From the Columbus Dispatch:
It looks as if Ohio State University administrators think $483 million is too good a deal to pass up.
Campus officials announced yesterday that they plan to ask the Board of Trustees on June 22 to approve leasing OSU’s roughly $28 million-a-year parking operation to QIC Global Infrastructure and its partner, LAZ Parking, for the next 50 years.
QIC is a long-term investor based in Queensland, Australia, and LAZ Parking is a parking operator based in Hartford, Conn.
The debate over privatizing parking at OSU has been acrimonious and occasionally baffling to me. Some of the arguments offered seem completely detached from the realities of university finance and dramatically overstate the effects of choosing one course or another; I suppose I should have expected this. Some of my frustration with the debate comes from the characterization by some parties (including a prominent student group) of privatization as a kind of corporate takeover of the Gordon Gekko variety. Without spending any effort trying to defend the lease as a general matter (the university administration has already spent great efforts to do so, and I have little to add that could convince readers one way or another; opposing views are also available via the link), the OSU lease debate reminded me that institutional investors often face an image problem. Even a stable, long-term investor like QIC is likely to be viewed with suspicion by affected constituencies. This is not surprising, of course–QIC is a foreign investor looking for a stable ROI, and they will likely anger some constituencies no matter how they manage the lease. I found it interesting, however, that QIC selected someone with local ties–and an Ohio State degree–to chair the project. From the Dispatch:
QIC has asked Ohio State alumnus William J. Lhota, the recently retired president and CEO of the Central Ohio Transit Authority, to be chairman of the project, pending board approval. OSU officials said they didn’t know what Lhota’s exact role would be, but they suspect more details will be revealed at the trustees meeting.
As I argued in a paper several years ago, governmental investors like QIC may be constrained by host country politics. The investors’ investment and management decisions are often directly (and unsurprisingly) affected by these political variables. I don’t mean to suggest that Mr. Lhota is not the right candidate for the job; rather, he may be just the right candidate because of his ties.