MBTA Parking Proposal Should Go Further

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The MBTA is proposing to securitize its parking revenues (roughly $30m per year) in order to fill a budget gap next year and pay down some debts, according to a Globe article. Also, the T will continue to run the lots and set prices.

First, its not clear to me that this proposal creates value, except by solving a short-term fiscal problem (at potentially great expense). If this is just a pure securitization of a future stream of income (without the promise of operational improvements that would provide better service and/or generate more revenue), then its just taking money from the future to the present. Its even worse if the money goes to fund operating costs, then you’ve taken future money (an asset) to pay for current costs (without creating a corresponding long-term asset). Its the difference between taking out a mortgage to pay your heating bill and taking out a mortgage to buy your house.

If the funds go to pay down debt, that makes better sense, as it should lower future obligations. But it would take some convincing to understand how this creates value (and is not just a swap).

Second, the T should push this deal further — long-term lease out the parking assets to an entity that has the skills to manage them. Right now, the T has a mix of parking entities – lots of varying size, location, and ownership and several major garages.

Unfortunately, the T does not have the expertise to manage these lots actively. Most of the lots still use an ‘honor system’ that consists of parking in a space then stuffing bills into a locked container for the appropriate space (which a private firm then collects). And the T has almost no pricing strategy for these lots — in 2008, they doubled the prices for commuter rail parking, which meant that most lots went from $2 to $4. So, a parking space in Roslindale Village (with lots of free off-street options) is worth the same as one in Middleboro and Ashland.

I’m not saying that I know the right price for each of these spaces, but I don’t think it was $2 for each one and that each warranted an increase of $2. Its like saying the same one-bedroom condo is worth precisely $125,000 in every community in eastern Massachusetts.

In my ideal scenario, you’d need to have a skilled operator come in, price the spaces at something that would maximize revenue (or ridership, if that was your goal), then have the MBTA capture some of that increased revenue through securitization (and not spend the resulting income on operating costs).