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Posts from the "Transit Funding" Category

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Albany Has Already Saddled the MTA With More Debt Than 30 Nations

As Albany contemplates paying for the MTA capital program by borrowing as much as $15 billion, it’s worth pausing to examine the debt load straphangers are already shouldering. To put it in perspective, the MTA carries more debt than Bolivia, Tanzania, and Luxembourg combined, according to numbers compiled by the Straphangers Campaign. The MTA owes more than at least 30 nations, including several with populations much larger than New York City.

"If I inflate the MTA's debt load, straphangers are the ones who will be left underwater." Photo: MTA/Flickr

With no action from Governor Cuomo, MTA debt will balloon even more. Photo: MTA/Flickr

Some level of borrowing makes sense, but shrinking state and city support for the MTA capital program has led to a ballooning debt load that pushes fares higher and impedes service.

The MTA currently owes $34.1 billion to pay off bonds issued for capital investments, according to Straphangers, and the agency is spending $2.2 billion on debt service this year. That’s 17 percent of its operating budget, a hair shy of the amount it spends to run Metro-North and the Long Island Rail Road.

Unless Governor Cuomo and the legislature decide to stop treating your MetroCard as a credit card, things will only get worse.

Even with no new borrowing, MTA debt is on track to exceed $39 billion by 2018, according to Comptroller Tom DiNapoli.

The $32 billion capital program, which fixes track, replaces trains and buses, and expands the system, is facing a $15.2 billion shortfall. Without a new revenue stream (this is where toll reform would come in handy), straphangers will soon be paying off the difference in the form of higher fares.

With several fare hikes since 2007, a four percent hike approved for this year, and another on deck in 2017, fares are already increasing faster than inflation. DiNapoli estimates that every billion dollars in new debt will translate to an additional 1 percent fare hike.

Does Governor Cuomo care enough about New York City transit riders to prevent super-sized fare hikes? Albany budget season is heating up, so it’s now or never. So far, though, Cuomo has given no indication that he’s serious about fixing the MTA’s debt problem.

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Cuomo’s Transit Budget Is a Confusing Jumble of Raids and Transfers

It’s state budget season! Governor Andrew Cuomo’s executive budget is chock-a-block with raids of dedicated transit funds, questionable transfers, and toll cuts doled out as election-year favors. It’s a mess that doesn’t answer how the state will close the $15.2 billion gap in the MTA capital program.

Photo: Governor's Office/Flickr

“So how can we make this MTA budget as confusing as possible?” Photo: Governor’s Office/Flickr

Cuomo’s attempts to satisfy MTA haters in the suburbs, shuffle bits and pieces to the capital program, and squeeze money out of the agency as surreptitiously as possible — without a noticeable effect on service – create a confusing blur in his transit budget. The overall effect is a lack of transparency, because it’s difficult to tell whether funds are being used for their intended purpose.

Here’s our guide to the tangle of transit funding proposals in the governor’s budget, starting with MTA operations.

Stealing from operations to pay for capital. In what the Tri-State Transportation Campaign calls ”an unprecedented and troubling move,” Cuomo’s budget would shift $121.5 million from transit operations to pay for capital programs. More than 85 percent of those funds would go to the MTA capital plan; the rest would go to other metro area transit operators. This makes the capital plan’s balance sheet look better while harming day-to-day operations.

MTA raids continue. Remember how the governor raided the MTA’s operating budget to take care of debt the state had agreed to pay? In 2013, he took out $20 million, followed by $30 million last year. Now, the governor is proposing another $20 million raid, and more to come in the future.

Extra cash for operations? Even as he’s raiding MTA operations with one hand, the governor is proposing an additional $37 million in operating assistance from the state’s general fund with the other. But is this really coming from general taxes? The State Senate claims that the increase is attributable not to Cuomo’s largesse, but an increase in revenue from the Payroll Mobility Tax.

