The Ohio State Board of Trustees unanimously voted today to lease the school’s parking system out for the next 50 years.
It’s all part of the university’s grand scheme, the “long term strategic plan,” which lays out the next decade for OSU, says Vice President Joseph Alutto.
That goal is to make OSU “the world’s preeminent public comprehensive university, solving problems of world-wide significance.”
So, basically, cure cancer, eradicate terrorism, and save the world from impending doom. Or, at the very least, strengthen faculty, improve the quality of education, establish more partnerships in the community, give out more scholarships and become “the model for an affordable public university recognized for financial stability.”
But solving the world’s problems comes with a hefty price tag, $2.1 billion to be exact. Alutto says he’s not holding his breath for increases in state and federal funding, but outsourcing the universities non-core assets is one way to pay for the plan.
The final deal is this: for the next 50 years, OSU will lease out its $28 million-a-year parking operation to an Australian company called QIC Global Infrastructure and its partner company LAZ Parking. In exchange, OSU gets $483 million in investments.
As OSU’s Chief Financial Officer Geoff Chatas told the Columbus Dispatch, “over 50 years, a $483 million bid would prove $3.1 billion in investment earnings.” That’s money the university can use to hire more professors, give out more in scholarships, and invest in the arts and humanities.
OSU may be blazing a trail among universities in leasing out its parking structures, but several cities have already done this, with mixed results.
Chicago struck a deal with a private operator to take over the city’s parking meters back in 2008, and leased out its parking garages two years before that. Critics have complained of pricey tickets and questioned whether the city got the best deal it could have. Los Angeles attempted a similar plan last year. And this Spring, Sacramento decided to lease its system for up to 50 years to raise money for the Sacramento Kings’ new basketball arena.
Not all Ohio State students and faculty are buying the argument that this is all for the good of the university. Some worry about getting hounded about costly parking tickets; others say a public land-grant university shouldn’t depend so much on privatization.
Alutto says anyone concerned should consider the move not in isolation, where he concedes it could look like a money grab, but rather in the big picture of that strategic plan and its cost.
“It’s not a matter of privatizing; it’s a matter of how do we achieve that long-term goal,” says Alutto. Outsourcing nonessential assets like parking allows the university to focus on what it’s supposed to: academics.
As for the day-to-day workings of parking on the Ohio State campus, Alutto says, “Well, actually, they won’t change at all. The services being provided are the same; we still own the facility. This is just an operating lease, and there may in fact be some enhancements in terms of responsiveness and so forth.”
Plus, he says the university trustees considered the deals struck by cities like Chicago and tried to learn from their mistakes. Alutto says the final contract includes 700 pages of constraints and limitations so the university can “maintain adequate control” of the leased lots.
Part of the deal is that QIC Global and LAZ Parking cannot raise the cost of parking more than 5.5 percent annually for the first ten years, and beyond that they can’t raise it more than 4 percent, or the average increase in cost of living, whichever is higher.