The Board of Trustees unanimously voted Friday to approve the plan to lease all Ohio State parking assets to an outside vendor for 50 years.
The winning bidder was QIC Global Infrastructure, an Australia-based investment company. QIC submitted three bids for three different pay scenarios.
QIC placed a $483 million bid for university parking earlier this month that limits parking rate increases by 5.5 percent for the first 10 years of the agreement. After 10 years, rates will be capped at 4 percent or a rolling five-year average of inflation, whichever is greater.
QIC also placed two other bids for rate scenarios of a 6.5 percent increase cap, and a 7.5 percent increase cap. Geoff Chatas, OSU’s chief financial officer, said models the university constructed valued that extra 2 percent increase at $60 million, and QIC only valued the increase at $40 million.
QIC has partnered with LAZ Parking, a company that specializes in parking operations, to take over operations of all permit sales, parking lots and parking garages. Chairman and CEO of LAZ Parking Alan Lazowski attended the Board meeting Friday, and said joint-planning with OSU will ease the transition process for.
“We’re going to work hand-in-hand with OSU staff. Our goal is that students see this is a very seamless transition,” he said.
LAZ Parking handles more than 600,000 parking spaces nationwide, including 15,000 university spaces at colleges at Brown University and Boston College, among others. OSU would be the first public university to privatize parking assets, which includes 36,000 parking spaces according to a QIC release.
The parking company also controls assets in Chicago, where according to the Chicago Sun-Times, former Mayor Richard Daley signed a $1.15 billion 75-year agreement to privatize parking meters in 2008. Increased parking rates city-wide have made the deal unpopular. The parking meter company took in more than $80 million from meters in Chicago in 2011 alone.
LAZ Parking will start a series of transition meetings Monday morning. Chatas said a board of directors for the parking operations has been created, chaired by former Central Ohio Transit Authority president and CEO William Lhota.
Current OSU Transportation and Parking employees will be given an opportunity to interview for positions with LAZ Parking, but Lazowski said that he is unsure at this point how many total employees they will have staffed on campus.
The agreement will not take affect until the 2013-2014 school year.
University President E. Gordon Gee has been a supporter of the proposal since the possibility of leasing parking assets has been public knowledge. He first asked the Board of Trustees to look into monetizing non-essential assets of the university in September 2010. In September 2011, Chatas said the Board agreed on a basement asking price of $375 million, and began looking for qualified bidders to possibly take over the parking operations of the university.
By deferring parking operations to an outside company, Gee said he hopes the university will have more money to focus on the “academic core.”
“No parking spot has ever cured cancer … but the money we can get from this can,” Gee said.
Chatas said initially there were 10 bidders interested, and the university eventually narrowed it down to four. Of those four, three submitted bids. All three, including QIC, are Australian-based pension managing groups. The other two were The Macquarie Group and IFM Infrastructure.
Chatas said the $483 million will be put directly into the university’s endowment when they receive the money in six weeks. That money, and the money earned through interest, will be split into four categories where the money will be used.
Chatas said $200 million, and interest from that money in the endowment will be put toward faculty initiatives and research. He said retention packages for faculty, salaries, staff support and space needs will all contribute to this fund.
Transportation and sustainability will receive $150 million of the $483 million for maintaining the current Campus Area Bus Service. The money will also go toward creating more pedestrian friendly infrastructure on campus and more energy efficient projects.
Chatas said $83 million will be diverted to student scholarships to support tuition, fellowship stipends and student research. He said the other $50 million will be invested in the Arts District for staff and space improvements.
Gee said the landscape and economic environment for higher education is changing. He said funding from the federal government could be decreasing in the future, and schools must find ways to generate money for themselves. He said this deal is a step in the right direction to ensure financial stability.
Despite Gee’s endorsement, the deal has faced opposition from some students and staff throughout the year.
In April, faculty members from 44 different departments signed a letter written by Enrico Bonello, professor of plant pathology, Paul Beck, professor of political sciences and Linda Lobao, professor of rural sociology and geography, in response to Gee’s request for proposals from private vendors and a university email from Gee that described the RFP and its processes. All three are members of University Faculty Council.
The letter argued that parking is a central component of university life.
“Parking services are essential for student access to classes, faculty access to students and staff access to work,” the letter states. “But even if we agreed, we believe this proposal is not in the best interest of OSU for several reasons.”
Gordon Aubrecht, a physics professor at OSU-Marion, created an online petition “Don’t sell our Ohio State University” to protest the deal. The petition had 2,714 signatures on June 23.
“Getting rid of the parking is a bad deal,” he said. “The whole thing is a bad idea.”
Student groups such as United Students Against Sweatshops and Re-Imagine OSU have held protests throughout the year urging university officials not to move forward with the deal.
Jerry Jurgensen, newly ap
pointed chair of the Finance Committee, said he read the 700-page agreement with QIC and said it was important to remember the agreement was drafted by the OSU office of business and finance and legal advisers.
“It came from our typewriter … There won’t be any surprises in it because it came from our people,” Jurgensen said.
