Indiana University decides not to pursue parking privatization
FOR IMMEDIATE RELEASE
BLOOMINGTON, Ind. -- After more than a year of careful analysis that included input from a broad range of stakeholders on the Bloomington and Indianapolis campuses, as well as work from outside experts, Indiana University will not request proposals to privatize parking operations on its two largest campuses but instead will pursue an internal plan to strengthen its parking system.
The finance and audit committee of the IU Board of Trustees today endorsed the decision of President Michael A. McRobbie, based on the university’s analysis of the issue, that IU retain control of its parking operations in Bloomington and Indianapolis. The university also will create a strategic business plan to increase operating efficiency and optimize parking revenue to be presented for the board’s review by its February 2014 meeting.
A university parking task force, chaired by a senior administrator in the office of IU Vice President and Chief Financial Officer MaryFrances McCourt, has been formed to create the strategic business plan, which is expected to address a range of issues, including:
- Implementing best practices across the university’s parking system.
- Creating a market-based, campus-specific parking fee structure for the future.
- Identifying opportunities to consolidate purchasing activities.
- Making use of the recommendations made by outside consultants on ways to improve efficiency within the parking system.
“We conducted a thorough and inclusive analysis of both the financial and nonfinancial aspects of a long-term parking agreement and, in the end, concluded that the valuation of our parking assets simply wasn’t compelling enough to justify losing control of our operations for 50 years,” said McCourt, who presented a summary of the university’s analysis to the Board of Trustees today. “Our decision is based, in large part, on the assumption that we will make improvements to our existing parking operations that will result in additional revenue to the university, and we will begin that work immediately.”
The university had been considering whether to monetize its parking operations by entering into a long-term lease agreement with a private parking services provider in return for an upfront cash payment.
According to a financial analysis by Goldman Sachs and Walker Parking Consultants, the university could reasonably expect to receive $275 million in gross proceeds for its combined parking operations in Bloomington and Indianapolis. A $275 million lease would, after paying off existing debt associated with parking facilities, leave the university with about $210 million to invest in an endowment with annual distributions available to fund initiatives in perpetuity.
The university’s analysis concluded that with internal improvements to the parking operations on both campuses, IU could generate similar -- if not greater -- revenue over the course of the lease period while maintaining control over its operations.
McCourt said the recommendations made by the outside consultants will provide a valuable starting point from which to begin to strengthen the parking operations on both campuses, adding that additional future revenue generated from parking will be earmarked for infrastructure and transportation improvements on both campuses.
“The analysis we did -- both internally and through our external partners -- will be invaluable in helping us move forward with identifying and implementing best practices related to running our parking systems in Bloomington and Indianapolis, as well as at our regional campuses," McCourt said. "I want to thank everyone involved in the project for their time, energy and committed thought.”
About the IU parking privatization initiative
IU began exploring the issue of privatizing its parking operations in early 2012 at the behest of the Board of Trustees, which asked that the university examine the possibility of monetizing certain non-academic assets as a way to provide additional revenue to IU.
More than 50 people from the university administration and the Bloomington and IUPUI campuses -- split into two campus operating committees and a steering committee -- contributed to the analysis. Additionally, the university hired Goldman Sachs to assist with the financial analysis, Walker Parking Consultants to act as parking operations consultant and Greenhill & Co. to serve as independent transaction advisor for the project.