NAIOP Supports MTF Report on MBTA

The recent Massachusetts Taxpayers Foundation’s report The T: The End of Its Line is a must read. NAIOP Massachusetts fully endorses the report and its recommendations.

According to the report, there are some critical next steps that decision makers can and must take in the near term. The Foundation recommends that the state prioritize the following nine steps to inform a more detailed analysis so that it may develop a plan for rescuing the T:

•    Tie FY 2016 state contract assistance to the release of up-to-date State of Good Repair (SGR) backlog data
The MBTA’s asset management system, which quantifies the SGR backlog and helps to prioritize maintenance projects, has been inoperative for several years and full implementation of a new Federal Transit Administration (FTA)-funded system is several years away. This is an enormous management failing and the state should withhold additional assistance until the T can produce a comprehensive SGR backlog project list that clearly and accurately states both the size of total maintenance shortfall and the cost to keep the system from deteriorating further.
•    Conduct a detailed audit of the MBTA’s maintenance protocols
The state should insist on an independent assessment of the T’s maintenance protocols, project selection criteria, and capital spending to determine whether the T has the capacity to bring its infrastructure into a state-of-good repair.
•    Require an independent fiscal audit of the T
The Governor should request an independent, third-party, in-depth analysis of the T’s finances. The T’s long history of using financial maneuvers such as debt restructurings and securitizing long-term revenue streams have complicated its debt obligations, and the T provides minimal information on unfunded pension and retiree health care liabilities. All pose substantial hurdles to the T’s ability to continue as a going concern. Full analysis and disclosure of the T’s financial exposures is necessary before solutions can be found.
•    Halt expansion contracts for the remainder of 2015
Before the MBTA undertakes any further expansion (with the exception of the Green Line Extension), it must get its current fiscal house in order. The state and the T must perform more analysis of the impact that expansions will have on the operating budget and maintenance expenditures and must identify revenue streams to cover the ongoing costs of expansions before any additional outlays are made. A brief delay will afford an opportunity to re-examine both the way in which projects are being carried through and the sustainability of each expansion as a part of the T system as a whole.
•    Reform the procurement process including a two-year moratorium of the Pacheco Law with a report on savings
Just as its maintenance systems require a careful review, so too do the T’s procurement practices. A series of problems with T procurement practices and other policies have further eroded public confidence in the T. The size and uniqueness of the T’s capital purchases warrant a centralized procurement process with in-house experts overseeing contracts to ensure purchases are delivered on time, on budget, and fully operative.
•    Reexamine the MBTA’s governance structure
The T’s long-term problems cannot be addressed effectively unless the Authority’s own leadership is fully committed to the reform effort. Currently, the T’s Board is independent and not accountable to the Secretary of Transportation, the Governor, or the Legislature and management has too often been resistant to external examination and proposals for change. The Administration should have control over the MBTA board in the short-term to ensure compliance, accountability, and full transparency. The Administration should also have the authority to select the next general manager and work with the Legislature to determine the most suitable governance structure to develop and execute a rescue plan for the T.
•    Eliminate Social Security eligibility to align with the state pension system
The unique dual pension eligibility of T employees, dating back to the state takeover of private operators, makes no sense decades later, and it imposes significant unnecessary costs on a financially stressed system.
•    Eliminate binding arbitration
Binding arbitration stands in the way of the responsible cost-conscious management the T requires. It was eliminated for most public employees a generation ago.
•    Require full disclosure of the pension system finances
Despite efforts by the Legislature, the T has not released details regarding its pension system and assets because it asserts that the pension system is a private entity. However, the T would have no hope of meeting its annual pension obligations without the annual infusion of hundreds of millions of dollars in tax revenues. At a minimum, the T pension system should release the details on its investments and cash flows and provide actuarial valuations.

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