P3 Parking Project FAQ
- Why is Indiana University undertaking a study to investigate a long term lease of its parking infrastructure?
- What process will IU be following to determine whether we will monetize these assets?
- Parking revenue and market study
- Parking technical and engineering study
- Discussion with key stakeholders/ decision makers
- Analyses of economic, legal and policy issues
- Review and discussion of the parking studies with the Bloomington Parking Operations Committee, the IUPUI Parking Operations Committee and the University Parking Steering Committee
- Why was Goldman Sachs hired to be financial advisor?
- What is the make-up of the Parking Operations and Steering Committees?
- Has IU already decided to lease its parking facilities to a 3rd party?
- Is there a timeline for a decision on whether IU will move forward or not with a parking concession agreement?
- How will IU make the decision whether or not to move forward?
- Will IU be selling its parking assets?
- If IU did decide to move forward with a parking lease agreement, would the 3rd party concessionaire set parking rates?
- Is IU looking at other possible public-private partnership ("P3") transactions?
- How much does IU expect to get from this deal?
- What process will be followed to share additional information or receive input from the University community?
- Who would decide whether to move forward with an RFQ to qualify prospective bidders and then an RFP from approved bidders?
- If a parking monetization transaction were to occur, how would IU make decisions on how to spend the proceeds from an up-front payment?
- Under a long-term lease, how would a contractor be held accountable for performance?
As President McRobbie noted in his October 9th, 2012 State of the University address, every one of Indiana University's five major sources of revenue is under pressure or threat. Indiana University ("IU") must look for new funding sources and ways to become more efficient in order to increase the resources available to fund IU's educational and research missions. A long term lease of our parking assets is being investigated as a potential tool to facilitate accomplishing specific, long-term strategic initiatives of the University by monetizing the current value of the parking infrastructure and future parking operational cash flows while maintaining or enhancing existing parking service standards on the Bloomington and Indianapolis campuses. The resulting cash payment could endow future funding for important, core missions of the University.
IU has engaged Goldman Sachs to serve as the primary financial advisor on this project. Goldman Sachs will work with independent parking consultants hired by IU to produce a Parking System Study that will assess options for the IU parking system. IU will also engage the services of an independent transaction advisor to provide "belt and suspenders" confirmation that the analysis and conclusions provided by the financial advisor and parking consultant are reasonable. All such advisors and consultants are being hired through request for proposals ("RFP") issued for each of the three advisory roles.
The first phase of the process is expected to involve the following steps:
After a thorough review of the Parking Studies, a go/ no-go decision to proceed to a second phase of the process - the issuance of a Request for Quote ("RFQ") to prospective parking concessionaires/bidders - will be made.
Goldman Sachs was selected to serve as financial advisor through an RFP process, from a number of investment banking firms. Goldman Sachs' experience in providing financial advisory services to both the "sell side" (a university/city/state) and the "buy side" (a 3rd party concessionaire) will provide valuable insights for IU to draw from during this evaluation process. Goldman Sachs' prior experience encompasses a number of transactions that are similar to the potential structure being evaluated by IU, including the City of Indianapolis Surface Parking Meter Concession, the City of San Francisco Parking Study, the Indiana Toll Road Concession, and the Chicago Skyway Concession. The Goldman Sachs advisory team has significant experience with both public-private partnerships (P3) and providing investment banking and consulting services to a number of major public university peer institutions on a wide range of financial matters.
The Bloomington and IUPUI Parking Operations Committees and the University Parking Steering Committee are made up of a diverse group of university constituent groups including the faculty, student government, academic units, senior campus administration, parking operations, offices of sustainability, administration and finance, service unions, student housing and a number of academic units.
No. IU has not decided to do anything with its parking assets and operations at this time. What IU has decided to do is to take an in-depth look at whether or not significant strategic objectives of the University could be achieved through a P3 parking concession/lease agreement. Given the on-going pressures on university funding sources and continued demands from the public for more high quality educational programs at lower costs, it is part of the University's fiduciary responsibility to its students, faculty, staff and the general public, to evaluate new and different concepts that might help provide funding in support of IU's strategic mission and purpose.
The initial phase of evaluating the potential value of current parking facilities and establishing the key terms and parking operating standards is expected to take approximately 8 weeks. After the consultants deliver their initial reports, it is expected to take an additional 2 - 4 weeks to finalize the Parking System Study based on the review of the parking committees and various constituent groups. A go/ no-go decision on proceeding to a second phase of the process - the issuance of a Request for Qualifications ("RFQ") to prospective parking concessionaires/bidders - will then be made.
IU will consider many factors in making this decision. This decision will not be solely based on the potential amount of funds generated. Other important factors will include level of services provided, parking operations experience, the ability to meet IU's key policy terms and the impact on the IU constituent community including current and future students, faculty, staff and visitors.
If IU decides to proceed with such a transaction, it would continue to own the parking assets. Such a transaction would likely be in the form of a long term lease of assets, with the term likely to be 30-50 years. At the end of the term of the lease, the assets would return to IU control.
No, a third party concessionaire would not have the ability to unilaterally set rates. Any concession/lease agreement would include a parking rate increase structure over the life of the agreement that would be agreed up-front by IU and the 3rd party as part of a potential bid process.
IU will continue to evaluate possible P3 transactions in support of the educational and research missions of the university. Indeed, IU has historically engaged in such transactions, e.g. bookstores, catering, etc.
The value of any potential transaction will depend on many variables. IU does not have an estimate at this time.
If IU decided to move forward with the issuance of an RFP for a long term parking lease transaction, it will develop a website devoted to the parking initiative and will post information to this website as information becomes available to share. In addition to receiving input from the various committees and constituents noted above, other avenues for sharing information and receiving input such as public forums or town hall meetings will be scheduled to distribute information and gather input on a wider basis.
If the Parking Steering Committee makes a recommendation to move forward with seeking bidders for a long-term parking concession, such a recommendation will be presented to President McRobbie. If President McRobbie approves the transaction, he will present it to the Board of Trustees for action.
President McRobbie is engaging with the IUPUI Chancellor and the Bloomington Provost to develop a plan for the strategic use of proceeds that could come from a long term parking concession agreement. If a recommendation to move forward with a parking concession agreement were to be made, a clear articulation of the strategic uses of potential proceeds would be included in such a recommendation.
If a long-term concession agreement would be entered into, the agreement would detail specific operating standards that a third party operator must maintain. Such an agreement would also include specific penalty provisions that would be levied against the third party operator if those standards were not maintained. Further, IU staff would be responsible for monitoring on-going compliance with terms of such an agreement to insure that the required service levels were maintained.
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