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).
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.
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.