T to jettison parking vendor
Officials say revenue discrepancies independent of decision to switch vendors
THE MBTA’S OVERSIGHT BOARD voted to approve a potential 15-year contract with one of the country’s biggest parking management companies, ending a troubled relationship with its longtime lot operator that resulted in missing revenues that went into the millions.
Top T officials recommended that the Fiscal and Management Control Board approve a performance-based contract with Republic Parking System of Tennessee that will pay the firm $360,000 per year in management fees, down dramatically from the current $9.4 million paid to LAZ Parking, while reimbursing Republic on a monthly basis for staffing, maintenance, and other operating expenses.
“We’ll reimburse for actual verified expenses,” Evan Rowe, the T’s director of revenue, told CommonWealth. “We’ll be their largest client.”
The T will now give a 30-day notice to LAZ and officials expect Republic to take over the contract beginning April 1. CommonWealth has reported LAZ is under fire for discrepancies in cash collection at several of the lots it operates for the MBTA, including North Quincy on the Red Line and the Lechmere garage in Cambridge.
“We believe LAZ undercollected a significant amount,” said John Englander, the T’s general counsel. “We intend to be made whole under terms of our contract. We believe those losses are well into seven figures.”
MBTA Acting General Manager Brian Shortsleeve downplayed the role of the cash discrepancies and said the recommendation to change vendors is a matter of improving service and efficiency at the T’s 10 garages and 90 surface lots.
“Parking is the largest component of our own-source revenue,” said Shortsleeve, noting gross parking revenues, which are used to pay down the authority’s $80 million operating deficit, are about $50 million annually.
The current contract with LAZ, which also submitted a bid for the new contract, pays the Rhode Island firm $9.4 million to manage the lots as well as another $1.2 million in enforcement and parking fees. Under the new contract, Republic will receive $360,000 for management, an estimated $4.7 million for staffing, $4.3 million in verified reimbursements and about $400,000 in parking fees.
Rowe said the savings are not readily seen but changes in efficiencies will increase revenues without resorting to higher parking fees in the switchover.In addition to the change in vendors, the new contract will alter the way parking fees are collected and payment is enforced. Under the current system, about $11 million of the parking revenues are collected in cash but with the new contract, updated technology is expected to reduce that to $2.8 million, with the difference being paid through credit cards, mobile apps, or other payment methods.
Rowe said the contract, which will be for five years with two five-year extension options for the T, includes a rigid auditing component as well as a severe penalty for cash discrepancy, as high as three times the amount of verified shortfalls. The new contract will also include performance-based incentives for everything from revenue collection to maintenance, something Rowe said was not part of the LAZ contract. Rowe also said the current contract put the onus on the T to find and enforce noncompliance. But, Rowe said, the incentives for Republic are built in to encourage proactive efforts.