Issue Briefs: Parking: Financing

The Board of Trustees must authorize the construction of new parking facilities on a campus. Once it approves, the detailed project financing begins. This process usually culminates in the sale of revenue bonds under the Systemwide Revenue Bond Program (SRB). Proceeds from those sales are used to construct the new facilities. Under terms of the SRB bond indentures, parking fee revenues, along with revenues from housing, student unions, continuing education and health center facilities and certain auxiliary operations are then collectively pledged to repay the SRB debt and interest.

Before approving the sale of bonds, the trustees require assurance that revenues derived from the campus parking function will more than cover operating expenses and payments towards the additional debt. The ability to cover these expenses is called the “coverage ratio.” An SRB Debt Management Advisory Committee is currently developing recommendations for the required coverage ratios.

CSU campuses use two types of parking facilities: surface lots and parking structures. Lots are less expensive (on average $1200 per space), faster to construct, and easier to maintain than parking structures, which cost $10–12,000 per space to construct and challenge small and medium size campuses, which have fewer users to absorb costs. On the other hand, lots have the drawbacks that they require more land to construct (which not all campuses have) and tend to be removed from the user’s ultimate campus destination.

When a campus wants to construct a new parking facility, it begins with a 6- to 12-month project justification and conceptual development phase, then typically proposes its project for inclusion in the Non-State-Funded Capital Improvement Program and submits a preliminary financial plan. A typical lot takes 18-24 months to develop (including approval, detailed design, financing, and construction); a structure, 24-30 months. During the conceptualization phase, the campus will determine the fee increase required to fund the project; in some cases, it will implement a staged fee increase.

Often construction of a new parking structure closes an existing lot. Faculty and other represented employees may be reassigned to other parking facilities. At project completion, the campus may limit use of the new facility only to those who pay the higher parking fee that allowed the facility’s construction. The campus is not required to allow employees displaced from the original facility to park in the new one, unless those employees pay the fee paid by all other users of the new facility.