into the endowment from the deal is going to fund important initiatives such as faculty research, stu- dent scholarships, transportation, sustainability and the arts district.
(Faculty Initiatives and Research: $200 million) (Student Scholarships: $83 million)
(Transportation and Sustainability: $150 million) (Arts District: $50 million)
Te dilemma that comes with acquiring funds for new projects, such as buses and the associated fuels, can be costly. While this cost is sometimes covered by a transportation fee or parking revenue, it still leaves a few campuses struggling to cover the mar- gin. Te same can be said of parking garages, which are also costly additions. Te potential that comes with a large lump sum, and its impact on increasing efficiency, accessibility and in the long run, the uni- versity’s bottom line, is often too large to overlook.
Of course, concessioning does not come with- out risks. Te OSU deal was even referred to as “Aparkalyp$e” by members of the community who felt that the $483 million was not a smart deal. While jobs were redistributed, many also worried about the effects of the deal on Transportation em- ployees. Says Chance, “concessioning campus land for many years affects not only parking, but also campus planning, building sites, development op- portunities and flexibility. Te cash is enticing, but it is not without costs of many types.” For example, in OSU’s case, what if the interest off of the endow- ment isn’t what was anticipated? And how do you plan for a campus for 50 years? As entire facilities and systems are turned over to a Concessionaire, how are responsibilities dispersed? During athlet- ics, visits and high-traffic events, who does what between the university and the Concessionaire? Ul- timately, as with the Buckeyes, universities contemplat- ing a concessions deal will have to weigh the costs and benefits of a long-term agreement.
“Parking and transportation are important for facul- ty, staff and students – but also for visitors to campus. Tey are vital functions, and they need good manage- ment. Tat may or may not be adequately addressed in concessions that are focused on generating cash,” says Chance. Te end results of Ohio State’s concessioning deal, of course, remain unknown. Will the endowment’s estimated interest pay out? Will accessibility to campus lead to increased revenues? We’ll know in 50 years. In the present, however, the agreement has created a valuable dialogue between campuses and Concessionaires.
18 NOV/DEC 2012 •
TODAYSCAMPUS.COM
What can be learned from the Ohio State University concessioning experience? According to Chance…
• Clarify early how the funds from a potential con- cession will be used to keep the campus community abreast of what will happen to the money.
• Identify changes taking place in the near future so that they can be addressed in the agreement, in- cluding construction, new parking or major events.
• Specify rates that the University will tolerate in the agreement rather than letting the Concessionaire propose long-term rates. For example, OSU’s park- ing rates (permits, fees, fines, etc.) will be increasing by 5.5% each year for the first 10 years. Ten they may increase by 4% or the cost of living increase.
• Te devil’s in the details. Proposing Concessionaire teams asked OSU over 500 questions. Splitting functions involves detail, and of course, time. Of- ten, parking garages are built with other buildings, and sorting electrical service, rooftop developments and service corridors can be difficult. Understand- ing what the costs for services previously performed by the University is important. At OSU, Trans- portation and Parking Services performed many functions that it simply subsumed under its existing budget – many of which will now have to be paid for if the Concessionaire does them.
• Keep morale in mind. Te process is hard on the department in question. Try to encourage staff, keep morale up, avoid staff leaving, and explain that changes happen and people must adjust.
rAChEl@TODAYSCAMPUS.COM Rachel Wiley is the Managing Editor for Today’s Campus.
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