North Station garage deal on shaky ground?
Transportation board members question wisdom of proposed $75 million sale
Members of the MassDOT board of directors are raising questions about the pending sale of the MBTA’s North Station garage, raising the possibility that the struggling transit agency could face an unexpected budget gap this year.
The MBTA’s real estate arm put the 1,280-space Boston garage up for bid in April, inviting investors to submit proposals to buy or lease the structure. Delaware North, owners of the TD Garden, submitted the only bid for the garage. Delaware North’s $75 million bid to buy the North Station garage would consolidate the company’s real estate holdings in the area; the garage sits underneath the Garden and is adjacent to the site of the old Boston Garden, which Delaware North still owns.
The MBTA’s fiscal 2012 budget was balanced, in part, based on $45 million of expected revenue from the garage sale. Bid documents anticipated the North Station garage sale closing by December 1. But board members questioned the proposed sale at a meeting of MassDOT’s finance committee this week. The discussion began in public, and continued after the committee entered executive session.
Members of MassDOT’s board have long preferred a long-term lease to an outright sale of the garage. The debate at this week’s finance committee meeting suggests that the board is at least considering scuttling the garage sale, two months before its scheduled closing. The board must approve any sale or lease of the garage.
“There was a discussion as to whether a lease or a sale would be most appropriate,” said board member Liz Levin. “Either one would cover the deficit. I’d prefer to lease it.”
The board members’ questions prompted a phone call to MassDOT secretary Richard Davey from Boston Mayor Tom Menino. Menino believes the garage’s sale will open up the redevelopment of the old Boston Garden site. The mayor previously lobbied to have the North Station garage excluded from this year’s $300 million MBTA parking bond, since such a move would have precluded a sale.
While maintaining that she couldn’t speak for the board as a whole, Levin said she believes that MassDOT shouldn’t sell the MBTA garage because it produces reliable income right now, and because pending developments may make the garage more valuable in the future. “We have to be very careful as we sell assets,” Levin said. “Once the garage is gone, we don’t have it anymore. It’s worth a vigorous discussion.”
Multiple sources indicated that MassDOT leadership had hoped to have the North Station garage sale on the agenda for the board’s October meeting, but the agency’s leadership is questioning whether it has the votes to get the garage sale past the board. The $75 million deal is not currently on the board’s October agenda.
“It is a long-standing practice for MBTA staff to bring items to the board when the board is ready to consider them,” MBTA spokesman Joe Pesaturo said in a written statement. “As the ultimate decision maker, the board of directors will determine what action is the best interest of the authority. As it always does, the MBTA will act in accordance with the board’s desire. A decision is expected this fall.” The agency had previously trumpeted the garage sale for attracting “the highest bid ever for an MBTA asset.”
Failure to sell or lease the garage (real estate sources say the absence of any lease bids speaks for itself) would open up an immediate $45 million hole in the MBTA’s current fiscal year budget, and worsen the projected $161 million shortfall in next year’s budget. The agency and the MassDOT board have begun discussing a fare increase, but Alvaro said a fare increase alone won’t be enough to close next year’s deficit. The T is projecting $900 million in cumulative budget deficits between fiscal 2013 and fiscal 2016.
Homepage photo by Groupe Canam and published under a Creative Commons license.