Your Top Ten Questions Answered
You are considering allowing a private vendor to raise parking rates by 7.5 percent per year for the first ten years. Why would you consider this?
The University regularly raises rates to maintain services so this would not be a change over what we’re currently doing We are looking at ways to cap annual parking rate increases for the first ten years, however. We are requiring all bidders to submit proposals with annual increases of 5.5 percent, 6.5 percent and 7.5 percent. This means that for the first ten years you would know exactly what kind of rate increase to expect.
What happens to rate increases after the first ten years?
The cap for the remaining years would be set by the Midwest Consumer Price Index or 4 percent—whichever is higher. The Midwest Consumer Price Index is part of the Consumer Price Index and measures inflation in our region of the country, as opposed to just national standards alone. There are also details in the proposed contract to ensure that a random spike in national or regional inflation over one or even two years would not mean a significant cost increase for our faculty, staff and students.
How would you make sure that an outside company would maintain the current level of services?
As part of the agreement, each bidder must accept a broad set of operating standards. These standards guarantee that you would receive either the same level of service or better service than you are receiving now. We’ll check service levels by gathering customer comments and also by making sure the vendor complies with the contract. Vendors who do not meet standards could face penalties, which include being replaced or removed.
Leasing the parking operations seems like a corporatization of the university. Why consider it?
Today, only 10 percent of the University’s budget comes from state funds and that is not expected to increase. This means that we must find new ways to support our excellence in teaching, research, and service. Unlike other universities, we have not been forced to lay off staff or close programs to make ends meet. Leasing our parking operations would help us continue to stay financially sound and build on our current strengths.
How would the funding from leasing the parking operation help Ohio State?
If the University receives $400 million from a parking lease, our Long-Term Investment Pool would instantly increase by almost 20 percent. In the very first year, this will allow us to:
- Increase student financial aid and scholarship support by more than $3 million.
- Use more than $8 million to begin to hire 8-10 percent additional tenure-track faculty.
- Increase support for critical areas, such as the Arts and Humanities, by more than $2 million.
- Use more than $3 million to improve campus transportation systems and create a more pedestrian-friendly campus.
Could Ohio State still promote public transportation, walking, car-pooling and bike commuting without having to pay the vendor for potentially lost revenue?
Yes, we gave all bidders the University’s sustainability plans and explained that we will continue to move forward with them.
What would happen to the current transportation system, CABS? How will it be paid for? Would levels remain constant?
CABS service is important to Ohio State, and the university will continue to maintain it at the current level or better through earnings from the leasing arrangement plus funds from other sources.
Could you have communicated more openly about the lease?
We have worked hard to keep faculty, students and staff informed about the proposed lease and why it is important. We started a website, http://www.osu.edu/parkingproposal, held town hall meetings, gave information to onCampus, sent special emails and formed a Parking Advisory Committee with representatives from a wide range of groups within the University. Your input was valuable – and helped us shape the standards included in the final request for proposals from parking firms. We would continue to provide regular updates as the process moves forward.
Does the lease still allow you to change and be flexible in the parking system?
The agreement with a vendor, called a Concession Agreement, was written to give the University the greatest amount of flexibility possible. It includes conditions about the construction of new garages, the movement or reclassification of parking spaces and the potential growth of our existing campus.
Why is the length of the lease so long? A lot could change in 50 years.
The University is looking to receive proposals of at least $375 million to move forward. In order to make the investment worthwhile for investors as well as Ohio State, 50 years was the optimal time frame. We recognize it is a long time, so the agreement does contain language that allows both parties to cancel if obligations are not met on either side.