FAQ regarding EMU's parking initiative
Frequently Asked Questions About EMU's Parking Initiative
- Q: What is happening to the University’s Parking system?
- A: In May 2017, Eastern Michigan University (EMU) announced to the community that it planned to monetize its parking system. In December 2017, the EMU Board of Regents approved the plan to monetize the Parking system. Under this arrangement, a financing company will pay EMU a one-time up-front payment of $55 million. In exchange for that payment, a third-party operator, LAZ Parking, will begin operating EMU’s Parking system, including incurring expenses and collecting revenues related to the Parking system.
- Q: Why is EMU taking these steps?
- A: This partnership offers several financial and operational benefits to the University as well as students, faculty, and staff.
- The $55 million up-front payment will be deposited into EMU’s reserves, which will more than double those reserves. This is an important step to increase EMU’s reserves. In a recent accreditation report issued to EMU, the Higher Learning Commission (HLC) called on EMU to substantially increase its reserves as soon as possible.
- The new Parking operator will invest significant capital to upgrade EMU’s Parking facilities and technology. These improvements would not occur had EMU not entered this agreement.
- As part of its routine capital spending initiatives, EMU plans to issue its own bonds this summer to fund important capital projects on campus, including renovations to Sill Hall, Rec/IM, Quirk, the Neuroscience Lab in Mark Jefferson, Warner, Hill, and the College of Business. The $55 million up-front payment paid to EMU as part of the Parking initiative is critical to ensuring that the University has sufficient reserves to support that bond issuance; indeed, EMU cannot issue those bonds or launch these construction projects until after it receives the payment as part of the Parking initiative.
- Q: What is the source of the $55 million that the third-party financing company will pay to EMU?
- A: The financing company intends to issue tax-exempt bonds and use the proceeds from those bonds to pay EMU the one-time up-front payment of $55 million.
- Q: How were the financing company and parking operator chosen?
- A: The financing company and parking operator were selected by EMU administrators, and approved by the EMU Board of Regents, following an extensive competitive, multi-month, public Request for Proposal (RFP) process.
- Q: Have other universities pursued similar arrangements?
- A: Yes. Ohio State University monetized its parking system in 2013.
- Q: How will EMU Parking operations change as a result of this partnership?
- A: Users will notice few changes to the Parking system. Students and employees will continue buying/obtaining parking permits on campus and, where applicable, payroll deductions will continue. The new Parking operator will invest over $4 million in new facility improvements during the first three years of the agreement.
- Q: Will parking rates increase as a result of this arrangement?
- A: No. On the contrary, the agreement caps parking rate increases at rates lower than have been implemented by EMU. Over the last six years, under EMU management, parking rates have increased 19% per year for non-union employees and 16% per year for students. The new parking agreement caps rate increases at 5% per year for the first five years of the agreement, and 4% per year or inflation (whichever is higher) thereafter. Parking rates that are set through collective bargaining agreements will continue to be determined through the collective bargaining process between EMU and the applicable unions.
- Q: How will Parking enforcement change as a result of this partnership?
- A: Parking enforcement will remain virtually unchanged, except for improvements in technology which will make the system more user-friendly. Appeals regarding Parking citations will remain under the exclusive control of EMU through the Parking Violations Bureau, and will be managed by an EMU employee.
- Q: What type of oversight will EMU have over the new Parking operator after this transition?
- A: EMU will continue to own all parking garages, lots, and meters. Appeals regarding Parking citations will remain under the exclusive control of EMU and will be managed by an EMU employee. EMU and the parking operator will establish a Joint Parking Advisory Committee to facilitate communications and resolve issues that arise.
- Q: What will happen to emeritus faculty parking passes and privileges?
- A: Emeritus Faculty and Staff will retain their parking privileges.
- Q: The Parking system funds SEEUS (the student-staffed Public Safety program that provides escorts to students at night). Will SEEUS funding be continued?
- A: Yes. The money to fund SEEUS that is currently paid by the Parking system will continue to be paid by the University.
- Q: Will the full-time EMU employees who work in Parking be fired?
- A: No. There are four full-time employees, all of whom are unionized, who work for EMU Parking.
- One employee will continue working for EMU overseeing Parking operations and appeals and will remain in the same bargaining unit.
- One employee will continue working for EMU in the Physical Plant and will remain in the same bargaining unit.
- One employee will continue working for EMU as a Police dispatcher and will remain in the same bargaining unit.
- The fourth employee accepted a full-time job offer with the new parking operator.
- All four employees were offered full-time employment with the new Parking operator. Additionally, the new parking operator has hired all of the temporary employees who worked in EMU Parking at the time the agreement was signed.
