MTA EconomicsService Cuts

Teaching John Liu, comptroller-elect, a lesson in MTA economics

by Benjamin Kabak
written by Benjamin Kabak on December 23, 2009

When it comes to educating New Yorkers about the MTA’s problems, I’m all in favor of advocacy journalism. I’ve long believed the most New Yorkers who don’t actively seek out transit news are ill-informed on MTA matters because our major news outlets both in print and on TV do not adequately and thoroughly report on the MTA’s problems. So when PIX 11’s Project S.O.S. (Support Our Students) came along, I thought I would be able to applaud a major news organization’s transit advocacy efforts.

Boy, was I wrong. Instead of a true educational/journalistic endeavor, PIX’s coverage is sycophantic and just plain wrong. Instead of examining how systemic long-term funding droughts from New York City and New York state have left the MTA, the region’s economic driver, struggling to stay afloat, PIX is using its TV time to blame the MTA for its financial straits and to urge it to restore student MetroCards without coming up for ways to pay for the program or to cover the $400 million gap.

Since Project S.O.S. launched last week, PIX has featured numerous local politicians and transit advocates, and none have advocated for just and proper MTA funding. The news reporters on Channel 11 are making a sham out of advocacy journalism. The most infuriating appearance came from long-time MTA ignoramus John Liu. The current City Council member and New York City Comptroller-elect appeared last week, and if you have the patience for it, watch the video above. I’m going to parry with Liu. The italicized quotes are his; my responses follow.

“It’s a real sad situation. You never what to expect from the MTA nowadays except that they are always asking for more money and threatening to reduce service in all different ways, and this latest round is really…they have reached a new low here.”

Liu makes it sound as though the MTA is choosing to cut services for its own joy. The truth is that the MTA has no choice. They’ve been hung out to dry by Albany and cannot continue to offer the current level of services and pay the current levels of compensation owed to its employees without service cuts or a fare hike. Since Albany mandated no fare hikes in 2010 as part of the sub-par rescue package last spring, the agency is left with one option to balance its books: service cuts.

“It’s absolutely abominable. A number of people have commented this morning that the students are being used as pawns, and that’s exactly right because you know what? Not allowing the students to take free mass transit to and from school, that’s not actually going to save the MTA a single red cent. The fact of the matter is they need to continue the service, allow the students to get to and from school without interruption.”

Here, Liu begins to show a firm misunderstanding of basic economics. According to a 2007 comptroller study, students took 133.4 million free trips during the 2005-2006 school year at a total cost to the MTA of $161.5 million. Simply put, it costs more to the MTA as more people use the system. They have to ramp up the number of buses and subways available, increase the number of employees and clean up afterward.

“Part of it is that it’s a very real situation that the state cut its budget to the MTA, but it is also true that the MTA is jumping the gun here. We don’t really know exactly what the deficit they’re facing is. we don’t know how bad it is. the number keeps changing. The current crisis just came to light a few days ago, last week, and the numbers are shifting. And they’re now saying these reductions will take place months from now and a lot of this is a threat and they’re just trying to angle for more money.”

This one is simply a mess. Liu insinuates that the MTA is jumping the gun because the cuts won’t take place for another month. This is a logical fallacy. The MTA issued its budget last week because it has a legal mandate to approve a balanced budget before the end of the calendar year. It’s true the numbers might shift a bit, but careful accounting and transparency — another of Liu’s tried and tired points — requires the agency to detail why it has a $400 million gap and how it plans to close that gap. If Liu can’t understand that, I fear for the future of the comptroller’s office.

“The students are already up in arms and rightfully so. The parents, the families, they are going to be screaming bloody murder if this every goes through…and like I said before, the MTA is not going to save any money simply by getting rid of these transit passes….There’s no marginal cost to providing the students with the bus and subway service so taking them away from them isn’t going to save any money. They’re not going to be able to eliminate trains because they don’t allow students to get on.”

That, ladies and gentlemen, is a statement on economics from the next comptroller of the City of New York. That is a statement on economics from the person in charge of overseeing the city’s economy. That is a statement on economics from one who doesn’t really understand economics and should never have been elected to the comptroller’s office.

Liu seems to believe that there is no marginal cost to the MTA. He seems to believe that 133.4 million free rides don’t impact the transit agency’s bottom line. He doesn’t understand that free isn’t actually free and that subsidies are subsidizing something that carries a price tag. He doesn’t understand that, by charging, the MTA can capture added revenue, and he doesn’t understand that, by not charging, the MTA is offering up services it must pay for to those who ride at no cost to themselves.

