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University of Michigan
News for Faculty and Staff

November 25, 2014

University decides not to move ahead on leasing parking facilities

January 20, 2014

University decides not to move ahead on leasing parking facilities

Topic: Campus News

After months of careful consideration and analysis, the university has decided it will not pursue leasing its campus parking facilities to a private operator.

Last April U-M retained Greenhill & Co. to complete an assessment of the value of a public-private partnership (P3) arrangement for parking operations at the Ann Arbor campus and U-M Health System. 

The investigation of P3 was one of a number of cost-saving or revenue-enhancement initiatives being considered as part of the university's overall efforts to keep U-M affordable to students, and to protect resources for the university's core missions of teaching and research.

Since 2004, the university has trimmed or reallocated $265 million in recurring expenses in the general fund. The university is committed to save another $120 million by 2017.

U-M's exploration of the possible arrangement followed a decision by Ohio State University to award a 50-year concession to a private consortium for an up-front lease payment of $483 million. The private operator, CampusParc, also is responsible for all of OSU's parking facility upkeep.

Since that transaction, a number of other universities including U-M, Indiana University, and University of Florida have examined similar arrangements.

Timothy P. Slottow, executive vice president and chief financial officer, said a rigorous external analysis of the U-M parking services revealed that U-M Parking & Transportation Services is managing U-M's parking assets very efficiently and with very little deferred maintenance.

Slottow added the analysis led the university to conclude that the financial return from a lease was not at a level that would justify the inherent risks and loss of flexibility that would come with a 40- to 50-year lease of its nearly 28,000 parking spaces.

Instead, the university will develop its own long-term plan that will include service improvements and enhancements through technology, Slottow said.

As that planning moves forward, parking employees will be involved in developing and implementing technology and service improvements, said Steve Dolen, executive director of Parking & Transportation Services.

"While we are not entering into a P3 arrangement, we did learn a few things through this analysis about our own operations and it has also provided additional impetus to speed up some process and technology initiatives to improve service," Dolen said. "That's where we will focus our efforts."

Before a final decision was made, Slottow explained, the university consulted with a number of external and internal advisory committees. What emerged through all of the discussions was the importance of preserving maximum flexibility with the land and parking assets, and avoiding potential rigidity that a long-term lease of 40-50 years might impose.

Additionally, it was determined that the university could find alternative ways to reduce operating expenses, while maintaining flexibility and control over the use of land that is now dedicated to parking.

Tags: parking

Comments

Thomas Twotone
on 1/20/14 at 10:01 pm

I'm disappointed that a committee of faculty, students, community organizers, and transient parkers wasn't appointed to study this. Parking rates are too high and the private sector could have done so much better.

Darth Dasnada
on 1/21/14 at 8:40 am

While I agree with Twotone that faculty, staff and students should have been involved in this process, I don't agree that the private sector could do better. How many times have we seen promises of lower rates in services and then ended up paying more? No thanks.

Ornery Onetone
on 1/21/14 at 10:38 am

Ask the residents of Chicago how they like their P3 parking arrangement enforced on them a few years ago! So glad that U-M had the vision to maintain control over our parking, as flexibility is vital to our work. If you don't like the price we pay now for parking, just imagine having a private firm decide the price for us instead!!

Robert Ziff
on 1/21/14 at 1:43 pm

I applaud the University for keeping control of the parking operations. In general, when functions like this are outsourced to private companies, stable university jobs with good benefits are replaced by low-paying jobs with little or no benefits, harming the community. This decision is supportive of the town of Ann Arbor. I also agree with others that privatization will most likely not lead to any lower rates.

One wonders how much money the Greenhill & Co. study cost... this was not mentioned in the article.

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