YPSILANTI, MI - Eastern Michigan University's plans to privatize its parking operations have been put on hold as the Ypsilanti City Council considers the potential impact giving up operating rights might have on the university and the surrounding community.

The city council voted last week to table a motion to permit the issuance of tax-exempt private activity bonds needed for Eastern to move forward with a 35-year agreement to monetize its parking system on campus with Dallas-based Preston Hollow Capital.

City council member Pete Murdock voted in favor of tabling the decision until its April 17 meeting, citing concerns about privatization and a desire to learn more after receiving little notice about the background behind the agreement.

"It was kind of a surprise to most of us that we weren't involved in this process at all," Murdock said. "We knew EMU was contracting its parking out, but we didn't know we had a role to play in that."

Details behind the agreement are complex. Under the agreement, which would provide a $55 million up-front payment to EMU, PHC would assign rights to Provident Group-EMU Properties, an Arizona-based limited liability corporation, which is in turn owned by Provident Resources Group, a nonprofit corporation based in Georgia.

The payment to EMU would be financed by sale of the private activity bonds, which are tax exempt, by the Arizona Industrial Development Corp., requiring approval from the city council according to the federal Tax Equity and Fiscal Responsibility Act of 1982.

EMU's Board of Regents approved the agreement in December, which would relinquish operation, management and maintenance of the university's parking system, consisting of more than 1,100 parking garage spaces, 8,300 parking lot spaces and any other metered or permitted parking spaces.

EMU professor and American Association of University Professors President Judith Kullberg said the university lacked transparency regarding the details of the agreement.

"The basis of the objection to this arrangement is that there was no consultation whatsoever with any stakeholders on campus," Kullberg said. "They didn't meet with any of the unions. There was minimal discussion with students or any other employees.

"In early December we were told in a faculty senate (meeting) by a senior administrator that it didn't look like there was going to be any movement on the parking, because people were asking questions about it," she added. "A week later at the Board of Regents meeting it was announced as completed."

EMU Spokesman Geoff Larcom said a significant delay in executing the privatization the university's parking services would impact the timing of planned capital improvements on campus that were announced previously, including renovations to Sill Hall, the Rec/IM, Quirk/Sponberg Theatre building and its Science Complex.

"The upfront payment of $55 million is planned to finance those projects as well as to bolster the university's financial reserves," Larcom said in an email. "The Higher Learning Commission has mandated that Eastern implement a plan to improve our financial position. A comprehensive effort is underway to do that, with the funds from the parking agreement as the most significant portion."

The agreement between EMU and Preston Hollow Capital would cap increases in parking rates at 5 percent each year in the first five years of the agreement, decreasing to 4 percent per year for the remainder of the agreement. Comparatively, EMU Chief Financial Officer Michael Valdes noted in December that the average annual parking rate increase at EMU has been 7.2 percent over the past seven years.

Larcom noted that LAZ Parking, which would serve as parking operator for EMU, has indicated it will hire eight employees compared to the five positions the university had in its parking operations. All current staff has either hired on with LAZ or moved to other positions at EMU.

Kullberg believes the city council should exercise caution going forward with its vote, warning that privatization within a public entity can result in unfavorable outcomes.

"I think any time a university or public institution outsources essential services, it is ceding some degree of control," Kullberg said. "That means that citizens, who are the owners of these operations, lose a lot of control, so they're not able to influence what's going on with this.

"If you look at all the privatization that's occurring at public schools in Michigan, it's not leading to better outcomes for citizens," she added. "We're losing our democracy, we're losing control over our own government, over our own institutions and the quality of education is declining. So, we really see ourselves as defending our university."

Murdock said concerns expressed by a number of EMU faculty, staff and students at the public hearing prior to its vote was a major reason he voted to push the decision back.

"There were several dozen people from the university who didn't think that they were involved enough in the process with Eastern and wanted to have more input and discussion," Murdock said. "That's probably why we tabled it. We kind of left it that Eastern had to do something to address those issues."