Questions Loom as NJ Transit Considers Privatizing Parking
November 16th, 2010 by Jay Corbalis
- NJ Transit recently issued a Request for Qualifications for private firms interested in operating and maintaining its parking facilities at 81 stations. According to the RFQ, the term of the “concession” would be 30-50 years.
- The 81 stations (.pdf) range in size from multi-million-dollar facilities along the Northeast Corridor line to smaller park-and-ride lots for bus and light-rail service, including 14 stations that currently offer free parking. The number of parking spaces that could be privatized at these stations is 37,165, or slightly more than 60 percent of the system-wide total of 60,234.
- The stations listed (some of which “may be added or removed during the RFQ and due diligence process,” according to NJ Transit) currently produce annual gross revenues of approximately $28 million.
Short-Term Revenue vs. Long-Term Accountability
In a state where an estimated 75 percent of residents live within five miles of a transit station and transit ridership is among the highest in the nation, parking — and the lack thereof — is always a hot topic. At the most popular transit stations, waiting lists for parking spots can stretch for years. NJ Transit is hoping its initiative to privatize many of its most valuable parking facilities can help change that situation, and provide the agency with some much-needed revenue along the way.
Parking at NJ Transit stations is currently controlled by a combination of municipal, private and NJ Transit operators. Rates vary wildly, depending on demand and on who controls the lot (municipalities typically charge less than private operators). Pursuant to the RFQ issued by NJ Transit, the first step in a process that will continue through June 2011, the agency would grant one private firm an exclusive “concession” to operate and collect revenue from 81 listed parking facilities across the state for a term of 30 to 50 years.
The concept behind this proposal has merit. Parking is a critical component of a well-functioning transit network. The current system, with varying rates and long waiting lists, is inefficient, and constrains ridership growth. Bringing rates in line with market conditions could allow for capacity investment and other upgrades (though such investment is not required under the RFQ) and thus expand access to the transit network.
But the proposal to privatize parking at NJ Transit stations raises several important questions that should be addressed before irrevocable decisions are made.
What is stopping NJ Transit from doing this itself? Public-private partnerships are used extensively in Europe, and can have benefits for all parties when done properly. But they can also be a convenient way for government to solve short-term budget woes with minimal political impact, while compromising long-term revenue generation. Chicago’s privatization of its parking meters, for example, has come under criticism (.pdf) for trading hundreds of millions of dollars in future revenues for a short-term budget fix. It seems appropriate to raise the question of whether NJ Transit, which already runs many parking facilities competently, is merely seeking to plug a hole in next year’s budget while passing the buck (and the political blame) for future rate increases to an unaccountable private firm.
Why should free market principles apply only to transit riders? The vast majority of roads in New Jersey have no tolls. The gas tax, one of the lowest in the nation, has not been raised in more than 20 years, and the revenue it generates does not cover the costs of maintaining the state’s roads and bridges. (The Transportation Trust Fund is broke and was recently forced to borrow nearly $400 million from the General Fund just to stay afloat.) Meanwhile, NJ Transit riders were recently hit with the largest fare increase in the agency’s history. By privatizing parking facilities, this proposal will have the effect of further raising costs for many NJ Transit riders. If New Jersey wants to move toward a user fee-based system to pay for transportation, it should apply the same approach to roads and bridges as it does for mass transit.
Will privatization hamstring transit-oriented development? As noted in an earlier Future Facts, NJ Transit parking lots have considerable value beyond being a receptacle for cars. Many transit agencies, most notably the Washington (D.C.) Metropolitan Area Transit Authority, capitalize on the development potential of land near their stations to bring in millions of dollars through lease agreements with developers. While the NJ Transit RFQ invites applicants to suggest how they would accommodate TOD, it makes no requirements for the preservation of TOD opportunities. Any agreement with a private operator should clearly preserve NJ Transit’s right to pursue future mixed-use, higher density development opportunities. Otherwise, this proposal, in addition to forgoing millions of dollars in potential revenue for NJ Transit, could do serious damage to the state’s long-term smart growth potential.