Ohio State announces $483M parking lease proposal

ANDREW WELSH-HUGGINS

Asso­ci­ated Press

COLUMBUS — Ohio State Uni­ver­sity announced plans Fri­day to lease school park­ing oper­a­tions for $483 mil­lion to an Aus­tralian com­pany over a 50-year con­tract the uni­ver­sity says will raise bil­lions in invest­ment earn­ings to sup­port its aca­d­e­mic programs.

The rec­om­men­da­tion to lease the park­ing oper­a­tions to Queens­land, Australia-based QIC Global Infra­struc­ture goes before uni­ver­sity trustees later this month. The uni­ver­sity would main­tain own­er­ship of its park­ing garages and spaces, which total more than 35,000 spaces. The company’s U.S. part­ner in the deal would be Hart­ford, Conn.-based LAZ Parking.

Tak­ing the park­ing oper­a­tion pri­vate would pro­vide $3.1 bil­lion in invest­ment earn­ings to hire more fac­ulty, pro­vide more stu­dent aid, sup­port the arts and human­i­ties and pay for the university’s bus ser­vices, the uni­ver­sity said.

QIC’s bid would cap annual park­ing rate increases at 5.5 per­cent for the contract’s first 10 years. After that, increases fall to the lower of either 4 per­cent or the rate of inflation.

“Mov­ing for­ward with this agree­ment would be one com­po­nent of an over­ar­ch­ing strat­egy to strengthen our fac­ulty, stu­dents, and pro­grams by gen­er­at­ing new fund­ing,” said Provost Joseph Alutto.

Ohio State Pres­i­dent Gor­don Gee has argued for months that the lease is nec­es­sary to pro­vide rev­enue for Ohio State at a time of declin­ing pub­lic funding.

Other uni­ver­si­ties have turned their park­ing oper­a­tions over to pri­vate com­pa­nies. Ohio State’s pro­posal is unique because of the size of the upfront pay­ment and the length of the con­tract, said Geoff Chatas, the university’s chief finan­cial officer.

“We have to con­tinue to make sure that this uni­ver­sity is a place that the Amer­i­can dream can live on for our young peo­ple, that they can attend Ohio State with­out going into huge debt,” Chatas said.

When the uni­ver­sity started look­ing at oper­a­tions that weren’t directly related to Ohio State’s core aca­d­e­mic mis­sions, park­ing made the list early, Chatas said.

Fac­ulty groups on cam­pus have voted in favor of the idea, but indi­vid­ual crit­ics worry the uni­ver­sity could lose money over the length of the contract.

“Park­ing rev­enues are depend­able,” said Paul Beck, an Ohio State polit­i­cal sci­ence pro­fes­sor who has opposed pri­va­ti­za­tion. “Returns on invest­ment fluc­tu­ate over time.”

Uni­ver­si­ties have been pri­va­tiz­ing non-academic func­tions for decades, start­ing with food oper­a­tions, then spread­ing into cam­pus book­stores and even dor­mi­tory oper­a­tions. Park­ing is likely the next edge of that move­ment, said Matthew Hamill, senior vice pres­i­dent at the National Asso­ci­a­tion of Col­lege and Uni­ver­sity Busi­ness Officers.

More than one in three uni­ver­si­ties in 2011 were con­sid­er­ing pri­va­tiz­ing oper­a­tions for short-term rev­enue, and more than four in 10 were look­ing at pri­va­ti­za­tion for long-term rev­enue, accord­ing an Asso­ci­a­tion of Pub­lic and Land-Grant Uni­ver­si­ties sur­vey of 81 research uni­ver­si­ties plus six uni­ver­sity systems.

The survey’s con­sen­sus was that costs can no longer be passed onto stu­dents and incre­men­tal mea­sures aren’t enough, said APLU asso­ciate vice pres­i­dent Chris­tine Keller.

“It’s the sense we can no longer tin­ker around the edges, but we need to do some new and inno­v­a­tive things to help con­trol the costs, to increase rev­enues,” she said.

Posted by AP News on Jun 8 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.