OSU Approves First-of-its-Kind Parking Deal

CHICAGO - Ohio State University’s board Friday approved a final $483 million concession agreement to lease its parking system for 50 years, marking the first such privatization deal for a university.

Australia-based QIC Global Infrastructure and LAZ Parking won the bid, though all three final bids came in well over the university’s original estimate that a 50-year lease would generate $375 million.

The firms will give OSU $483 million in cash to operate the system with a 5.5% cap on parking rate increases for the first 10 years and 4% for the remaining 50 years.

The agreement will begin in October.

The two private firms will set up a separate entity, called CampusParc, to oversee the lease. CampusParc will be governed by a three-member board, chaired by William Lhota, an OSU alumnus and former chief executive officer of the Central Ohio Transit Authority.

Officials said the lease was needed to generate additional money at a time when state aid is falling.

“This agreement is one component of an overarching strategy to strengthen our faculty, students, and programs by generating new funding,” Ohio State Provost Joseph Alutto said in a statement issued after the trustees’ vote.

Officials estimate that the $483 million deposit into the school’s endowment will generate more than $4 billion by 2033, assuming 9% growth, which is the rate the school’s existing endowment has grown over the past 30 years. The school plans to put $3.1 billion toward academic programs and $871 million toward transportation.

OSU will defease $80 million of bonds backed by parking revenues as part of the deal.

The parking system currently generates $30 million annually.

Morgan Stanley, Jones Day and Desman Associates, a parking consulting firm, advised the university on the transaction.

Macquarie Capital & Central Parking offered $417 million and Industry Funds Management & Parking Solutions offered $390 million.

Also at Friday’s meeting, the OSU board approved a 3.5% tuition increase for the upcoming year.

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