An affiliate of Delaware North submitted the sole bid for the MBTA’s North Station garage today, putting the financially struggling transportation agency in line for a $75 million windfall.
The sale of the 1,280-space garage is the second significant one-time sale that the T has initiated this year, as it seeks to close nearly $900 million in cumulative budget deficits between fiscal 2013 and 2016.
Last month, the T closed on a $300 million bond offering that traded $450 million in future parking revenue for upfront cash. The T plans to use the bond proceeds to pay down near-term debt.
The T had budgeted $45 million from the North Station deal to close what had been projected as a $132 million deficit in fiscal 2012. Delaware North’s bid topped that figure by nearly $30 million – a sum that would appear to be a down payment on closing next year’s projected $156 million deficit.
In a statement, MBTA spokesman Joe Pesaturo said, “The Authority is pleased to have received the highest bid ever for an MBTA asset.” Pesaturo could not comment on how the excess sale proceeds would be spent, noting that the sale has not been finalized. The T expects to close the sale by the end of the year.
John Wentzell, president of the TD Garden, said Delaware North has had “a longstanding interest” in acquiring the North Station garage, going back to the initial planning of the TD Garden. “It’s a really important piece for the current business, and for future development.”
It appears that Delaware North paid a premium to gain control of the garage under its arena as a way of easing future construction in the area. The site of the former Boston Garden is zoned to allow up to 1 million square feet of new development, and the garage will likely play a key role in accommodating that construction.
Delaware North’s new Garden arena was built on top of the North Station garage, on a formerly vacant lot once owned by the city of Boston. State officials took the lot from the city in a legislative maneuver, leaving development air rights with the city and Delaware North. The state’s maneuvering allowed it to bury the Green Line (which runs through the middle of the garage) and expand rail capacity at North Station, but it also left the T, a mass transit agency, owning a parking garage at the downtown end of a major transit hub. The garage is sparsely used by commuters. The 2009 legislative overhaul of the state’s transportation bureaucracy allowed the T to sell the garage for economic development purposes – language that was seen as a nod to Delaware North’s construction plans.
“This was an outcome that was contemplated decades ago, when the garage was first built,” said Bob O’Brien, executive director of the Downtown North Association.
The North Station garage sale has been a bumpy process for the T. Last month, potential bidders took a weekday tour of the nearly-empty garage, and then peppered T representatives with a series of skeptical questions about the $70 million price tag. One attendee said a real estate exec not aligned with Delaware North “tore into” the T over pricing.
