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Developers Worry Parking Privatization Will Impede TOD…In Boston

January 5th, 2011 by

It seems NJ Transit isn’t the only transit agency seeking to wring more revenue from the acres of parking it controls near its stations. At the same time NJ Transit is vetting bidders for the right to lease and operate 81 of the most profitable parking facilities in its system — in exchange for an upfront payment that will help the agency address short-term budget woes —  the Massachusetts Department of Transportation is considering a similar scheme to help fund the Massachusetts Bay Transportation Authority, Boston’s transit agency.





The old Boston Garden. Source:




The situation in Boston is similar to that in New Jersey: A cash-strapped transit agency looking to plug a looming multi-million-dollar budget deficit proposes to exchange the long-term (25-50 years) right to maintain and collect revenue for its parking facilities in exchange for a large (likely nine-figure) upfront payment. Interestingly, according to the Boston Globe, the MBTA is leaning away from a full lease of its parking lots, as NJ Transit is proposing, in favor of a more limited arrangement that would retain more control for the agency and help guard against some of the massive rate increases that have accompanied similar deals, such as Chicago’s parking meter privatization (.pdf).

One striking similarity between the Boston and New Jersey schemes is their potential adverse impact on transit-oriented development (TOD). As this blog and others have pointed out,  privatization of NJ Transit’s parking facilities, if not done properly, could severely hamstring TOD by creating a strong incentive to keep land near stations as surface parking, rather than redevelop it.  (Bidders would pay the agency an upfront sum based on a set number of parking spaces, and the revenue those spaces are anticipated to produce. Any reduction in the number of spaces, including reductions caused by developing surface lots into housing, offices, etc., would reduce the value of the overall parking concession paid for by bidders, who would therefore likely oppose it.)   Developers in Boston are already raising concerns about the impact of MassDOT’s plans on potential development near prominent stations. From Commonwealth Magazine:

Delaware North has permits to build more than 360 residential units along Nashua Street, and zoning allows the construction of 40-story towers along Causeway Street, where the old Garden used to stand. The North Station garage extends beyond the footprint of the TD Garden, allowing it to also serve as the foundation for the planned Nashua Street residences. (The garage was also built to be combined with a new 800-space garage under the old Garden site.)

MassDOT and the T have two options for disposing of the North Station garage: They can sell it outright in a stand-alone offering, or they can roll it into the anticipated bond package.

Boston Redevelopment Authority director John Palmieri … asked that the North Station garage be taken out of the prospective bond package, arguing that its inclusion could handcuff development efforts in the area. And Bob O’Brien, executive director of the Downtown North Association, has been pushing the T’s real estate consultants on the North Station garage since the summer. The garage, O’Brien said, has “always had an economic development purpose that distinguished it from other MBTA parking facilities. That expectation is reflected in fact that the legislation singled out this garage.”

Maher [head of Delaware North’s local development arm]) says the inclusion of the North Station garage in a bonding package would be “absolutely disastrous for the development of the [Garden] property.”

To its credit, NJ Transit specified in its Request for Qualifications (RFQ) that it would like to preserve TOD opportunities as a part of any privatization agreement. But the RFQ is only a guide; the final details of the arrangement, and their impacts on TOD over the next 30 to 50 years, will be negotiated with the final buyer sometime this spring. You can be sure that developers in New Jersey, like those in Massachusetts, will be watching.


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One Response to “Developers Worry Parking Privatization Will Impede TOD…In Boston”

  1. Jay:

    I read with interest your article concerning the MBTA’s parking privitization plans, and how developers are “worried” it may impede TOD here in Boston. You correctly pointed out that the MBTA is considering a revenue securitization plan, rather than a concession sale or lease like Chicago and perhaps NJ Transit. Under the MBTA’s plan, we would retain control over parking facilities and rates. Furthermore, to your main point, please be advised that the MBTA’s securitization effort will NOT impede or in anyway diminish our robust TOD program. That is precisely why we chose this method, rather than the concession scheme which cedes too much control to private investors. As an example, the MBTA will be able to continue its practice of developing and replacing its large surface parking lots at transit stations with higher density mixed-use TOD. Commuter parking will be relocated into parking structures, built as part of the TOD project, resulting in shared parking, a principle of smart growth and TOD. To date, and in our “pipeline”, the MBTA’s TOD projects have resulted in thousands of new housing units, millions of square feet of commercial space, increased ridership, and enhanced revenue to support our public transportation mission. Lastly, your excerpt from Commonwealth Magazine was out of context and did not explain the full or accurate story regarding the North Station garage. The MBTA fully supports Delaware North’s TOD plans which are located adjacent to our second busiest station. Again, those projects will result in more housing, jobs, economic development, ridership and revenue for the MBTA, the City of Boston, and the Commonwealth of Massachusetts.

    Thank you.

    Mark E. Boyle
    Assistant General Manager for Development

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