YPSILANTI, MI - The Ypsilanti City Council ultimately approved Eastern Michigan University to move forward with the privatization of its parking operations, but not without advising the university to be more transparent about its major financial decisions in the future.

The city council voted 4-2 in favor of a motion permitting the issuance of tax-exempt private activity bonds that will provide a $55 million up-front payment to EMU to execute a 35-year agreement to monetize its parking system. Mayor Amanda Edmonds and council member Brian Robb voted against the motion during the city council meeting on Tuesday, April 17.

The vote came after more than an hour of public comment and discussion from EMU and Ypsilanti community members, as well as the council. Several audience and council members believed EMU had not done its part to address concerns brought up by faculty, staff and students - at the suggestion of the council - since the vote on the bonds was tabled during a council meeting last month.

"I would suggest heavily, that this is the age of transparency," Council member Beth Bashert said. "Our governmental entity is having some hard lessons on our end and I would suggest that your governmental entity is having some hard lessons on your end.

"This is painful and damaging to EMU," she added.

Ward 1 Council Member Lois Richardson agreed, openly asking why EMU had not made a better effort to address the details of the parking agreement with both the EMU community and the city council prior to bringing the motion forward.

"It's really sad to say that the university has come to this point where they're not willing to be open with their own people," Richardson said. "The university has to do better with an openness within."

EMU Vice President for Communications Walter Kraft noted that President James Smith addressed the privatization of parking with the faculty senate a "few weeks ago," but did not provide a specific date of when the discussion took place, acknowledging that communication between the administration and the EMU community must improve going forward.

"That is clearly not enough, we should have done more," Kraft said, addressing those who said EMU had not been transparent enough in discussing the privatization agreement. "I respect your point of view and we will learn from it."

While a number of members disagreed with the spirit of privatization and the parking agreement itself, those who voted in favor of the agreement did so because they felt there was no benefit in voting it down. Failing to approve the issuance of the bonds would have reduced the up-front payment EMU received from the agreement by about $10 million, EMU Chief Financial Officer Michael Valdes said.

"The most likely scenario (if the motion wasn't passed) would be that we financed the transaction with taxable bonds," Valdes said. "As (Ypsilanti City Attorney John) Barr mentioned, that has an impact on the overall valuations of essentially the same cash flow to finance those bonds, which results in less up-front payment to the university."

EMU's Board of Regents approved the agreement in December, relinquishing 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.

Barr said according to the tax code, private activity bonds like the ones passed Tuesday must be issued by a governmental entity - in this case the city of Ypsilanti.

Details behind the agreement are complex. Under the agreement, third-part vendor Preston Hollow Capital assigns 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 is 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.

During public comment, around 15 people spoke out - the majority against the parking agreement.

EMU student Alex Nuttle said the university failed to reach out to students regarding the details of the agreement like it has in other instances.

"The university hasn't really reached out to us," he said. "They haven't engaged in a dialogue and they've been silent on this issue of private parking and done a terrible job at giving the information to students who pay the salaries of these administrators making the decisions we oppose."

EMU student Sam Jones Darling said privatizing parking is essential in bolstering the university's finances and funding capital projects like the renovations to Sill Hall, the Rec/IM building, Quirk/Sponberg Theatre building and the Science Complex.

"If we need that money to go forward to execute renovations for our university that frankly the state of Michigan has been delinquent for years in providing us funding for, I'm going to ask you today: Are you going to stand in our way?" he said.

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, Valdes noted in December that the average annual parking rate increase at EMU has been 7.2 percent over the past seven years.