T revenues growing from ads, real estate, parking

Agency on track to reach $100m target by 2020

MBTA OFFICIALS SAY they are on track to reach their goal of $100 million in recurring, own-source revenue by 2020.

The officials said they expect to bring in $77 million this fiscal year from advertising ($27.8 million), parking ($24.6 million), real estate ($17.2 million), and a handful of other revenue-generating initiatives ($6.9 million). The MBTA’s own-source revenue in fiscal year 2015 was $43 million.

While own-source revenue has grown more than $33 million, or 77 percent, since fiscal 2015, fare revenue has grown much more modestly in percentage terms. Fare revenue is expected to hit $663 million in fiscal 2018, which represents a gain of $60 million, or 10 percent, since fiscal 2015.

Michael Abramo, the T’s chief administrator, attributed the bump in fare revenue primarily to a price hike in 2016 and increases in corporate pass sales (up 16 percent since fiscal 2015) and commuter rail revenue (up 21 percent).

Overall, fare revenue is sluggish because ridership is down at the T. The comparison to fiscal 2015 may also appear better than it actually is because that year included a winter with record snowfalls that led to the shutdown of the T for many days.

MBTA digital ad at Park Street Station

MBTA officials said own-source revenue still has room to grow, particularly in advertising and real estate. Under a contract with Outfront Media negotiated in 2016, the company is installing at its own expense 700 digital media panels across the system and 70 percent of the revenue is going to the T. So far, 225 panels have been installed, with the rest coming by December. New alcohol ads are slated to begin appearing soon, but the goal of $2.5 million in revenue this fiscal year from liquor advertising will not be met because the Fiscal and Management Control Board took longer than expected to approve the controversial program.

Real estate revenues are also on the rise. Rents have been raised to market levels  at a number of locations, boosting income by $250,000 a year. An amended lease at South Station is generating an additional $1 million per year.

Going forward, the T is hoping to generate $160,000 per year from concession leases at Government Center and hundreds of thousands of dollars annually with a transit-oriented-development project at North Quincy Station. Bank of America also plans to install seven ATMs in stations, generating an estimated $195,000 a year for the T.

Parking is more of a work in progress. The T dumped its parking operator in April 2017 after money was stolen and hired Republic Parking to take over. The agency’s parking director resigned in early December, saying Republic was squandering money and the contract was being mismanaged by Evan Rowe, the T’s director of revenue.

“The transition to Republic, there certainly have been challenges, some of which have been reported by you,” said Rowe in a telephone interview. “But it’s important to recognize that we have record revenues and Republic’s expenses are on budget.”

Parking revenue was $13.2 million in fiscal 2015, rose to $21.2 million in fiscal 2017, and is expected to reach $25 million in fiscal 2018.

Rowe said no final decisions have been made to raise parking fees, but he suggested an increase was warranted because they haven’t changed since 2008. He said it would also be possible now to implement what he called “dynamic pricing,” which is raising prices at off-peak, high-demand periods. For example, Rowe said, many people attending Boston Bruins games park at Sullivan Station and take the T into TD Garden from there. He said prices could be increased at Sullivan Station on game nights to bring more revenue to the T while still making it attractive to park and ride.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

“Are we pricing these kind of special events in a way that is fair to our core commuting customers but also providing real value to customers parking there?” Rowe asked.

Abramo and Rowe are scheduled to make a presentation on own-source revenue to the Fiscal and Management Control Board Monday. They spoke to CommonWealth in advance of the meeting to highlight the positive developments.

  • QuincyQuarry.com

    While the T’s growing own-source revenue is helpful, it is still short money in the grand scheme of things.

    Perhaps more importantly, it is not so clear how much actual net revenue is so gained.

    For example, the plans for an air rights development lease at the T’s Quincy Center station looks to be requiring such considerable new infrastructure expense and a dubious as well as considerable re-configuring of the station’s operations (e.g., moving the bus station’s egress onto a major and busy crosstown arterial AND via a problem-laden design plan) that the lease revenue might not properly cover it’s share of the nut – ESPECIALLY as a fair chunk of the air right’s revenue is dependent on speculative incremental development not happening until 2030 or thereabouts.

    In other words, I fear that the T may be spending ASAP the increase in new gross own-source revenue without properly considering concurrent costs incurred to obtain any such additional new revenue.