- The new parking operator will continue to hire EMU students and an on-campus job fair for students is planned.
- Q: I heard a rumor that EMU will eliminate union jobs, just as it did when it hired a new firm to manage Dining operations. Is this true?
- A: No. As outlined above, three of the four unionized employees who work in Parking are remaining with EMU in unionized positions, and one employee accepted a position with the new Parking operator. Moreover, no union jobs were eliminated as part of EMU’s third-party Dining Service partnership. In fact, 100% of the EMU employees who worked in Dining Services were retained as EMU employees with their same compensation, benefits, and union status.
- Q: I hear EMU recently laid off other employees. Is this true?
- A: EMU is restructuring its budget to respond to a shrinking population of high school graduates and community college students, as well as cuts in State appropriations. These same challenges are faced by other regional public universities in Michigan, Wisconsin, Illinois, Pennsylvania, Maine, Missouri, and other areas. As part of this re-structuring process, EMU eliminated 60 staff positions in early-2018 which resulted in 16 layoffs (the remaining positions were vacant). No instructional positions were eliminated. These and other initiatives will allow the University to re-allocate resources to continue investing in dynamic high-demand academic programs, world-class facilities, and student success programs.
- Q: When was the EMU community notified about the Parking initiative?
- A: EMU first announced to the community in May 2017 that it planned to monetize its parking system.
- Q: Were the applicable unions informed in advance?
- A: Yes. There are two bargaining units impacted by these actions and they were notified in advance. As described above in Question #12, none of the unionized employees were laid off.
- Q: I’m concerned that EMU appears to be privatizing services. What is this about?
- A: Public regional universities in the Midwest – including EMU – face significant challenges, including:
- The State of Michigan provides $10 million per year less to EMU than it provided in 2003. That reduction is much larger when accounting for inflation.
- The number of high school graduates in Michigan has declined by nearly 15% since 2008, and is expected to decline by another 16% between 2018-2028.
- Student Credit Hours – the primary source of revenue for EMU – have declined by 14% since 2004.
- Over 40% of EMU’s undergraduate students receive Pell Grants, yet the federal government has barely increased Pell Grant awards over the last several years.
- EMU has taken many steps to respond to these challenges and focus on its core mission – educating Michigan students – by, among other things, partnering with experts to manage non-core operations.
Dining Services is a good example. EMU partnered with a third-party firm in 2016 to manage Dining Services. As noted above, 100% of the EMU employees who worked in Dining at the time of the transition were retained as EMU employees with no change to their compensation, benefits, or union status. A recent survey showed that student satisfaction increased in nearly every category after the third-party company assumed management of EMU’s Dining Services. Based on those results, EMU’s Student Government President and Vice President recently endorsed a five-year extension of the Dining Services third-party agreement.
Ypsilanti City Council
- Q: What is the Ypsilanti City Council being asked to vote on?
- A: Under federal law, the issuance of certain tax exempt bonds – including the bonds that the financing company plans to issue to fund the $55 million payment to EMU – must be approved by a governmental entity with jurisdiction over the assets that will be financed with the bonds. EMU asked the Ypsilanti City Council to approve the issuance of the tax exempt bonds at the Council’s meeting on March 6, 2018, because all of the affected parking facilities are located in the City of Ypsilanti. Ypsilanti City Council is not, however, being asked to approve the Parking initiative. Indeed, City Council does not have authority to approve or disapprove the parking initiative. As described below in response to Question #20, the initiative will move forward regardless of the City Council’s actions.
- Q: What happened at the March 2018 City Council meeting?
- A: Leaders of the union representing EMU faculty (AAUP) attended the Ypsilanti City Council meeting on March 6, 2018, to express opposition to EMU’s Parking initiative. In response, City Council postponed action on EMU’s request for issuance of tax-exempt bonds. City Council will consider the question again on April 17, 2018.
- As a result of the delay, EMU has suspended summer construction projects at several facilities – including Sill Hall, Rec/IM, Quirk, the College of Business, and Mark Jefferson – because those projects will be financed in large part by an EMU bond issuance which itself is supported by the issuance of the tax-exempt bonds for the Parking partnership. Historically, EMU’s construction projects have been completed by union contractors.
- Q: What happens if the Ypsilanti City Council does not approve the tax-exempt bonds?
- A: EMU’s Parking partnership will proceed regardless of the City Council’s actions, but if Council does not approve the tax-exempt bonds, then the financing company would have to issue taxable bonds instead. This would result in an up-front payment to EMU that is significantly less than $55 million. Under that scenario, EMU will have fewer funds available for its reserves, and fewer funds available to support borrowing for important academic construction projects that historically have been occupied by union contractors.