Falling short on making the PMT whole. In 2011, Cuomo trimmed the payroll tax while promising to fill the hole with a transfer from the state’s general fund. This year, the general fund transfer will total $309 million, in line with previous budgets. But while the MTA expects payroll tax revenues to increase 23 percent by 2018, it projects replacement revenues from the state will remain flat [PDF]. The bottom line: The 2011 deal is on track to hurt straphangers in the long run. It enabled Cuomo to appease suburban politicos immediately while delaying the loss of tens of millions of dollars in annual revenue for transit operations.

Meanwhile, suburban Republicans continue to strongly oppose the payroll tax. The Senate recommends phasing it out entirely and replacing it with one-time cash from the state’s windfall $5.4 billion bank settlement [PDF]. Agreeing to this reckless plan would quickly starve the transit system of funds needed to keep trains and buses running.

Funding Cuomo’s Verrazano toll cut: Last year, the governor announced an election year toll cut for Staten Islanders and commercial drivers on the Verrazano Narrows Bridge, with the state budget and the MTA splitting the tab. Cuomo’s budget does not come up with the state’s half, leaving it to the legislature to find funding for the program or let it expire.

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Just a Reminder: Cuomo Can Take Charge of the MTA Whenever He Wants

At approximately 5 p.m. Monday, Governor Andrew Cuomo announced that he had ordered the complete closure of New York City’s bus and subway systems in the face of an oncoming snowstorm. If nothing else, it was a stark reminder that the transit system is not a political orphan. The MTA is, in fact, Cuomo’s agency.

Photo: NY Governor's Office/Flickr

When it’s convenient for him, Cuomo takes charge of the MTA. When it’s inconvenient, it’s someone else’s problem. Photo: NY Governor’s Office/Flickr

After the blizzard gave only a glancing blow to the city, Cuomo gathered at a morning press conference with his transportation deputies, including MTA Chair and CEO Tom Prendergast. A reporter asked about the cost of shutting down the transit system. ”These were factored in the budget, and this was not exceptional to that process,” Cuomo said. “I’m sure Tom will say he needs a budget increase because of this, but Tom was going to say he needed a budget increase anyway.” Chuckling, the governor patted Prendergast on the arm while they both smiled at the cameras.

Yes, the governor can turn off the transit system with a word, but a budget increase? That’s for Tom to worry about. And nevermind the hundreds of millions of dollars the governor has raided from the MTA’s operating budget since taking office.

Cuomo also likes to create distance between himself and the MTA when the subject turns to the agency’s five-year capital program, which he recently called “bloated.” It was not the critique of an executive determined to find efficiencies and do more with less at one of the most important agencies under his control. Rather, it was a way to separate himself from the MTA and frame the agency as an insatiable bureaucracy.

The MTA currently has a $15 billion funding gap in the $32 billion capital program. Cuomo talks about this problem as if it’s an abstraction, completely separate from his powers to set the agenda, control costs, and raise revenues. “The first budget from every agency also always calls for $15 billion. That’s part of the dance that we go through. That’s why I say it’s the initial, proposed budget,” he said in October. “We’ll then look at that budget and go through, and we’ll come up with a realistic number.”

Building a great transit system that lasts for generations should be a governor’s legacy, not a pesky agency request. But Cuomo has a different legacy transportation project, something he loves to call his own: the Tappan Zee Bridge replacement.

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Cuomo to Spend Lion’s Share of NY Bank Settlement Windfall on Highways

 

 

One of the looming questions as Governor Andrew Cuomo has unveiled his budget agenda over the past few days has been how he’ll divvy up the $5.4 billion windfall the state has reaped from bank settlements. At the State of the State address this afternoon, Cuomo revealed that the biggest chunk of that money will go to the Thruway Authority so highway drivers don’t have to pay higher tolls.

Of the nearly $1.7 billion for road and rail projects in Cuomo’s plan, more than three-quarters — $1.285 billion — would get sucked up by the Thruway Authority and the replacement Tappan Zee Bridge.

The MTA gets two comparatively small slices. The most significant is $250 million to bring Metro-North to Penn Station and build four new stations along the Hell Gate Line in the Bronx. This project was already in the MTA’s pipeline, so the allocation should shrink the $15.2 billion gap in the agency’s capital program by a small amount.