In the end, I can’t say I’m too surprised by John Liu’s ignorance. He has served as the head of the City Council’s Transportation Committee for the past few years and has exhibited no willingness to learn about the city’s transit issues. In the end, we’re simply stuck with another person in a position of power and no idea how to exercise it. The MTA continues to founder.

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Second Avenue Subway

Second Ave. station entrance sagas hit 96th St.

by Benjamin Kabak
written by Benjamin Kabak on December 22, 2009

96thStEntranceScheme

The current schematics for the 96th St. station along Second Ave. do not feature an entrance on the north side of the street. (Click to enlarge. Image via the 2008 CB8 presentation.)

Few streets offer up as a stark a dividing line between two neighborhoods as 96th St. does on the Upper East Side. Although gentrification has stretched the boundaries of the two areas, south of 96th St. along Second Ave. has been the Upper East Side while north has been Harlem. The two neighborhoods have tolerated each other over the last few decades, but they are quite different.

As the MTA has planned the station stops for the Second Ave. subway, we’ve seen neighborhood groups object to just about everything. Some groups complained about the station entrances; others targeted the auxiliary ventilation structures.

At 96th St., the complaints are similar. The current MTA schematics call for a northern station entrance on the south side of 96th St. Residents in Harlem, Dan Rivoli reported last month, are crying foul:

The proposed station will only have entrances and exits on the south side of the street, where the traditional boundary for the Upper East Side begins. East Harlemites will have to cross a busy intersection to access the new subway line.

Critics have also pointed out that Metropolitan Hospital Center, which occupies the area bordered by East 97th and 99th street between First and Second avenues, will be underserved. The hospital has 341 beds and saw more than 400,000 visits last year. “It’s a highly congestion intersection. There are safety considerations to crossing 96th Street or Second Avenue or both,” said Hunter Armstrong, executive director of Civitas.

The group, a civic organization focused on the Upper East Side and East Harlem, has called for added subway entrances. In June, Civitas published a study suggesting that a northern subway entrance is necessary to accommodate the 35 percent of station users who are expected to come from north of 96th Street. “It would be not only beneficial but prudent for the neighborhood to have an entrance on the north side of 96th Street,” Armstrong said.

For its part, the MTA says it can’t dig north of 96th St. due to preexisting tunnel infrastructure. A segment of the Second Ave. tunnel, dug out decades ago and planned for the northern Phase II of the project, is in the way. “The 96th Street Station will connect to an existing tunnel which prohibits the station from being moved further north,” agency spokesperson Kevin Ortiz told Our Town.

The community groups may have a point; in an ideal world, the 96th St. station would allow passengers to enter and exit on both sides of a busy two-way street. It is, however, hardly alone in limiting entrances to one side of the street due to station plans. The 96th St. stop on Broadway has entrances on only the south side of the street, and many riders have no problems crossing the street to head to and from the subway.

There are, of course, safety concerns whenever people have to cross the street, but here, the limits of engineering handicap the MTA’s ability to alter the designs. Harlem is the next area to enjoy Second Ave. subway access if and when Phase II is built, and for now — or in 2017 — straphangers will just have to cross 96th St.

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AsidesInternational Subways

An international view of subway architecture

by Benjamin Kabak
written by Benjamin Kabak on December 22, 2009

As underground architecture goes, the New York City subway system is hardly a paragon of greatness. Although Heins and LaFarge and later Squire Vickers spent some time designing recognizable and identifiable station mosaics, the more ornate designs, as seen at the now-shuttered City Hall stop, were shelved due to massive costs. Over the decades, New York’s subway architecture has fallen into disrepair and only recently has the MTA tried to invest more in station appearances.

Around the globe, though, other mass transit systems feature stunningly ostentatious designs as in Moscow or cutting-edge architecture as in Stockholm. Recently, Design Boom highlighted some of the more “architecturally interesting” subway stations as the site explored how station design defines the mass transit experience. If the Second Ave. Subway designs are any indication, New York’s blandly utilitarian stations won’t be featured in international subway design shows any time soon.

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7 Line Extension

The parable of the 7 line extension

by Benjamin Kabak
written by Benjamin Kabak on December 22, 2009

The 7 Line extension — that glorious city-funded boondoggle of a subway extension — reached a milestone this past week. After a few months of drilling, the second of the project’s two tunnel boring machines broke through the southern wall of the 34th St. station cavern. The two TBMs have finished digging out a combined 2900 feet of track from 26th St. on north that will be used for storage, and Phase I is now complete. The project remains on target for its December 2013 opening.

