RATE STRUCTURES & ENDOWMENT FUND

Parking Strategic Partnership  -  Discussion on the Rate Strucutres and Endowment Fund related to the potential agreement.  The items below reference the starting point for discussions which received various stakeholder feedback.  Final decisions on the RFP materials involved additional conversations and negotiations with the University administration, external consultants, and third-party parking companies.

General:  In exchange for an upfront payment, the Operator shall be given exclusive rights to operate, maintain and upgrade the CSU Parking System for a period of 50 years in accordance with the terms and conditions set forth in the Project Agreement.

Rate Structure:

• Parking rates and charges, and limits and terms thereof, for each permit year during the concession will be set forth in the project agreement (Schedule of Parking Fees).  Base rates will be adjusted annually according to the schedule approved by the University and set out in the agreement.
• Bidders will propose the amount of their upfront payment to the University under a variety of pre-determined rate adjustment regimes, allowing the University to evaluate and determine which rate adjustment regime it wishes to apply. The University has already committed to sustained increases in the future to better align parking rates with market practices,[1] however, believes these adjustments will be more acceptable when coupled with service level and infrastructure improvements provided by the Parking System Partnership. 
• During the term of the agreement, the Operator shall (i) have the right to collect and enforce payment of fees and charges, at rates not exceeding those permitted by Schedule of Parking Fees and (ii) have the right, title, entitlement and interest in all revenue derived from fees and charges imposed by or on behalf of the Operator in respect of vehicles using the CSU parking system during the term.
• The Operator cannot unilaterally adjust parking fees.  To the extent the Operator wishes to change the Schedule of Parking Fees, the Operator must submit such suggested changes to the Parking Advisory Committee (PAC)[2] for its consent and approval no later than six month before to the beginning of the applicable permit year.  The PAC, after consulting with appropriate University personnel and governance committees, shall accept (with any modifications thereto mutually agreed upon by the Parties) or reject such suggested changes.
• For its part, the University retains the right to impose changes to the Schedule of Parking Fees at any time; however, if any such change has a material adverse effect on the Operator’s revenue, then such change would constitute a Compensation Event (where the University would need to indemnify the Operator).   

Changes to Permits or Parking Spaces.

• Permits. The Operator cannot unilaterally change the permit system or designation of spaces. Any such proposed change would be subject to the review and approval of the PAC, after consulting with appropriate University and governance committees.  The University, for its part, however, may unilaterally make changes to the permit system and designations, subject to limitations and compensation considerations set forth in the Contract.
• Parking Spaces. The University retains the right to right to designate, temporarily close or remove, from time to time, parking spaces from the system, subject to the terms and conditions set forth in the Agreement.

Endowment Fund:

• In exchange for the rights contemplated in the Parking Partnership Agreement, the Operator will make an upfront payment to CSU.  CSU has full discretion as to how to utilize these proceeds.  While it is anticipated that the majority of the proceeds will be invested in the CSU endowment fund, it is important to note that some of the monies will be used for the defeasance of outstanding debt, estimated around $28M. Reducing debt will strengthen the University’s balance sheet and lower interest payments, further contributing to the financial health of the University.  
• The University may determine that there are special projects that merit immediate funding from the parking system proceeds. In such case, some of the proceeds may be directed for investment in capital improvements, programs, etc.
• The process for deciding how the parking system proceeds are best utilized is still under consideration by University leadership.  The University is committed to a transparent and collaborative process.
• With the exception of requirements set forth in debt covenants, the University doesn’t intend to commit any funds to any specific allocations until after a decision has been made to proceed with the deal or not.
• If the deal is successfully executed, the interest generated off of the proceeds invested in the endowment will be allocated across four main categories as outlined:
  • Academic Programming
  • Student Programming
  • Capital Infrastructure
  • Campus Operational Support