Cuomo also announced $150 million in settlement cash for parking garages at one Metro-North and two Long Island Rail Road stations — an idea that, like the Willets Point AirTrain, he sprung on the public yesterday. This is a subsidy for suburban commuters who park and ride at what are supposed to be transit-oriented development hubs.

But that’s all small potatoes compared to the chunk of change heading to the Thruway. It’s still not clear how much of the $1.285 billion will be for Tappan Zee construction and how much will be to directly bail out the authority’s deteriorating finances. Either way, this is money that will basically be used to keep drivers from squawking about tolls that better reflect the true cost of road building and maintenance.

Sorry, straphangers.

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Cuomo’s Transpo Vision: Huge Garages, Cheap Roads, Lots More MTA Debt

A day before his big statewide policy address, Governor Andrew Cuomo laid out his transportation and infrastructure agenda today at a Midtown breakfast hosted by the Association for a Better New York, a business group. This was not the speech where the governor finally laid out his plan to prevent runaway MTA debt, fix the traffic that is choking New York City’s economy, and revive cities around the state by tearing out decrepit 20th century highways and redeveloping downtowns.

Governor Cuomo talks transportation this morning. Photo: Governor's Office/Flickr

Governor Cuomo talks transportation this morning. Photo: Governor’s Office/Flickr

Instead, surprising no one, Cuomo promised subsidies to keep highway tolls cheap, train stations with tons of parking, and economic development centered around airports. The speech did not even mention the most pressing transportation issue in New York right now: the $15 billion gap in the MTA’s five-year capital program.

Cuomo did mention that the capital program will pay for new buses and subway cars, the Second Avenue subway, Metro-North along the Hell Gate Line, signal upgrades, and Bus Rapid Transit (which he called “a big part of the future”) — all part of the plan already. The governor also touted an attention-grabbing new proposal to build an AirTrain line to LaGuardia Airport from the Long Island Rail Road and 7 train stations at Willets Point, a 30-minute subway ride from Times Square.

Cuomo said the LaGuardia project is in “initial planning phases,” though the administration expects the 1.5-mile line to cost $450 million and take the Port Authority, in consultation with the MTA, five years to build. (A more direct proposal to extend the N train from Astoria to LaGuardia, championed by Mayor Rudolph Giuliani, was scuttled by NIMBY opposition more than a decade ago.) Cuomo also proposed tax-free zones for businesses near Stewart and Republic airports in a bid to boost freight traffic there.

Meanwhile, the most significant new MTA proposal unveiled this morning involves building garages for park-and-ride commuters to Metro-North and LIRR stations at Ronkonkoma, Nassau Hub near Roosevelt Field, and Lighthouse Landing in Tarrytown. Tellingly, the images that flashed on screen as Cuomo spoke did not depict parking structures, but tree-lined streets with apartments and retail from transit-oriented development projects in Westchester County and Long Island. The state will subsidize the garages to the tune of $150 million, according to a press release, but it’s not clear if this will cover the total cost and, if not, whether the MTA will be on the hook for the rest.

The governor wants New Yorkers to think that this infrastructure construction will come at essentially no cost. “All the costs will be from existing state resources,” Cuomo said. He mentioned the $5 billion bank settlement windfall as a potential source of funding, but his staff couldn’t say after the event exactly how much of that kitty might go to transportation.

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Ex-MTA Chiefs: Fund the Capital Plan, Don’t Gamble With the Transit System

With the election over and Albany in session, the time for tiptoeing around the $15.2 billion gap in the MTA’s next five-year capital program is over. Today, three former MTA chiefs lined up to say that, one way or another, the plan must be fully funded.

Former MTA Chairman (and current Alta Bicycle Share CEO) Jay Walder speaks at Grand Central Terminal today. Photo: Stephen Miller

Former MTA Chairman (and current Alta Bicycle Share CEO) Jay Walder at Grand Central Terminal today. Photo: Stephen Miller

“The governor, the legislature, and the mayor must do the heavy political lifting to find new revenue sources,” said former MTA chief Elliot Sander, joined by fellow ex-MTA leaders Peter Stangl and Jay Walder this morning in Grand Central Terminal. A roster of NYC civic groups and private sector interests, from environmental advocates to big business to the construction industry, stood behind them in support.

