The Ohio Union South Parking Garage. Credit: Mackenzie Shanklin | Photo Editor
To the editor:
After Ohio State privatized campus parking operations in 2012 — against the wishes of some 83 percent of faculty members — I promised to write periodic reports to the community on the true financial impact of this privatization deal. Here’s my latest update of how poorly privatized parking has been going on the financial front.
Let me clarify that in no way do I “blame” the new administration for Ohio State’s continual failure to acknowledge what a disaster parking privatization has been. They obviously have their hands full with COVID-19. The negative impact of this deal consummated two administrations ago is something neither University President Kristina M. Johnson nor most other newcomers to the university are likely even aware of. So, let this letter serve as their introduction to it. We can then observe over the next year whether the public relations campaign being waged by holdovers from previous administrations — who were at least partly culpable for making this terrible business deal — forges ahead offering the same nonsense we’ve been hearing for the past eight years.
First, official Ohio State reporting continues to treat the up-front $483 million payment from CampusParc as if it were a gift to the university, rather than acknowledging it is payment for giving CampusParc 50 years’ worth of net profits that Ohio State previously made from parking operations. These never-mentioned opportunity costs comprise tens of millions of dollars in annual parking earnings going to CampusParc until 2062.
Second, Ohio State continues to hide key financial information that would make possible a detailed accounting of the actual financial impact of the parking deal. My public records requests for this information continue to be met with, “The information that you requested is considered a trade secret … and thus exempt from disclosure under the Ohio Public Records Act.” Ohio State contends there is no public right to know whether this was a good deal, yet we can still detect that it was not: An estimate of the financial impact remains possible based on information the university revealed earlier in the process and information about the investment performance of its endowment funds that cannot be hidden from public scrutiny.
Each year since fiscal year 2013, Ohio State has emphasized in its PR how funds from parking privatization have been distributed to various good causes around campus. In FY 2019, it was $23,515,323; in FY 2020, it was $23,974,293; and in FY 2021, we already know it will be $24,442,899. Sounds good, right?
However, as noted above, Ohio State has utterly failed to acknowledge the net earnings from parking operations it has handed over to CampusParc. These far exceed the amounts above. When opportunity costs plus actual expenses related to monitoring CampusParc, etc., are taken into account, the university has suffered rapidly increasing net losses on parking privatization. Based on the most recent information, I estimate the net loss in FY 2019 was about $17.6 million, and the net loss in FY 2020 was about $21.3 million.
In other words, when opportunity costs are included, the $24 million Ohio State will claim it has provided to good causes around campus in FY 2020 because it privatized parking is probably about $21 million less than otherwise would have been available. That is, Ohio State would have had about 87 percent more money to distribute to those good causes if it had not privatized parking.
Sadly, the financial burden that another Ohio State privatization deal has set up for future Buckeyes and Ohio taxpayers in the energy infrastructure privatization deal will be much worse. The university is poised to borrow far more than the advertised $1.165 billion — that’s billion, with a “B.” In a repeat of what happened with parking privatization, this amount is being touted by Ohio State as if it were the winning bidder’s gift rather than the loan it truly is. The energy deal involves multiple loans that official university documents, obtained through public records requests, show could total more than $1.75 billion. These loans carry ridiculously high effective interest rates compared to what Ohio State would have paid to borrow in the normal credit markets. And the university will still be paying off these loans, not just for the next 50 years, but rather the next 70.
You need to know.
Bruce W. Weide
Professor Emeritus
