More Thoughts on Ohio State and PPP

Share:

More Thoughts on Ohio State and PPP

The Ohio State University gets $485,000,000 and it proposes to invest the money in such a way as to generate $3 billion over the next 50 years and add substantially to the university’s long term investments. Nowhere do they mention paying off existing debts. Excellent!

To wit:

“When you compare man-aging $483 million versus managing parking … it’s an obvious trade-off to me,” said Jerry Jurgensen, the head of the board’s finance committee. “Every physical asset on this campus has a depreciable life, but cash is forever.”

I”m not sure about the “cash is forever” line, but if they manage it properly, perhaps.

There is a 700 page agreement that supposedly ‘protects’ the university from those money grabbing capitalistic business folks who are after, lets face it, profit profit profit.

The numbers are a little more clear now — According to the local press, the parking program at The Ohio State University generates $28mm a year.  If you increase that amount by 5.5% each year for 10 years, you generate $382 million and change. During the next 40 years, at the 4% annual increase, the revenue generated would be close to $3 billion. So in the end, assuming that people keep driving cars at the same clip they drive today and that The Ohio State University doesn’t grow in size, the deal is worth in excess of $3.3 billion.

That’s about the same amount that the university said it would get if the money was invested so it appears a wash. They feel more comfortable managing the money than the parking and we can ‘assume’ that Laz and Co will do a more efficient job of running the garages finance wise, so the ‘net’ will probably be more than it would have been if the parking program was kept under the university. Good deal for Laz and the Aussies, good deal for the university. Financially speaking.

If the 700 page document truly protects the university and gives them some control over policy, then all the better. However I doubt if a prudent business would give up too much control along with its $483 million so we will see.

All the best to both partners in this PPP.

JVH

Picture of John Van Horn

John Van Horn

One Response

  1. The monthly parking rates in dowtown Columbus have been stagnant for 15+ years. I would imagine that a significant majority of the current parking revenues come from monthly permit parking. Within 11-12 years (with 5.5% annual increases), the cost of an A permit for the prime parking spaces will exceed the average monthly parking cost in downtown Columbus which is two miles away from campus. I’m guessing Laz’s projections and guarantee assumes the overall Columbus parking rate market and not being able to increase rates 4-5.5% each year. Like always, this should be interesting as it plays out.

Leave a Reply

Your email address will not be published. Required fields are marked *

Only show results from:

Recent Posts

A Note from a Friend

I received this from John Clancy. Now retired, John worked in the technology side of the industry for decades. I don’t think this needs any

Read More »

Look out the Window

If there is any advice I can give it’s concerning the passing scene. “Look out the window.” Rather than listen to CNN or the New

Read More »

Archives

See all Blog Posts

Send message to



    We use cookies to monitor our website and support our customers. View our Privacy Policy