The University of Toledo monetized its parking assets through a long-term concession (the “Concession”) transaction, in order to:
- Generate an upfront capital payment that can be used to help the University achieve its growth targets and advance its strategic priorities.
- Improve the physical condition of the facilities that make up the Parking System.
- Provide a better customer experience by outsourcing the operation to an experienced, professional third-party parking operator.
- Improve the operation and management of the System using technology and parking industry best practices.
- Focus on its core mission of educating its students.
The Concession transaction closed on October 7, 2021 and provided the University with an upfront payment of $52 million together with a further $10 million to be spent by the Concessionaire over the first three years of the Concession on upgrading the condition of the parking assets. Thereafter the Concessionaire is required to maintain the parking assets in good condition and to distribute to the University an anticipated further $140 million of surplus parking cash flows over the life of the Concession.
The University has effectively added $52 million to its Endowment Funds, transferred capital maintenance & life cycle costs for 35 years and outsourced operating risk, while retaining ownership and ownership rights (including the right to set rates and change policies) and a continuing revenue stream from surplus parking cash flows.
It is for the University to explain how the it intends to use those endowments funds, but it is easy to see why the University’s Board of Trustees voted this to be a transaction in the interests of the University, its faculty, staff and students.
The Concession Agreement is between the University of Toledo and ParkUToledo (the “Concessionaire”), a non-profit entity controlled by the Toledo Lucas County Port Authority. The Concession is managed by an Asset Manager (Diogenes) which in turn oversees the operation of the Parking System by an experienced parking Operator (SP+). Both the Asset Manager and the Operator have extensive experience in concession and parking operations management, and both have continued the employment of key university parking employees in order to ensure continuity of processes and institutional knowledge.
As a non-profit entity the Concessionaire operates the parking system for the ultimate benefit of the University and pays all surplus cash flow from the parking revenues, after operating expenses and debt service, to the University. Diogenes and SP+ are private companies, engaged by the Concessionaire to manage and operate the parking system for a fee and neither company participates in the parking revenues.
Despite the complexity of the documentation the Concession Agreement merely enshrines the University’s rights of ownership and the Concessionaire’s obligations to operate and maintain the parking system and to hand it back to the University at the end of its term in good condition. A copy of the Concession Agreement can be found here.