P3s and ParkingThe ultimate change management

experience

Presenters 

• David Teed – QICParc Inc/CampusParc

• Sarah Blouch – QICParc Inc/CampusParc

• Alan Lazowski - LAZ Parking

Presentation Overview

• Three perspectives regarding:

o The process

o Lessons Learned

o Best Practices

Is this a good idea?

Meet QIC & CampusParc• QIC

o One of the largest institutional investment managers in the world with $67.8 billion in funds under management

o Over 500 employees with offices across Australia and internationally

• QIC GI o Established in 2006 ; team of 19 investment professionals

o Grown from an initial commitment of $1bn to approximately $6.8bn FUM; currently ranked within the world’s top 10 infrastructure managers and investors 1

o Manages $6.8 billion of infrastructure assets across 19 global investments spanning a range of sectors including transportation, utilities and telecommunications

o QIC GI has established a specialized investment & asset management platform focused solely on parking assets

o CampusParc is focused on University parking and is Concessionaire of the OSU system

Is Parking Infrastructure?• Infrastructure assets are by nature monopolistic with predictable

cash flow generation

• The car-parking sector contains a broad range of opportunities that cover the breadth of the risk return spectrum; a large number of opportunities within the sector are not consistent with infrastructure investment

• Car parks controlled by a concession agreement issued by a demand generator such as a university, hospital or transit system can produce stable and growing revenues and predictable costs creating an investment asset with classic infrastructure characteristics

Which Parking is Infrastructure?• Parking assets manifest as either:

o On-street parking (meters); oro Off street parking generally represented by surface or multi-storey garages; oro A combination of the above two categories

• Parking assets have lower capital expenditure requirements than traditional property and can benefit from technology enhancements through increased revenues or lower costs

• Parking assets connected to specific demand generators such as airports, universities, hospitals and transit systems can be considered infrastructure due to the physical linkage to, and commercial relationship with, the specific demand generator

Parking as Infrastructure• CampusParc is targeting concession based opportunities that

ideally demonstrate the following characteristics:o monopolistic characteristics and high barriers to entryo captive customer baseso proven resilience to the economic crisiso Inflation linked returnso low demand elasticity and tariff structures that are consistent with market

pricing benchmarkso where transaction completion risk can be appropriately assessedo low levels of technology risk or where change is required the impact of

such change can be appropriately assessed

The What & Why of Concessions• Pressures to reduce costs and demonstrate return on assets

lead to considerations:

o Is Parking a core activity or merely a necessary service?o Can the capital invested in your parking assets can be better invested

elsewhere in your organization?

A parking concession is a means of monetizing a non-core asset that allows you to redeploy that capital into core services

A concession iso A long term lease or concession – but the assets remains your propertyo You transfer operating risk – management & the cost of maintainingo You also transfer the capex burden for the life of the concessiono If you need additional capital for new parking, you also gain access to

that capital

The What & Why of Concessions• A Concession Agreement provides for

o the regulation of parking rateso the prescription of operating standardso the maintenance of the assets and where necessary the construction of

new assetso the flexibility to change the use of assets or substitution of other assetso the protection of both parties in the event of a change in laws

• The process of exploring a concession should include the development of a “parking strategy” which ideally optimizes the parking experience

• Done correctly it is a partnership approach

For Example ‐ OSUAsset Garages/Surface

Lots Total Spaces

Total Campus 17/166 36,952

Academic 11/147 28,788

Medical Centers 6/19 8,164

OSU is one of the largest university and campus parking systems in the U.S.

OSU’s Wexner Medical Center is ranked as “one of America’s Best Hospitals”

“Parking has been the bane of our experience…we need a strategy which improves this”

OSU Outcome

OSU received $483 million in up front funds. Funds will be used for teaching, scholarships, improvements

OSU gains operating efficiencies and innovations via the partnership expertise

OSU retains control of rates throughout the course of the Partnership

OSU maintains ownership of the asset AND eliminated $300m capex

In the beginning…

OSU T&P

Transportation

Event/TrafficManagement & Planning

ParkingServices

Transportation & Parking Services

OSU TTM

Transportation

Event/TrafficManagement & Planning

Transportation & Traffic Management

CampusParc

QICParc Inc(Asset Management Company)

CampusParc LP(Concessionaire)

LAZ Parking(Operator)

QIC GlobalInfrastructure

(Investor)

OSU Parking Services

Who does what?TTM Concession

compliance Transit Services Traffic

Management Alternative

Transportation

CampusParc

Relationship with OSU

Operator Oversight Capital

Expenditures Concession

compliance Financial reporting

LAZ Parking

Sell permits Manage event

parking Clean and

maintain lots and garages

Write parking tickets

Adjudicate and collect tickets

Concession compliance

What stays the same?• Familiar faces – over 50% of management team

from OSU• Parking system architecture • Event parking support• Rate increases coordinated with new permit year• Maintenance standards• Campus Bus service (provided by OSU) continues to

provide essential transportation link

What changed?• New business model• Change in deployment of people• Consistent enforcement of parking policies• Emphasis and investment in technology to enhance

parking experience• Emphasis on operational efficiencies and metrics

Why bring in an operator?• Transfer to private sector operator often brings

technology and efficiency upgrades and opportunities for increased returns on investment

• Different business model can result in savings to university or city

• External operator can facilitate internal process change

• Sharing best practices; Partnership

Operations Transition• Choose the right partner to team up with

• Dedicate your team to extensive due diligence

• Learn from the existing staff

• Work hand in hand for a smooth transition

• Merge Best Practices

Scope of Services• Over 36,000 total parking spaces

o 196 surface parking lots (over 23,000 spaces)o 18 garages (over 13,000 spaces)

• 373 pieces of equipment

• Over 50,000 active parking permits

• Over 2.7 million transactions (9/21-12/31)

• Service provided 24/7/365

Visible Enhancements  

Transparency 

Best PracticesHow do you protect against perceived risks?• RFP Process

o Provide detailed historical data o Operating standards must be rigorous but non specific with

consequences for both parties should they fail to fulfill operational duties

o Balance prescribed rate increases and averages to enable optimization and simplification

o Process for change must be addressedo Robust customer feedback helps the process

Best Practices• Transition and Implementation

o Define roles and responsibilitieso Be open to new ways to accomplish similar goalso Consider how the Concessionaire will be incorporated into

daily processo Seize opportunities to reinvent processes

• Embrace each other as a partner o common goalso alignment of interestso desire for mutual success

Lessons Learned• RFP – dare to dream• Run a robust, inclusive process• Focus on the end result rather than a prescribed

approach to all services• Do not assume standard approaches are the same • Different ≠ wrong• Figure out key processes retained • Eliminates the emotional policy setting• It can work!

FAQ• Why do this?

o Enables redeployment of capital to debt reduction or investment in new core services

o Parking is an essential, but not core service o Eliminates capital (asset maintenance) expense o Shifts operating risk and long term capital cost

• What do you gain from a Concession?o Large amount of cash up fronto Ability to dictate all rules of engagement, rates, operating standards,

reporting etc..o Flexibility – concession agreement can address changeso Enhanced operations; well-maintained facilities