New Jersey’s stupid parking-privatization plan
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In cases like that of the Chicago parking meters, I have a certain amount of sympathy for the privatization argument. But New Jersey Transit parking spaces aren’t Chicago parking meters, and so I’m entirely in agreement with Yonah Freemark that privatizing NJ Transit’s parking lots is a very bad idea.
Frankly, all you need to know about the plan in order to hate it is its name — it’s called the System Parking Amenity and Capacity Enhancement Strategy. But there are three more substantive reasons to dislike it.
Firstly, press coverage of the scheme has revealed nothing about the state’s willingness to cap or guide the amount charged for parking in these lots. Indeed, the official RFQ states that “it is currently contemplated that this transaction will include an opportunity to adjust parking rates in accordance with market demand” — and the stated aim of the privatization is to raise as much money as possible. As a result, the successful bidder is likely to give themselves a lot of freedom to hike parking rates in the future.
The problem is that right now no one knows what the revenue-maximizing market rates might be. If New Jersey thinks that a revenue-maximizing strategy is the way to go, it should try to implement such a strategy itself first, just to get an idea of how much revenue it could generate that way. Otherwise, there’s a serious risk that it will sell of the lots for a fraction of their actual worth.
Secondly, the plan comes on the heels of the price of rail tickets being hiked by 25% in May. If the cost of traveling by train and the price of parking at train stations both rise substantially, it’s pretty obvious what’s going to happen to the number of people taking mass transit as opposed to simply driving to their final destination. While the headline revenues from the privatization contract might look attractive, no one seems to be thinking about the hidden costs to both the state and its citizens in terms of extra congestion.
New Jersey Future’s Jay Corbalis makes this point another way, saying that privatizing NJ Transit’s parking lots only makes sense in the context of broader congestion pricing, where the cost of the driving-only alternative rises commensurately:
“By privatizing parking facilities, this proposal will have the effect of further raising costs for many NJ Transit riders,” Corbalis said. “If New Jersey wants to move toward a user fee-based system to pay for transportation, it should apply the same approach to roads and bridges as it does for mass transit.”
Finally, there’s the likelihood that the best and highest value for all that land currently being given over to parking spaces is probably not parking at all. Instead, it’s new residential and commercial development, centered on the transit services already there. (See San Francisco for an example of this in work.) The term of art for this is transit-oriented development, or TOD, and the RFQ is well aware of it:
Many of NJ TRANSIT’s parking facilities are key properties that have the potential for TOD and certain Concession Assets are currently under active consideration for TOD. Consequently, Prospective Proposers are advised that NJ TRANSIT is strongly interested in ensuring that TOD opportunities are not negatively impacted by the award of this Concession. To that end, Prospective Proposers will be encouraged in the RFP stage to submit TOD proposals as an option in their responses…
The selection of a Concessionaire will be based entirely on the proposals for the Concession Assets submitted pursuant to the RFP; however if the selected Concessionaire has submitted a TOD proposal that is deemed advantageous to NJ TRANSIT, NJ TRANSIT may, but shall not be obligated to, negotiate an independent and exclusive development agreement with the Concessionaire.
If NJ Transit will pick the winning bidder entirely on the basis of what they want to do in terms of parking, then it’s almost certainly not going to pick someone who’s ideally qualified to build new development on those parking spaces. More to the point, if NJ Transit does not negotiate an independent development agreement with the concessionaire, then the chances are that the land will simply remain a parking lot for decades to come, since the concessionaire at that point has the right and indeed the obligation to continue to run that land in exactly that manner. While it’s possible that NJ Transit might be able to team up with a third-party developer to buy out the concessionaire’s parking rights, that’s a very expensive and complicated way of doing things.
Writes Stephen Smith:
Rather than taking on entrenched suburban interests, we’re just adding another layer of government dependents, this time of the monied corporate variety (bidders include KKR, Morgan Stanley, Carlyle, and JP Morgan). The land on which transit parking lots sit is uniquely positioned to be converted into dense development, and the only thing worse than sitting on the land would be for the agencies to sign away their rights to change that within the foreseeable future.
None of this is particularly surprising, coming from the government of tunnel-killer Chris Christie. But it’s very depressing, all the same.