As Ohio State University favors $483M bid to outsource parking U-M not considering privatizing service
Ohio State University is considering privatizing parking services in an attempt to generate revenue.
OSU recently received a $483 million lump-sum bid from a company to operate its parking facilities, including some 36,000 spaces, for 50 years.
OSU is the first large public university to accept bids on the privatization of its entire parking enterprise for a significant length of time.
University of Michigan Director of Transportation Stephen Dolen told AnnArbor.com that U-M has not seriously considered privatizing its parking services.
"People are just kind of interested in seeing what's going on with OSU," he said. "There's probably all kinds of things people are considering in this day and age of state appropriations."
OSU Provost Joseph A. Alutto says that outsourcing parking is a way to recoup revenue lost as Ohio reduces funding for its public universities. It's also part of an ongoing trend to outsource or streamline services in order to generate immediate cash. The school predicts that if fully endowed, the $483 million investment could increase to $4.9 billion at the end of 50 years.
Parking permit rate increases would be capped year-to-year. During the first 10 years, rates would not be permitted to increase by more than 5.5 percent yearly and during the final 40 years yearly rate increases would be capped at 4 percent or the industry standard.
According to a survey of more than 1,000 OSU professors, 92 percent of faculty members who took a position on the issue opposed privatization, an OSU Lantern article reported. One professor created a video questioning OSU's endowment prediction.
Comments
rusty shackelford
Thu, Jun 7, 2012 : 7:33 p.m.
Selling public assets to private companies is by definition a bad deal for the public/taxpayer. No rational entity would buy these assets unless they stood to gain more from them than they are paying. As such, the public will ALWAYS get less than the assets are worth.
leaguebus
Thu, Jun 7, 2012 : 3:25 p.m.
http://economix.blogs.nytimes.com/2012/03/02/why-tuition-has-skyrocketed-at-state-schools/ Read the article and see why college tuition has gone up. The OSU move sounds too good to be true. Whether this company pays them the money or not, OSU is ultimately responsible for parking. I can see legal suits in their future if this company is a dud. Plus 50 years is a long time for any business.
GoBlue2009
Thu, Jun 7, 2012 : 3:20 p.m.
It's already a huge pain to park around town, and on campus. This would be horrible! Furthermore...they have professors at OSU? New one on me.
jns131
Thu, Jun 7, 2012 : 11:59 p.m.
From what I heard the lowest of the low get the parking farthest from where they actually work and have to use a bus just to get to work. The more years in? I heard you can get a closer place to park. Kind twisted if you ask me.
catfishrisin
Thu, Jun 7, 2012 : 2:46 p.m.
I hear outsourcing of OSU's parking is already a done deal...not a consideration.
brimble
Thu, Jun 7, 2012 : 2:31 p.m.
Parking is not a profit center for the University of Michigan. The reality is that the U's interests are best served by an efficient public transit system and off-site park-and-ride lots. Hence, riding AATA buses is at no cost to U. employees. The cost to park-and-ride is quite reasonable, really, while the premium paid for parking adjacent to a central campus building is quite stiff. Despite that, there is still huge demand for premium parking. OSU's proposal is probably a short-sighted one; any private company that seeks to provide a service currently offered by an arm of the public sector institution believes that it can do so profitably, which means either lower cost basis or higher retail charge. That solution would be more harmful to UM employees than the current one.
xmo
Thu, Jun 7, 2012 : 1:10 p.m.
Forget Wall Street Greed! What about Big Education Greed? Why does the "Occupy Group" protest the High Cost of Education? (Oh that's right, they get paid by them)
Enso
Thu, Jun 7, 2012 : 5:54 p.m.
And how about Church greed! Tax them already!
treetowncartel
Thu, Jun 7, 2012 : 1:32 p.m.
Spot on. I bet car dealerships wish they had a guaranteed payment system like financial aid.
dextermom
Thu, Jun 7, 2012 : 12:53 p.m.
What I'm missing is: how much does the UM currently make from it's parking? Is it a loss or a profit? If it is a loss, shouldn't we look at doing it better ourselves? It would seem that currently managing the parking provides revenue to UM and jobs for local staff. Other than waving large 50 year numbers, why change the current system?
Craig Lounsbury
Thu, Jun 7, 2012 : 12:15 p.m.
my guess is that rather than watch that upfront money compound for 50 years they will blow through the principle in 8-10 years then wonder whatever happened to that income they used to have from parking.
PLGreen
Thu, Jun 7, 2012 : 5:05 p.m.
You took the words right out of my mouth. Typical Public Sector thinking; short term solution with a long term problem.
Craig Lounsbury
Thu, Jun 7, 2012 : 12:04 p.m.
"OSU Provost Joseph A. Alutto says that outsourcing parking is a way to recoup revenue lost as Ohio reduces funding for its public universities. " I'm with you so far..... "The school predicts that if fully endowed, the $483 million investment could increase to $4.9 billion at the end of 50 years. " Wait a minute. You mean you don't really need to touch the money? You can let it compound for 50 years?
smokeblwr
Thu, Jun 7, 2012 : 11:56 a.m.
UM already makes a ton of money off charging their own employees to park on their tax-free land. This is an OUTRAGE!!!
Left is Right
Thu, Jun 7, 2012 : 11:39 p.m.
So parking should be a profit center? Don't get me started on UM parking. I don't think they have a clue how much it costs them in lost productivity.
zigziggityzoo
Thu, Jun 7, 2012 : 1:42 p.m.
The UM budget is also public knowledge. They come close to breaking even on parking, and there's still not enough of it.
Lets Get Real
Thu, Jun 7, 2012 : 11:47 a.m.
Let's Get Real here - this is another example of these large colleges and universities' elitist money extortion behaviors. In private business, if we charge the customer (fans) more, if we charge our employees more (for parking, health care, retirement contribution), if we are exempted from paying taxes, if we refuse to contribute to the infrastructure (the deteoration of roads from construction vehicles, and the deterioration of bridges directly serving as a link to our facilities), if we dictate under payment fees for use of real estate (parking at Pioneer HS) we too could be successful entities consistently operating and expanding in luxurious newly constructed or newly renovated buildings. Oh, the luxury of not needing to be responsible or accountable to the little people whose hard work and tax levys pay for the dreams of pompous academics who believe they are better than the rest. I'm so tired of it. I just want to be able to pay my electric bill on time.
Carole
Thu, Jun 7, 2012 : 10:35 a.m.
Cost for parking at the UM is huge -- when I left in the late 90's it was a good portion of my salary to pay to park and go to work. Can't imagine what it is these days.
Ken
Thu, Jun 7, 2012 : 8:02 p.m.
@zigziggityzoo The $66 is per year for an Orange permit.
zigziggityzoo
Thu, Jun 7, 2012 : 1:39 p.m.
About $66/mo for staff. Parking rates are public information: http://pts.umich.edu/permit_parking/annual_parking_fees.pdf