Developer seeks $11M in damages in parking lot dispute with Eastern Michigan University

Parking signs provide information throughout the Eastern Michigan University campus, indicating which types of permits are valid in a given lot. EMU switched its parking operations to a private vendor this year, causing a spike in parking violations issued at the university.Martin Slagter | The Ann Arbor News

YPSILANTI, MI - A court confrontation over contract disputes is brewing between Eastern Michigan University and the private operator of its campus parking.

Provident Group-EMU Properties, an Arizona-based limited liability corporation, took over the operation of the Ypsilanti university's parking structures in 2018. EMU issued a notice of default toward its partner, also known as Provident EMU, earlier in March for failing to repair and reopen a campus parking structure.

Read more: Failure to repair parking structure leads to Eastern Michigan issuing default with developer

Provident EMU has sued EMU twice in the last two weeks in both federal and Michigan court. EMU officials said they are planning to file counterclaims.

The first lawsuit, filed March 20 in Detroit federal court, was dismissed within days by U.S. District Court Judge Victoria Roberts for being filed in the wrong court. Provident EMU filed the second lawsuit in the Michigan Court of Claims this week, said Provident Resources Group Chairman/CEO Steve Hicks.

"Our lawsuit speaks for itself as to our position on this matter with EMU," Hicks said. "We will continue to attempt to work with the university in a collaborative manner to resolve our dispute."

The language of both lawsuits is the same, Hicks said, and alleges EMU undercut revenue by misreporting the number of parking spaces it was relinquishing, reducing rates for faculty and staff and changing policies during the COVID-19 pandemic.

In addition, Provident accused EMU of underselling the cost of repairs needed on a 784-space parking structure, which the company closed on Sept. 25 to fix. EMU issued the Notice of Default earlier in March with the repairs ongoing and the structure remaining closed, but Provident said they are the ones suffering financially for the closure.

"(We have) been damaged in an amount of at least $4,476,279.46, representing the pro rata loss in value of 784 parking spaces," Provident noted in the lawsuit.

The lawsuit is "entirely without merit," EMU spokesman Walter Kraft said in a statement.

"Provident is attempting to rewrite the contract it signed," he said.

Read more: Ypsilanti wants more info on Eastern Michigan's $55M parking agreement

EMU received a report from New York-based Desman Design Management in 2017 assessing the repairs needed on the campus parking structures, Kraft said. The expected repairs were estimated at $3.4 million for the first two years of the agreement, while Provident is alleging they were told the price tag would be $250,000, Kraft said.

The 784-space structure accounts for 8% of on-campus parking, EMU officials said. There are a little under 9,500 parking spaces on campus, Provident EMU said in the lawsuit, adding that it understood there were 138 more spaces when the 2018 agreement was made.

That loss of revenue cost Provident about $787,000, the lawsuit states. Also, Provident accused EMU of costing them $4.8 million in revenue by closing parking structures during the COVID-19 pandemic by switching to remote learning.

Along with another $824,000 for reducing parking rates for faculty and staff, Provident is seeking nearly $11 million in damages from EMU over alleged breaches of contract, the lawsuit states. The company is also challenging EMU's Notice of Default.

"The University issued a default notice against Provident nearly three weeks ago for failing to live up to its promises in running our parking system," Kraft said in a statement. "In particular, Provident failed to operate and maintain University's central parking garage."

In 2018, EMU privatized parking on its campus in a 35-year agreement with Dallas-based Preston Hollow Capital. Under the agreement, which provided a $55-million up-front payment to EMU, PHC assigned rights to Provident Group-EMU Properties.