“The message today, in case you haven’t heard it, is ‘mind the gap,’” said Regional Plan Association Senior Advisor Bob Yaro. “Everybody’s gonna have to belly up for a piece of it.”

A variety of solutions have been floated to fill the funding gap, from a gas tax increase to a regressive sales tax hike. The best one from a transportation, environmental, and economic development perspective would involve reforming the region’s dysfunctional toll system. While no one speaking today would come out in favor of one fix over the others — “this is not the time for that,” Sander told a scrum of reporters after his remarks — with Albany in session, the clock is now ticking.

Ultimately, closing the capital program gap is up to Governor Andrew Cuomo and the legislature.

The governor is set to combine his State of the State speech and budget address in one event on January 21. I asked Sander if he is looking for Cuomo to say anything about the MTA during the speech. “Whatever works for the governor and the legislature and the city in terms of how to deal with it,” he said. “We don’t — you know, no.”

Sander was less circumspect about City Hall’s role. “I think there’s a recognition by the mayor’s senior staff that the city may need to contribute more. There’s no greater beneficiary than the City of New York,” he said. “I am optimistic that the mayor will be there.”

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Will Maryland Gov-Elect Larry Hogan Kill the Red and Purple Lines?

The Purple Line, which Governor-elect Larry Hogan has threatened to kill, is seen as key to Montgomery County’s long-term economic viability.

Seeing shovel-ready transit projects destroyed by petty politics has been all too common the last few years (see: Scott Walker and Wisconsin high-speed rail, or Chris Christie and the ARC tunnel). Even so, this one’s a doozy.

The fate of two of the country's biggest planned transit projects rest in this man's hands: Maryland Governor-Elect Larry Hogan. Photo: Wikipedia

Larry Hogan. Photo: Wikipedia

Maryland Governor-elect Larry Hogan has the power to halt two major urban transit projects that have the planning and funding all lined up and and are all but ready to go: suburban DC’s 16-mile Purple Line as well as Baltimore’s 14-mile Red Line. More than a decade of planning has gone into each of these transit lines, and each has been awarded a competitive federal New Starts grant for $900 million [PDF], accounting for about a third of the total $5.5 billion combined cost.

Early in his gubernatorial campaign, Hogan promised to kill the projects, saying the money would be better spent on roads and that the western, eastern, and southern parts of the state deserved more attention. But closer to the election he moderated his views, saying the lines were “worth considering.”

Since winning the race, he has mostly kept mum about his intentions. When asked recently about the plans, he demurred, according to the Washington Post.

“They should just keep on guessing, because I’m going to be governor January 21, and we will start talking about policy then,” he said.

Although Hogan won’t take office for a few weeks yet, his indecision is already affecting construction timetables. Bids were due this month for the Purple Line project, but were delayed until March, after the swearing-in.

Maryland spent more than $170 million planning and purchasing right-of-way for the Purple Line and another $230+ million on planning for the Red Line. That work will go to waste if the projects are killed. Plus, because the Red Line has already gone out to bid, the state would be responsible for another $8 million in payments to the engineering firms that have prepared detailed, long-term plans to build the line.

Of the most concern to transit advocates is all the federal funding that would likely be lost if the state were to abandon or dramatically alter the plans at this late stage. In addition to the New Starts grant, the Purple Line has received $900 million in federally backed loans. None of the federal money could be used for other projects in the state.

Business groups in both the DC area and Baltimore strongly support the projects and have been urging the governor to continue with the plan.

Klaus Philipsen, a Baltimore architect who served as a consultant and planner on the Red Line, said dirt could start flying this year in Baltimore. The $2.9 billion Red Line was expected to not just attract new passengers, but greatly expand the usefulness of the city’s existing two rail lines by creating a more extensive network. It was also expected to be a boon for struggling west Baltimore, where intensive community planning processes sought to get the most out of the stations for local neighborhoods.

