VI. Construction phasing and financing

Preferred Garage Phasing

The Consultant Team offers these recommendations with regard to the construction of new garages in the South Campus and Health Sciences District to provide both replacement parking spaces and needed new parking spaces:

Financial Considerations

The T&P Plan assumed a total cost per space for new structured parking of $12,500, with an inflation factor of 3% per year for construction costs, a reasonable assumption at the time the plan was completed.  The projected rates in the T&P Plan were designed to support construction of 3,500 spaces in parking structures on the OSU campus as a whole.  Of these 3,500, 2,000 were assumed to be in a structure on Lane Avenue on the northern end of campus.  This structure was assumed to displace 500 existing surface parking spaces.

The remaining 1,500 spaces were assumed to be in the South Campus and Health Sciences District.  However, the rate projections in the T&P Plan did not consider any parking displacement associated with building these new spaces.  The preferred sites identified in this report all displace some surface parking, so the number of new spaces constructed must be higher to result in a net of 1,500 spaces.  The three preliminary designs in this report would create a total of approximately 2,495 spaces, while displacing 708, for a net gain of 1,788 spaces.

Since the time of the T&P Plan, construction costs for parking structures have escalated at a rate greater than 3% per year (the actual rate is roughly 6%, and could be higher in coming years).  By 2003, when debt service on any new garages is anticipated to begin, the construction cost per space will have increased approximately 34 percent since 1998.   APPENDIX D provides a more detailed delineation of the estimated costs for parking structures in the future.  This cost escalation is one of several factors that create the need to revisit the parking rate projections in the T&P Plan.  The new construction projects identified in this report have displaced or may displace surface parking spaces without funding replacement parking in structures, creating additional financial strain on T&P.  Also, since the number of spaces constructed in the District will need to be greater than 1,500 to yield 1,500 net spaces, the associated debt service and operating costs will increase accordingly.

While rate increases are anticipated to provide most of the revenue associated with the parking program, the University is considering a contribution to parking costs on an annual basis.  This contribution will be applied to replacing surface parking spaces that are displaced due to construction and must be replaced in garages.  The funds would come from state and central university funds used to support new construction.  Details of this plan can be found at the RPIA website at www.rpia.ohio-state.edu.

With these factors in mind, the Consultant Team has developed several scenarios related to the phasing of garage construction.  Parking rates are shown without and with the University contribution, so that the effects of this new revenue source are clearly understood.  It is important to note that just as conditions have changed in the last few years, they will likely change again, which creates the need to constantly review these scenarios and the assumptions underlying them. 

SCENARIO ONE: BUILD LANE AVENUE AND RHODES HALL NOW, OTHER GARAGES LATER

Anticipated rate increases, if present assumptions hold and no University Contribution is applied, would be as follows:

With the University contribution considered, Scenario One should be removed from consideration, since T&P will be able to build more garages (as described in Scenario Three) within the existing rate structure.

Pros

Cons

SCENARIO TWO: BUILD RHODES AND CUNZ FIRST, POSTPONE LANE AND 10TH AVENUE

Pros

Cons

Gradual declining percentage (without University contribution)

Gradual declining percentage (with University Contribution)

Most significant increase postponed until all new garages opened or under construction (without University contribution)

Most significant increase postponed (with University Contribution)

Rates would increase five percent annually in all versions of Scenario Two after FY 2006-07, if present assumptions hold.

SCENARIO THREE: BUILD ALL BUT ONE GARAGE (LANE, RHODES, AND CUNZ BY 2003)

Pros

Cons

Most significant rate increases completed by garage opening in 2003 (without University contribution)

Most significant rate increases completed by 2005 (without University contribution)

With University Contribution

Rates would increase five percent annually in all versions of Scenario Three after FY 2006-07, if present assumptions hold.  The extent of rate increases necessary in Scenario Three is less than that necessary for Scenario Two for several reasons.  First, in Scenario Three, construction of the Lane Avenue Garage would take place three years earlier, so construction costs would be significantly lower due to decreased inflation of construction costs.  Second, Scenario Three does not include debt service and operating costs for the 10th Avenue Garage, which are projected to total nearly $2 million annually.

SCENARIO FOUR: BUILD ALL GARAGES BY 2003

Construct Lane Avenue Garage - 2,000 spaces (1,500 net new); Rhodes Hall Garage – 1,055 spaces (682 net new), Cunz Hall Garage – 656 spaces (521 net new), and 10th Avenue Garage – 784 spaces (584 net new).  All completed by 2003

Pros

Cons

Anticipated rate increases would be as follows, without the University Contribution:

Rate increases, if the University Contribution is considered, would be as follows:

Rates would increase five percent annually after FY 2006-07, if present assumptions hold.

Recommended Scenario

After reviewing these scenarios, the Consultant Team has come to the conclusion that Scenario Two is in the best interest of the University, if there is no University Contribution to T&P annually.  The construction of the Rhodes Hall Garage will meet the needs of the Health Sciences Center, free spaces in other facilities for faculty, staff, and students, and provide improved services for patients and visitors.  The construction of Cunz Hall Garage will replace spaces lost to construction and add capacity for the South Campus and adjacent areas.  It also allows T&P to build cash reserves before beginning construction on the Lane Avenue Garage, which will be a larger project and therefore more costly than the other garages described in this report.  While planning for the Lane Avenue Garage is further along than planning for the garages in this study, neither design nor construction has begun.

If there is a University Contribution to T&P annually, the Consultant Team recommends that Scenario Three be pursued.  With the University Contribution, it appears as if no additional rate increases beyond what were proposed in the T&P Plan will be necessary.  Scenario Three allows T&P to meet some needs in the South Campus and would continue the present course of action on the Lane Avenue Garage.  Then, after construction of the Rhodes Hall, Cunz Hall, and Lane Avenue Garages is completed, T&P can reevaluate its projected budgets and determine what, if any, additional rate increases will be necessary to construct the 10th Avenue Garage.

Implementation Schedule

With this recommended scenario in mind, the estimated implementation timetable of the South Campus and Health Sciences District Parking Plan is below.  The parking effects of development projects that will affect this schedule are shown in more detail in Section II of this report.  

Phase One: FY 1999-2000 and FY 2000-2001

T&P Activities

External Decisions Needed

Phase 2: FY 2001-2002 AND FY 2002-2003

T&P Activities

Phase 3: FY 2003-2004 AND 2004-2005

T&P Activities

Summary

It is important to note that conditions have changed significantly since the T&P Plan was approved.  Construction costs have escalated beyond projections, thus raising the costs of providing new parking.  Unanticipated developments have displaced parking spaces and created additional parking demand.  Decisions need to be made on which parking facilities to build, when to build them, and how to fund the construction.  Because of the rapid pace of change at OSU, it is imperative that the University reserve the sites mentioned in this report for parking structures, whether the structures themselves will be built in the immediate future or later in this decade.  If the sites selected in this project are taken for other uses, the University’s ability to meet its access needs will be seriously curtailed and in a manner deleterious to the overall goals of the institution.  Continued facility construction on campus also increases the significant need to analyze, plan, address, and monitor the cumulative effects of parking, traffic, and access related to new developments.