The $28 billion, five-year MTA Plan set out in October, 2009 faces a gap of at least $10 billion for its final three years. The MTA is in the middle of its largest system expansion in more than four decades, and there is now legitimate worry that the MTA will have great difficulty in finding resources sufficient to complete its current slate of mega-projects, including the first phase of the Second Avenue Subway and the Long Island Railroad’s East Side Access Project. On these two projects alone, the MTA is short $3.5 billion. Should the MTA fail to fulfill its local funding obligations for these projects, the federal grants that the MTA has received for the projects would need to be fully repaid--$284 million for the Second Avenue Subway and $1.25 billion for East Side Access. Given the prohibitive amounts of these repayment obligations, the part of the MTA capital program that is at most risk of non-funding is the MTA’s “core program,” which funds state-of-good-repair and normal replacement projects for New York City Transit and the commuter railroads—rebuilt tracks, upgraded signals, new subway and rail cars.Unmentioned in the report: the MTA's willingness to sell capital assets, like the Vanderbilt Yard, in processes that privilege a single developer, like Forest City Ratner.
One main solution: tolls on all bridges and roads, though not as part of a coordinated congestion pricing campaign. Streetsblog's Noah Kazis observes:
Now all that remains is to assemble the political coalition for tolling every important road in the state…As noted in the Wall Street Journal, the report informs Governor-elect Andrew Cuomo that even the planned 7.5% MTA fare increase and cuts to service and overhead provide "only a little breathing room."
Ravitch criticizes a mentality focused on short-term fixes:
Thus, the State is, in effect, spending more than ever before on its transportation program but getting less. As a result of this disinvestment, New Yorkers will begin to see conditions in the DOT system decline in the coming years: The agency simply cannot keep pace with the demands of an aging system. If New York State fails to devise a realistic blueprint for the years after 2011-12, it can expect the deterioration in conditions to accelerate, resulting in increased safety risks, traffic delays, and associated costs.Increased debt
A focus on refinancing debt solved short-term problems but increased back-end burdens, as the MTA debt nearly doubled:
Today, debt service exerts pressure on the MTA program just as it does on the DOT program. A debt restructuring carried out between 2000 and 2002 took advantage of lower interest rates, which reduced debt service on the bonds outstanding at the time. Lower debt service payments in the short term allowed for additional borrowing for a new capital plan without new taxes and fees or higher fares; but the refinancing resulted in a dramatically larger debt burden and debt service payments in future years. Bonding, as a share of the 2000-2004 MTA capital plan, jumped to 55.7 percent from its traditional share of around 36 percent. Between 2000 and 2008, the MTA nearly doubled its debt burden from $13 billion to $24 billion. The restructuring also extended the maturity dates of the MTA’s outstanding debt. If the restructuring had not extended the maturity dates on MTA debt, a substantial part of the MTA bonds outstanding in 2000 would now be paid off, freeing up revenues to support new borrowing capacity. Instead, the maturity schedule for the more-than-$31 billion in outstanding MTA debt is back-loaded into the 2020’s and 2030’s; and the MTA is in acute need of new revenues to service its existing debt and finance new borrowing for capital purposes. Short-term fiscal and political relief came at a long-term cost.Short-sighted treatment of surpluses
The report suggests that surpluses should have been managed more soberly:
This imbalance in the MTA’s budget was masked for a short time by the economic bubble of the mid-2000s, when the real estate taxes that support the MTA generated surpluses for the agency. Instead of reserving these surpluses, the agency was under pressure to use them to hold down fares; it even offered short-lived and short-sighted fare holidays amounting to $45 million. When economic conditions changed and dedicated tax revenues plummeted, the MTA found itself without enough revenues to meet both its operating costs and its debt service payments.Doing less with less
We must expect reduced services, according to the report:
Because of the constraints on the State’s resources, New York must refocus its transportation program to emphasize state-of-good-repair, safety and security, more efficient and cost-effective project delivery, and better regional planning. It simply will not be possible for the State to fund every desirable project. While politicians often speak of doing more with less, the fiscal reality of the next decade may dictate that New Yorkers learn to do less with less.Transit-oriented development?
The report suggests a regional strategy:
In the New York City region, the MTA is the force that makes New York the most energy-efficient state in the nation in terms of transportation. But the agency must renew its emphasis on transit-oriented development in the suburbs, reverse commuting, and links between suburban population centers. The State should be working proactively with the MTA through the Empire State Development Corporation to advance these goals.There's no mention of very high-density construction near transit hubs, a justification (to some) of the Atlantic Yards project, but rather the importance of increased density in the suburbs.
Streamlining environmental review
The report makes a good case for ensuring that the environmental review for certain projects move faster. (I agree, as long as the project is truly a public one, rather than a public-private partnership that looks more like a private-public partnership.)
The report states:
New York cannot complete transformational mega-projects in the future unless it becomes more innovative in project planning, financing, and delivery.Finding new revenues
• Streamlined Environmental Review: New York should consider easing environmental reviews for projects with a demonstrably positive environmental impact, such as transit and intercity rail. The years and money spent on proving the merit of projects like Moynihan Station make such important projects all the more difficult to see through. We must reduce the gestation period for these projects. The environmental process for critical projects should not take longer than the actual construction period. The State should also press for a streamlining of the federal environmental review process for select project-types.
• Design-build: The State must enact legislation that empowers its transportation agencies to procure the best services at the most competitive rates. Design-build contracts shorten the planning and design process for major projects, thereby saving time and money. Design-build contracts are one of the surest ways to reduce construction costs for mega-projects like the Tappan Zee Bridge, and they are an innovation in wide use around the world. New York will continue to lose the edge to global rivals like Shanghai, Hong Kong, and Singapore if it insists on handcuffing itself with outdated procurement policies.
The report recommends tolls:
In order to fund projects like the Tappan Zee Bridge and the Kosciuszko Bridge, New York must get serious about pricing its transportation network effectively. The State should initiate an Environmental Impact Statement for a regional tolling strategy that would rationalize the downstate tolling regime. The development and phase-in of a coordinated regional tolling strategy that includes all key bridges and statewide roads, especially the parkway system, could provide funds for projects like the Tappan Zee Bridge.New taxing districts
Also, the report makes a nod to projects like Hudson Yards:
The State should also explore the creation of special taxing districts for certain mega-projects that have the potential to dramatically increase economic activity and property values in an area.Would this apply to Atlantic Yards? Only if it has "the potential to dramatically increase economic activity and property values," which I think is a very big "if."
Lt Governor Report Transportation Capital Needs