“The hope is that with the Red Line [Baltimore's rail transit] would start to become a real system and we’d have a quantum leap in connectivity,” Philipsen told Streetsblog.

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It’s His Commission: Blame Cuomo for MTA’s Underwhelming “Reinvention”

The MTA Reinvention Commission report, the product of months of work from a panel of experts, was unceremoniously dumped to the press by the governor’s office at 5:30 p.m. yesterday, shortly before Thanksgiving. While the document [PDF] includes a number of worthwhile suggestions, it fails to seriously grapple with the biggest challenges facing New York’s transit system. The MTA’s astronomical construction costs and the substantial systemwide benefits of funding transit with road pricing get only cursory mentions. This is disappointing, but not surprising, since the report is a reflection of the man who created and controlled the commission: Governor Andrew Cuomo.

Photo: MTA/Flickr

Photo: MTA/Flickr

Cuomo’s disinterest in transit goes back to the start of his administration. After a campaign where he cast doubts on the Payroll Mobility Tax that stabilized the MTA’s finances in 2009, Cuomo followed through in first year in office by cutting the PMT.

Cuomo has dipped into the MTA budget multiple times by diverting dedicated transit funding to the state’s general fund. When the legislature passed bills to require more disclosure of raids, Cuomo blew open a loophole and vetoed an effort to close it, all while denying that his financial maneuvers amounted to transit raids at all.

In an election-year stunt this February, Cuomo gave Staten Island voters drivers a 50 cent toll cut in February — a political ploy that came at transit riders’ expense.

When Cuomo worked out a labor agreement to avoid a Long Island Rail Road strike earlier this year, he hosted a press conference where smiles were in abundance but details about how much the deal would cost were not. Months later, it was revealed that new labor deals would cost the MTA at least $1.28 billion through 2017, paid for by cuts to retiree fund contributions and the authority’s own capital budget. Absent from the new labor agreements: Work rule reforms to ensure that, in addition to compensating employees well, operating funds are spent efficiently.

All the while, costs and delays continue to spiral upwards on the authority’s big-ticket projects, leading MTA Chairman and CEO Tom Prendergast to admit that large-scale capital construction might not be one of the authority’s “core competencies.”

Why does it takes so much time and so much money for the MTA to do things compared to its peer systems? The report acknowledged these problems but failed to offer much in the way of critical analysis or specific solutions, similar to how it failed to zero in on road pricing as an ideal revenue stream that can both lower the agency’s debt load and dramatically improve systemwide bus performance. (For some more food for thought about what’s missing from the report, read Alon Levy’s post at Pedestrian Observations.)

Don’t blame the commission for these shortcomings though. Blame Andrew Cuomo. He created the commission, so it’s no coincidence that it produced a document that skirts the most politically sensitive issues. The report is another sign that Cuomo’s interest in transit doesn’t extend deeper than press releases and photo-ops. The governor has no intention of confronting contractors, unions, or motorists to make a transit system that works better for all New Yorkers.

Streetsblog will not be publishing on Thursday or Friday. Happy Thanksgiving, and we’ll see you on Monday. 

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Cuomo’s MTA Commission Declines to Endorse New Funding Source

If you were hoping the release of the MTA Reinvention Commission report would be the moment when Governor Andrew Cuomo comes to his senses and makes an aggressive push to fund the region’s transit system by fixing its dysfunctional tolling structure, don’t hold your breath.

It's in Cuomo's hands now: The MTA Reinvention Commission is set to release its final report soon. Photo: MTA/Flickr

It’s in his hands now: The MTA Reinvention Commission is set to release its final report soon. A draft didn’t tackle many specific funding questions. Photo: MTA/Flickr

Yesterday, Dana Rubinstein at Capital New York published a draft copy of the report [PDF 1, 2, 3]. While the MTA won’t say when the commission plans on releasing the final version, it should be coming soon. A commission member tells Streetsblog that the panel met today to go over the document before its publication.

