Parking garage intrigue
The Massachusetts Department of Transportation is looking to raise a substantial amount of money for the cash-strapped MBTA by leasing the T’s parking garages, but Boston development interests are warning that the plan could wind up stalling construction around North Station.
MassDOT has been weighing a plan to cash in on the MBTA’s 51,000 parking spaces for the past several months. Under the most likely scenario, MassDOT and the T would take a significant up-front payment and enter a long-term parking lot lease with a Wall Street investor; Wall Street would then use the T lots’ parking revenue to backstop bond securities that could be chopped up and sold to investors. No one has put a value on the parking lot lease, but Morgan Stanley and LAZ Parking paid the city of Chicago over $1.7 billion in a pair of transactions similar to the one MassDOT is considering.
The T is looking to pay down debt as it queues up several costly new capital projects, including the Green Line extension, new service to the South Coast, and an ambitious expansion of South Station.
The North Station garage is an anomaly for the T. Unlike garages in outlying areas such as Lynn and Quincy or at Alewife Station, commuters don’t park at North Station to board a train. The T needed to build the garage as a way to stage the burying of the old elevated Green Line, and now it’s one of the most valuable garages in the T’s portfolio. In 2008, it produced $4.8 million for the agency.
The North Station garage was also singled out in the legislation that created MassDOT. A line item in that law allowed the T to sell the garage for economic development purposes. That’s an allusion to the development plans held by Delaware North, the company that owns the old Garden site and the TD Garden, which sits above the garage.
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.
“It’s premature to say which way we’re going,” MassDOT secretary Jeffrey Mullan said earlier this week. “My instructions to the team were to maximize value. We’re looking at leveraging as much of our assets as possible. We’re looking at how North Station plays into it, how we maximize the value.”
Several months ago, the T’s real estate advisers hosted a meeting for potential North Station garage buyers, and MassDOT appeared to be leaning towards putting the property up for bid on its own. That’s no longer a sure thing, since attaching the North Station property to the Wall Street bond package could certainly make that overall offering more valuable.
Boston government and business interests are worried about the already-complicated relationship between the current North Station garage and the Garden development site. The North Station garage was designed to be expanded outward, underneath the old Garden site along Causeway Street; any cars going into new buildings on Causeway would have to enter and exit through the North Station garage. Delaware North has easements allowing its traffic to pass through the North Station garage, but that may not be enough surety – especially if the garage were controlled by an outside investor, instead of the T.
Boston Redevelopment Authority director John Palmieri called Mullan last week and 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 says the inclusion of the North Station garage in a bonding package would be “absolutely disastrous for the development of the [Garden] property.”
“We’re not looking for a deal,” Maher insisted. “We understand it’s going to be a public process. We would bid fair market value if it was offered.”