The International School Eindhoven (ISE) has been tied to contract that has kept them in a stranglehold contract since 2013. The school, which may soon expand on its own campus, is suffering financially because of the DBFMO construction that financed the current campus a good decade ago.
At the time, Eindhoven municipality was seriously short of funds. The International School needed to expand but money was tight. A DBFMO (Design, Build, Finance, Maintain, Operate) was therefore used in which a consortium called SPC-ISE became responsible for the design, construction, maintenance, financing and management of the campus.
That consortium included four commercial parties, namely Strukton, Spie, Mansveld and Verbego. When the contract was closed, it was a new form of financing, encouraged by The Hague. At the time, the construction saved about 10 million euros, but in all likelihood, SILFO, the the conglomeration of schools which includes the ISE, will in fact lose many millions of euros over the duration of the contract.
As a result, SILFO is deeply troubled. When the contract was drawn up, the requirements to be met by the ISE campus were laid down. Any changes made after that date cost an arm and a leg.
‘The problem lies in the financing,’ says SILFO director Meine Stoker. ‘At the ISE, because of that financial construction, there is a link with the Bank Nederlandse Gemeenten and they are rock hard. They say: I want to get this return. So for every item we want to change, a separate agreement has to be made that fits within the existing agreement.’
Risk
‘They want to exclude any risk,’ says manager of management and services Ruud Jansen. ‘So with every change they look at how the risk profile of the property they have to maintain until 2043 changes. We are reviewed annually by the lenders’ regulator. Each time they check whether the risk profile remains intact.’
The so-called DBFMO construction is exceptional in terms of its design. The municipality reveals that outside the International School, no institution in Eindhoven has such a contract. ‘What normally happens is that the municipality makes money available, gives it to the school board and the school starts building,’ Jansen said.
‘Then the municipality pulls out and the school board starts maintaining the building. In this case, the Eindhoven municipality said that they did not have any money. So they looked for a party who could finance the project and the municipality will pay that off in 30 years. Until then, we are stuck with the contract.’
And that means a strong noose around SILFO’s neck. After all, the requirements to be met by the International School campus were drawn up between 2008 and 2011. In terms of requirements for sustainability and ICT facilities, however, much has changed in recent years.
Half a million euros
‘Take sustainability as an example,’ says Stoker. ‘ There is no solar panel on the roof because that is a risk.’
‘If you compare the ISE campus with the Stedelijk College building on Henegouwenlaan, the difference becomes painfully clear. The building on Henegouwenlaan is completely energy-neutral,’ Jansen adds. ‘In terms of energy costs alone, the difference on an annual basis is almost half a million euros. And the noose is around our necks because the municipality pays a fixed amount annually. We settle with the consortium.’
ICT
It gets even more bizarre when you consider ICT. “In 2011, it was decided what that should look like for the next 30 years. We managed to get that part out, putting us back in control. But we had to dig deep into our pockets for that”, says Jansen.
“Imagine this: beforehand it was established how often a door in the building opens and closes. How long does that door last, how often does it need to be lubricated. So we had discussions as more students came. Doors break faster, carpets have to be replaced faster.’
“I remember an issue in the beginning with a tray of flower bulbs”,says Stoker. “We wanted to put some of those trays in the school. We had to do that through the consortium. It was 20 euros a tray at the time but the consortium ended up with 500 or 600 euros for the tray. It was not just about the tray but also about the next 28 years of that tray. The tray had to be replaced at some point. It had to be cleaned. Every four months, that tray had to be lifted, cleaned underneath and had to be put back, and so they came up with huge sums”.
Extension
Despite the strangllehold the ISE is in, Eindhoven municipality recently announced that they can expand. By refurbishing existing buildings, space can be made for 1,500 students. Completely new buildings as was actually intended could not be achieved through the DBMFO construction because the price tag of doing so would be far too high.
Future
This solves the school’s most pressing problem: the capacity problem. But until 2043,SILFO still sees plenty of bears on the road. ‘Further expansion will not be necessary any time soon, because more and more internationals coming here are here for the longer term. Their children will not need to attend the International School. But the further we go towards 2043, the further apart the expectations become between what a school building should meet, and between what is in the contract”, says Stoker.
“In addition, there are fewer and fewer people at SILFO who know the spirit in which the contract was concluded. The moment no one knows the idea behind the contract anymore, only the hard letter is looked at, and then it might become much more difficult to see eye to eye’
Response
The SPC-ISE consortium did not want to respond to specific questions from Studio040 but did come up with a general response:
‘The Municipality of Eindhoven, the International School and the business community have made funds available for an expansion on the ISE campus. That is the budgetary framework in which we operate as a consortium and as a school. In 2013, the construction and operation was tendered for 30 years. Extensions also fall within this scope and so it is within that framework that we are going to realise the extension.’
‘The consortium is linked to the ISE through a DBFMO contract in the form of a PPP contract (public Private Partnership), where construction and operation are handled integrally. This has many advantages, including continued joint learning and evaluation, so that the contract remains constructive for both parties. Alignment on this is always done constructively between consortium and SILFO.’
‘We do not recognise what is stated about the impact of the financial part of the construction on the financial situation of the international school. This is our reaction for now; we will not answer any further qustions.’
For Eindhoven news: Shanthi Ramani
Source: Studio040
