredo Pascual. The new UPIS complex and the UP Town Center are two examples of the initiative to develop UP’s idle lands into revenue generating assets that will help finance UP’s operations.

“The income that we generate from the UP Town Center, for instance, will be put to good use—to repair and restore buildings, purchase new equipment and replace outdated ones. But the money is not exclusively for the use of Diliman, but will be made available to other campuses as well,’’ says Pascual, who assumed office in 2011 as UP’s 20th president.

UP has been blessed with large tracts of land that remained idle for most part of the university’s 105-year history. But Pascual has made it a major thrust of his administration to proactively and systematically develop UP’s land assets.

“We have formulated a strategic plan at the start of our term and one of the pillars is financial stability. We were very clear in saying that we are going to develop our existing properties to be able to generate additional resources,’’ states Pascual who was formerly connected with the Asian Development Bank (ADB).

Model SUC

UP is attractive to investors, Pascual says, partly because of the land it owns, and partly because of the prestige of the UP brand.

For instance in Davao, UP is entering into a partnership with a company that will develop a cacao plantation on a land that UP stewards.

Some portions of the sprawling UP Los Baños campus have also been converted into an economic zone where factories may be located. It is already operational, with an approved Peza (Philippine Economic Zone Authority) status.

In UP Diliman, Pascual says that they are also reviewing the lease contracts of existing commercial tenants, aiming to update the rental rates to competitive market level.

Considering the success it has attained so far in entering into Public-Private Partnerships (PPP), UP has become a model for state universities and colleges (SUCs).  Pascual shares some valuable advice with other SUCs if they are to enter into PPP to develop their assets for income generation.

“First, SUCs need to be able to identify the best use for the property with the help of experts in real estate. We in UP did not rely on our own appreciation of what is best for the property and consulted with people who are in touch with the market. Second, after determining the best use, SUCs must prepare a plan, again with inputs from the market,’’ Pascual says.

He also recommends  SUCs to engage in open competitive bidding to determine what the real value of the property is,  based on assessment made by actual players in market.  For the UPIS Complex for instance, Pascual opened the bidding to major developers and opted to go for the one who had the best offer. The winner, Ayala Land,  was the only one among the three bidders who offered to build the new UPIS green building in place of the old one which would be displaced by the UP Town Center.

“For UPIS, there was open competitive bidding and this really showed us the value of the property. There were offers before my term and they turned out to be way below the market value,’’ Pascual adds.

Phase 1 of the UP Town Center, which is the mall, is targeted to open next month. Phase 2, which includes the mall and the offices, will be completed in 2015.

The UP president also advises against negotiated transactions wherein developers usually approach SUCs to simply rent a property for its own purposes.

Commercialization?

While the earnings from these partnerships provides the much-needed boost to the UP coffers, critics view it as otherwise and were quick to dub it as commercialization of the well-loved state university.

Pascual qualifies that commercialization comes in many forms. If it means allowing commercial enterprises to dictate what they do in UP, for instance, in its research agenda, that is a form of commercialization. In India, Pascual shares that just allowing the setting up of a McDonald’s on campus or displaying their brand names, is already commercialization.

“Commercialization is a slogan that people use to communicate the need for government to consider and provide UP with increased subsidy, which is also what we are trying to work on. But these partnerships that we are entering into never affect the academic agenda of the university. UP got so much land and this is precisely why UP is expected to develop these resources. Allowing us to develop our property is stated in our Charter,’’ Pascual clarifies. “But UP cannot be sustained by income from these assets. Our Charter says that whatever is generated by the development of these assets will not in any way reduce the commitment of the government to provide it with budget appropriation.’’

UP’s budget from the national government through the General Appropriation Act 2013 totals P9.529 billion. About P2 billion is earmarked for the Philippine General Hospital (PGH) while the rest is for the academic units. The said budget is a 66 percent increase from the 2012 GAA, a substantial part of it in the MOOE (Maintenance and Other Operating Expenses). This MOOE increase contributes to the improvement of UP’s delivery of its academic programs as well as to its research outputs.

For 2014, its proposed budget is P17.1 billion.

In his vision statement, even before he assumed office, Pascual had already stated that UP would pursue the development of properties in partnership with private sector. “But even if we develop all these, we cannot generate to replace the budget of UP. We can reliably generate P2 billion from UP properties all over the country but if we were to put UP at the forefront of higher education in Asia, we need to generate more funds to finance research, faculty training and development, student scholarships, and many more,’’ Pascual says

In UP Diliman, after the Ayala Technohub, the only remaining area for development is about 30 hectares. Pascual says there are no final plans yet for this but it will probably be developed into a science and technology park to support the research and development thrust of UP.