More than nine million square feet of infrastructure in poor or critical condition required University of Minnesota senior leaders to create an innovative solution to address this critical issue.

Because State higher education funding has become more unpredictable, “The only way we are going to get a step ahead from our crumbling infrastructure is to define our own destiny,” says Executive Vice President for Finance and Operations Gregg Goldman. “To keep up with our peers, we must invest in our infrastructure to attract top researchers, faculty, staff, and students to drive innovation and fulfill the University’s mission.”

That way forward is the University’s self-funded repair and replacement plan. 

Increasing borrowing power

Historically, the University invests more than $10 million annually in the repair and replacement (R&R) plan within the operating and maintenance (O&M) budget.

Beginning in FY 2026, the University will allocate an additional $10 million to the R&R plan that will instead be used as a debt service. This means that each $10 million investment every two years will give the University $150 million in borrowing capacity.

Over 10 years, the $50 million cumulative R&R investment translates to $750 million in borrowing power that won't be limited by Higher Education Asset Preservation and Replacement (HEAPR) funding standards (e.g., the project must address life safety, building systems or building code issues).

As a creative solution to a longstanding lack of funding for critical repairs, “the University can leverage its borrowing power and good credit rating to take on low interest debt and accomplish large and small scale projects across the campuses,” explains Alice Roberts-Davis, vice president for University Services. “We have never done anything like this before.”

The funds would be distributed across the four campuses that have owned buildings (the Rochester campus uses leased facilities) and allow the University to focus its capital request on the projects the State has been more amenable to funding like the remodeled Fraser Hall on the Twin Cities campus.

Thinking bigger

With this new plan, “We can think bigger about what we want to do,” says Roberts-Davis. “Unlike HEAPR, these funds will be unrestricted and could be used for programming, equipment, and updating buildings to make them as modern as we like.”

One proposed project is the demolition of the Mayo Building on the Twin Cities campus, which would cost over $50 million.

“The Mayo Building is a project that has needed attention for decades,” says Roberts-Davis. “It’s a building we no longer invest in and is only getting worse.”  

Major investments in existing facilities allows the University to consolidate similar programs into one space and forgo investing in buildings that have passed their useful life. A complete renovation of Eddy Hall would consequently allow for the demolition of Peik Hall, a building rated in poor condition.

At the Board of Regents June meeting, President Rebecca Cunningham said, “Ultimately, to be responsible to the students who do choose to come here, we need to provide them facilities that are not falling apart at the roof and coming apart at the heater. And so that’s part of what we’re doing when I say we’re investing in our people and our infrastructure.”