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Transportation Funding & Financing

Concessions

Overview

Transportation systems have many assets that provide attractive business opportunities to the private sector. One of these assets is real estate. Real estate in places that receive and/or generate a large amount of foot traffic, such as transit stations and transfer points, can provide retailers with a stream of potential customers. Similarly, fueling plazas and rest stops along a highway also appeal as business opportunities because of the numbers of travelers who will pass through.

Transit and highway systems can capitalize on attractive retail and service locations in their possession by licensing the space to concessionaires-individuals, partnerships, or corporations-who pay rent to occupy the space. Concession revenue may be used to support the system's general operating costs or to finance specific services, such as the operating and maintenance expenses for public restrooms. In many cases, transit systems may use concession revenue as a local match for Federal grants.

Resources

Station Concessions Case Study: New York City Metropolitan Transit Authority (PDF 209 KB)
This concession case study is excerpted from the Transit Cooperative Research Program Report 31, "Funding Strategies for Public Transportation" (1998). It outlines the station concession program of the MTA, describing common concession businesses, the RFP process, concession-related station improvements, license terms, and rent calculations.

Urbanized Area Formula Program: Grant Application Instructions (Appendix D)
This FTA circular includes an appendix on Operating Assistance Projects that discusses how station concession revenue may be counted as system revenue or used as a local match for Federal grants. Section 5307 of Title 49 provides that transit operation revenues shall not include the amount of any revenues derived from advertising and concessions that are in excess of the amount of such revenues in fiscal year 1985. This means that advertising and concessions revenue in excess of 1985 levels may be treated as local match, not system revenue.