Ohio State announces $483M parking lease proposal
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.