Monday, March 26, 2018

MTA proposes 'value capture' to New York City

Written by 
New York MTA President Pat Foye (left) and New York City First Deputy Mayor Dean Fuleihan. New York MTA President Pat Foye (left) and New York City First Deputy Mayor Dean Fuleihan.

New York MTA Chairman Joe Lhota and New York City Mayor Bill De Blasio—bitter political enemies since at least 2013, when Democrat De Blasio trounced Republican Lhota 73.2% to 24.3% in the mayoral election—have been battling publicly over the City's share of funding for New York's subway system, which is in need of major capital investment.

 

 

If Lhota and De Blasio can't or won't work with each other—a subject the City's tabloid dailies, the Post and the Daily News, have been feasting upon—perhaps their deputies—MTA President Pat Foye and New York City First Deputy Mayor Dean Fuleihan—can?

New York State's government is currently hammering out its FY2019 budget, due on April 1. There are several proposed measures "that would provide short and long-term funding to the MTA, which is currently under a state of emergency as a result of decades of disinvestment and disrepair," Foye points out in a letter to Fuleihan released to the media on March 25. "City funding for half of the subway emergency action plan and congestion pricing are being considered."

One of those funding measures Foye says is currently being debated is a funding tool known as value capture, which "is commonly used throughout the country and the world to finance major capital projects. It would give the MTA and the City the ability to fund critical projects that would be part of its 2020-24 capital program. Unfortunately, without this new funding stream, those projects would lack the funding to proceed."

Foye points out that Phase 2 of the Second Ave Subway (a pet project of New York Governor Andrew Cuomo)—96th to 125th street—is "a vital project [that] would need to be aborted without this financing option. There are no other viable funding mechanisms. The simple fact is that the MTA does not currently have the necessary funding to move critical projects along."

"Value capture is not a controversial policy," says Foye. "It is essential to note that no property owner would pay a dollar of additional property tax as a result of the MTA sharing in the increase in property values. It would help fund mass transit by directing a portion of additional revenue generated from MTA investments back to the authority for maintenance and future capital projects. Without the required MTA construction, the city would not receive the increased property tax revenue resulting from MTA construction. [Former] Mayor [Michael] Bloomberg successfully employed value capture to fund the No. 7-line [subway] extension in Manhattan."

"Contrary to the City's previous assertions, the City would in fact end up with more revenue than if the MTA had not otherwise completed these projects," Foye claims. "According to your own estimates, as a result of the MTA's investments financed with value capture, New York City would receive nearly $300 billion in new tax revenue it does not have now."

"Implementing value capture would be a win-win for the MTA and the City," Foye concludes in his letter/press release. "It would provide the city with an option that [it] could use at [its] discretion going forward. But the MTA can take no action without the City's explicit approval. However, if the legislature does not approve this option, there is no way the MTA can fund the next phase of the Second Avenue Subway or any other major new capital project. The MTA will not have the capital available and the City has made it clear that [it] will not fund additional capital for the MTA plan. If the City doesn't want to approve a particular project for value capture or approve the project at all, it doesn't have to. At the end of the day, the City has the total ability to veto any project through its representative on the Capital Projects Review Board."