“It’s been a half century since City government expanded its subway system, but that drought will soon be at an end,” Mayor Michael Bloomberg said. “Too often, government falls victim to the temptation to abandon long-term infrastructure projects amidst short-term downturns, and that’s why big things never get done. The redevelopment of the Hudson Yards has been talked about for decades, but with the expansion of the number 7 line, its potential will finally be realized.”

“This week’s milestone is a clear indicator that the MTA is delivering on a major expansion project that will increase capacity within our transit system and generate economic growth in a vastly underserved area,” MTA Chairman and CEO Jay H. Walder said. “Much like our joint efforts to improve bus service throughout the city, this partnership between the city and MTA will benefit New Yorkers for generations to come.”

The press-release back-slapping by the MTA heads and various city leaders continued as you would expect. For those so inspired, read it here. Manhattan Borough President Scott Stringer, City Council Speaker Christine Quinn and House Rep. Jerrold Nadler all added their praise for the project. The 800-pound gorilla in the room, though, was completely ignored.

“Today’s announcement of the completion of the first phase of the Number 7 Line extension is a major milestone in the expansion of New York’s aged infrastructure,” Nadler said. “For too long we have not made the necessary investments to update our transportation network. This project, which will open the economic potential of the Far West Side, is one of many such projects we need to do to prepare New York for continued growth. I look forward to the successful completion of this project and future investments in our infrastructure.”

Left unsaid were qualms about present investment levels in our infrastructure. In a way, the 7 line extension and this moment in the sun for the project represent the perfect complement to the wall-to-wall coverage of of the MTA’s budget crisis. Here is a project in which the city has given $2.1 billion to transit, and yet it is one of the most flawed expansion projects under construction. Despite the Council’s approving a rezoning measure for the Far West Side yesterday, there has been no progress on the Hudson Yards development.

Meanwhile, the City was hesitant to cover cost overruns on the project and shelved even just a $500 million shell for a badly-needed station at 41st and 10th Ave. Why? Because real estate developers looking for handouts and bonuses to increase their land value wouldn’t have benefited nearly as much as Related, the company in charge of constructing something at Hudson Yards, will when the 7 line opens ahead of their development.

Call me a cynic, but there’s something wrong about the city’s funding priorities when it comes to mass transit. Bloomberg is happy to pay for an extension that will benefit his real estate friends, but when it comes to contributing to operating expenses and ensuring that the economic driver of the city can continue to offer adequate service levels, he and his third-term administration are nowhere to be found.

One day, the 7 line extension to nowhere will open, and one day, it might actually be an extension to somewhere. For now, though, the TBMs trundle forward with 42nd St. in their sights. Hopefully, the MTA will be able to pay for the extra operating costs this new line will incur when it opens in four years. Don’t expect the city to help out.

After the jump, some TBM pictures. Click to enlarge. The video above is courtesy of Mayor Bloomberg’s YouTube channel.

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AsidesMTA Economics

Using stimulus funds but from another source

by Benjamin Kabak
written by Benjamin Kabak on December 21, 2009

Last week, I explained why I was not in favor of Gene Russianoff’s plan to use stimulus funds to cover the MTA operating gap. It’s not sound policy to move money from capital projects to operating deficits, and to do so would risk future MTA financial problems without solving the current one on hand. Today, Cap’n Transit comes out in favor of using stimulus funds but with a twist. He wants the unused Department of Transportation stimulus funds — those not being used to widen the Major Deegan or those earmarked twice for Brooklyn Bridge repairs — to fund the MTA’s operating gap. It is, of course, far better to use someone else’s capital funds to cover the MTA’s operating gap than it is to use the MTA’s capital funds to do the same thing. Sign me up.

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MTA Economics

Getting worse before it gets better

by Benjamin Kabak
written by Benjamin Kabak on December 21, 2009

One the major causes of the MTA’s current fiscal short fall is a $143 million reduction in previously-approved state appropriations. Now, the state’s fiscal picture is growing darker by the day, and as the MTA prepares to close a budget gap of nearly $400 million, recent developments are leaving me wondering if they should look for even more ways to save.

In a rather gloomy story over the weekend, the Daily News reported that things will very likely get worse before they get any better. Wrote Kate Lucadamo and Pete Donohue:

The MTA’s budget crisis could worsen, a financial rating company said Friday – just days after the authority announced plans to slash services and charge students to ride buses and subways. A Moody’s Investment Services report raises concerns that the state again will cut funding to the Metropolitan Transportation Authority.