The report examines the current state of MTA funding and operations, using case studies from cities around the world to offer examples of how its recommendations could be put into practice. It covers a wide breadth of issues, including the management of large capital projects, how to improve customer service, and better regional planning and coordination with other agencies.

The recommendations are grouped into seven “strategies,” leaving funding for last. The report emphasizes the need to keep the Payroll Mobility Tax in place, and suggests revenue enhancements like requiring all-cash real estate transactions to pay a version of the mortgage recording tax, increasing the use of value capture throughout the region, and squeezing more revenue from advertising, which is already on the rise.

When it comes to larger revenue sources, the report is more circumspect. It raises the possibility of congestion pricing, parking fees, and even distance-based subway fares, which Gene Russianoff of the Straphangers Campaign called “the mother of all non-starters.” In the end, the draft report refuses to pick sides, suggesting “a comprehensive study that re-examines the MTA’s approach to fares and tolls.”

“It was beyond the scope of this Commission to recommend a specific set of revenue-raisers,” reads the report. “[But] existing sources fall short of what will be needed for sustaining a truly great regional transportation system in the years ahead.” In short: Albany will have to make a decision, so stay tuned.

There’s a lot more to the report than the funding section. The first strategy deals with how the MTA could reform its procurement and project delivery methods. It suggests greater use of public-private partnerships and design-build contracts in a bid to encourage “risk sharing with the private sector” and to reduce the costs and timelines of MTA projects.

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How NYC Could Get More Transit Funding From Developers

As the MTA capital plan funding gap has come into focus, there’s been a lot of discussion about how new development can help pay for the transit service it requires. It turns out the city already has a tool that links real estate with transit improvements, but it’s so limited that it’s been used to fund transit upgrades only 10 times in more than three decades. For a more robust model, planners should look to San Francisco.

The iconic "lipstick building" is one of only 10 developments that have taken advantage of the city's "subway bonus" since 1982. Photo: Wally Gobetz/Flickr

The “lipstick building” is one of only 10 developments that have taken advantage of the city’s “subway bonus” since 1982. Photo: Wally Gobetz/Flickr

In 1982, the Department of City Planning created the “subway bonus,” which allows developers to construct buildings up to 20 percent larger than normally allowed. In exchange, the developer must pay for and install subway station improvements requested by the city.

The subway bonus only applies to sites adjacent to a subway station. At first, it only covered qualifying sites in Midtown. The program was expanded in 1984 to more of Manhattan and Downtown Brooklyn; in 1986, a slightly modified subway bonus was created for the Court Square area of Long Island City. In addition, the city requires developers atop future Second Avenue Subway stops to keep a public easement in new development for future station entrances.

Although tools to extract transit improvements from developers pop up sporadically in the city’s zoning code, only 10 projects have used the subway bonus program since it was first created in 1982, according to a DCP report [PDF]. The report also lists two completed projects and one proposal that offered subway improvements using other incentive programs.

Most of these projects brought upgrades like wider platforms, new or expanded walkways between stations, elevator installations, and redesigns to allow more natural light into subway stations, among other changes.

These projects might be familiar to regular subway users. The Lexington-53rd Street station, for example, received upgrades from office towers at 599 Lexington Avenue and the “Lipstick Building” on Third Avenue. In other locations, the developer of Zeckendorf Towers expanded the mezzanine at Union Square, new office buildings brought connections between platforms at the Court Square station, and the Hearst Building added stairs and elevators at the southern end of Columbus Circle.

The city is moving forward with a modified version of the subway bonus on Vanderbilt Avenue, where it is working with developer SL Green to swap increased density for a pedestrian plaza and station improvements beneath Grand Central Terminal.

While this handful of projects over the years have provided beneficial upgrades to the subway system, it’s hard to see them as anything more than spot improvements that occur only if a big new office building happens to be located on top of a subway station. New development a block away from the subway creates just as much demand for transit, but there’s no mechanism in the city’s zoning code to recapture the costs of providing that service. What’s missing is a more comprehensive value capture system.

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