A deepening or longer recession also could drive down ridership and revenues from taxes that are supposed to help pay for the subway, bus and commuter train system, according to the report…Gov. Paterson and the state Legislature cut nearly $3 billion in state spending early this month, including money for student MetroCards. Mayor Bloomberg warned yesterday things will get worse.

“People are screaming about what they do now; wait until they see what happens in March,” Bloomberg told WOR’s John Gambling during his weekly radio show.

In March, the state may very well be faced with a budget gap of $9 billion. That could spell the end of any major state subsidies for the MTA.

Of course, cutting off the MTA is a major mistake. Whether or not Albany realizes it, New York City’s mass transit system drives the state’s entire economy. Our politicians though are far more willing to play with fire than they should be. If we’ve learned one thing over the last year, it is exactly that.

In the end, the MTA should begin to evaluate its options now. It can cut services only so much before the fares have to start inching up. As I’ve said in the past, I’d rather see service levels remain as they are now with fares going up. It’s more important to have adequate service and slightly higher fares than it is to have sub-par service and fares artificially deflated. Still, congestion pricing and East River Bridge tolls are going to have to be considered as solutions, and as the economy stumbles in New York state, we can only hope the MTA can survive relatively intact

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MTA EconomicsService Cuts

How Atlantic Yards impacts the MTA’s bottom line

by Benjamin Kabak
written by Benjamin Kabak on December 21, 2009

Late last week, amidst all of the talk about the MTA’s budget crisis, State Sen. Pedro Espada nearly made a good point. In a letter to MTA CEO and Chairman Jay Walder, Espada urged the authority head to examine the state of the MTA’s real estate holdings. His point though was a bad one.

“MTA budget gap needs must be measured against real numbers, and the MTA must prioritize fiscally prudent lease and sale of assets before deciding to leave children, seniors and hard-working citizens stranded without a safe, reliable and affordable means to get to and from work, school, grocery shopping and doctor’s appointments,” Espada wrote. “I would like to hear from you as soon as possible regarding the MTA’s real property holdings as a solution to the Authority’s serious budget concerns.”

Now, it doesn’t take an economic genius to understand the folly of Espada’s remarks. First, he is urging the MTA to sell its real estate holdings during one of the greatest periods of market depression in U.S. history. Second, MTA real estate sales are simply another one-off quick fix and provide no long-term secure solution to the agency’s financial problems. To sell now, in other words, would be folly.

Unfortunately, for transit advocates, Espada missed an opportunity to make a point. He could have used the MTA’s summertime decision to accept just $20 million up front from Bruce Ratner for the Vanderbilt Yards land rights to question whether the MTA is fiscally smart enough to take advantage of its real estate holdings. Originally, in 2005, the MTA extracted a promise for $100 million from Ratner, and even then, the price was a below-market rate. Today, the deal looks even worse.

Last week, Atlantic Yards opponents lost a legal challenge to the renegotiated terms of the Atlantic Yards deal. A state judge upheld the lower upfront payment in light of the fact that all new deals must be subjected to an open bidding process. This, he said, was simply a renegotiation of a payment plan. “If every change were to be viewed as a new plan so as to trigger anew each mandated review process, no development plan could ever reach final approval — let alone ultimate completion. The MTA had a rational basis for continuing to use the 2005 appraisal rather than ordering a new one in 2009,” the judge wrote.

There may indeed be a solid legal argument the MTA can make here, but it is one to which I find myself very unsympathetic. At a time when the agency must maximize its revenue potential, the authority — and the state along with it — is simply handing over free money to Bruce Ratner while the rest of us face the specter of service cuts. A full market rate payment for the Vanderbilt Yards land wouldn’t close the 2010 gap by itself, and since the MTA can sell that land only once, it wouldn’t help the future. But a better deal would benefit both the authority and its riders.

As the Ratner deal becomes one step closer to reality, Pedro Espada’s words are the last ones we should be following. If this is the best the MTA can do with its real estate holdings, the authority is far better off not selling during a depressed market or perhaps not even selling at all.

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Service Advisories

Snow cancels weekend work, Nostalgia Train

by Benjamin Kabak
written by Benjamin Kabak on December 18, 2009

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New York City Transit’s winter weather fleet is ready for service. (Photo via NYCTSubwayScoop)

If the folks reading us the weather are to be believed, we have one giant winter storm heading our way. Right now, the weather service is predicting up to a foot of snow for New York City, but I’ll believe it when I see it. The MTA, on the other hand, has to prepare for the weather no matter what, and to that end, they have canceled all weekend work. Only stations along the BMT Brighton Line and the Far Rockaway line are closed due to ongoing work.

On a sad note, the weather is also shelving the Nostalgia Train for the weekend. It’s simply too cold, and there too many contingency plans in place for Transit to devote resources toward the old train cars. It will return next weekend for a final ride in 2009.

So what then can we expect this weekend? Well, due to the need to store as much rolling stock as possible underground, the agency often uses express tracks for storage during winter storms. Thus, trains that normally run express for all or parts of their routes may run local. Passengers using lines that run outdoors may experience slower train rides or longer-than-normal waits. A few weeks, Transit urged passengers who take the A, E, D, F, N, Q, 2, 3, 4, and 5 to allow extra time during snow storms.

Meanwhile, the agency has a fleet of work trains ready to combat the snow. “Our goal is to keep our services up and running so that our customers can get to where they need to be no matter what the weather,” NYC Transit President Thomas F. Prendergast said. “We have a tremendous investment in machinery, manpower and experience so that customer confidence remains high in our ability to transport them safely.”

For those waiting for trains at stations aboveground, be on the look for some anti-snow vehicles Transit sent out a release earlier this week with info:

Snow Throwers – Precise directional snow throwing equipment. Includes a two stage impeller and side mounted rotating brushes to throw snow up to 200 feet and can remove 3,000 tons of snow an hour. This is similar to a household snow blower, just a lot bigger.

Jet Blowers – This equipment uses a jet engine to remove accumulated snow from the roadbed and deposit it a distance from the tracks so that it cannot slide back. This piece of equipment is used primarily to keep the yards clear.

De-Icer Cars – Equipped with scraper shoes that scrape off ice and also uses equipment to direct a stream of deicing fluid to melt and/or prevent ice buildup on the third rail. If ice is permitted to build up, subway car power pickup equipment will not be able to draw electric current from the third rail and the train will stop.

Ballast Regulator – Uses brush/broom to evenly sweep and push up snow onto an undercab conveyer and away from the track.

The picture atop this post shows the equipment ready and waiting for the snow. Will the storm hit? Who knows. But for this weekend, we are spared the pains of weekend service changes.

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MetroCardService Cuts

Pointing a finger at state, city over student transit cuts

by Benjamin Kabak
written by Benjamin Kabak on December 18, 2009

As New York City students face the reality of life without a free MetroCard, most of the outrage has been directed at the MTA. How could the MTA desert the city’s children? How could they play politics with the city’s future? Doesn’t the authority know truancy rates will increase?

Over the past week, I’ve examined both the politics and the mathematics behind Student MetroCard cuts, and the picture is not a rosy one. The state, once a guarantor of the Student MetroCard program, now pays just $6 million in transportation subsidies for its students while the city hasn’t increased its funding past the $45 million mark in a decade and a half. The MTA, meanwhile, is saddled with $160 million in costs for the program.

For families, the pain will be acute. Based on my calculations, it will cost at least $687.60 for a family to send one child back and forth to school every year. Add some extracurricular stops, and the costs will rise to approximately $800 a year. As Sharon Otterman explored today in The Times, many families will struggle to find that money, and the city’s school choice program would suffer. “If I had to pay for the MetroCard, my mother would have preferred a school closer to me,” Alejandro Velazquez, a 15-year-old from the Bronx who travels 40 minutes to school each way, said. “There’s one right down the block from our house.”

I am guardedly optimistic though about the MTA’s position here. What is notable about Otterman’s article is her utter lack of sources who blame the MTA for pushing through these cuts. People are out there who are willing to point fingers, but journalists who are doing their jobs will not give them a platform. The state and city should bear the costs of transporting students, and journalists should know that.

In the end, it’s a tough situation for everyone. Urban areas are not legally required in New York State to provide free transportation to students, and the MTA in particular is under no mandate to give away transit to students while the millions of New Yorkers who rely on the transit network for to power the area’s economy wait longer for more crowded trains. While state officials may want the MTA to “find money” through other cuts that sustain student transit, the reality is that student transit is not the business of the MTA, and student transit is now acutely holding down the MTA from fulfilling its role.

“No other transit agency in the country subsidizes free or discounted student travel,” agency spokesman Kevin Ortiz, said. “Transporting students usually falls on the government body responsible for educating them.” Amen.

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