Since my office is now across the street from Grand Central, I’ve had a front-row view of the work at 1 Vanderbilt. In a way, it’s a peek into the potential future of MTA financing. As the old building goes down and a new skyscraper takes its place, we should ask if this model of value-capture is sufficient and sustainable. The new developers of the new building will guarantee at least $210 million in upgrades for the Grand Central subway stop, but is this truly a model that the city can replicate on a grand scale while addressing the needs of growing demand for transit?
The idea behind the funding for the transit improvements at 1 Vanderbilt is simple: In exchange for permission to construct the 68-story tower, SL Green will contribute a few hundred million to fancy up the Grand Central subway station. The dank Lexington Ave. line will see improved street level access, more platform space and a larger mezzanine. Ideally, these changes will help the station better handle both current passenger loads and anticipated increases in ridership brought about by the new building, the East Side rezoning and the eventual opening of the East Side Access project.
Transit advocates seem to like the idea. On Friday, Gene Russianoff of the Straphangers and John Raskin of the Riders Alliance published an Op-Ed in the Daily News calling upon the city to pursue this type of funding on a wider scale. They write:
Over time, especially with systematic disinvestment from the federal government, we’ll need more funds to fill the gap. One promising source is sitting right there in underdeveloped land near the subway. Think of it as a kind of “value capture”: Landowners seek permission for large-scale bonuses to how big they can build. In return, they must offer transit improvements. In the past, many of the changes have been modest, as anyone stuck at the bottom of a non-working private escalator in the subways can tell you. We must be more demanding…
If we extend it to far more projects, the One Vanderbilt model could eventually bring in hundreds of millions of dollars as the city considers a new generation of super skyscrapers. (It’s true that real estate does pay citywide taxes that fund transit. But these are like the broad-based transit taxes on drivers, corporations and consumers — not tied to specific improvements.)
Many communities around New York City owe their existence to our number one capital asset — our subways. How fitting that desperately-needed subway aid should come from our number one home town industry, real estate.
In theory, it’s hard to oppose this deal. Mega-towers will likely tax the subways around them, and the MTA shouldn’t be left holding the bag as developers walk away with millions of dollars from these new towers. But in practice, I’m not yet convinced it’s a sustainable model for MTA funding.
The problem concerns, as Raskin and Russianoff put it, “underdeveloped land near the subway.” Is there enough underdeveloped land to generate enough revenue for the MTA to build multi-billion-dollar subway extensions? The land, for instance, around the Triboro RX line isn’t zoned for developments big enough to help offset anything more than a token amount of the costs, and asking developers in corridors with lower value than Midtown Manhattan may not be a fruitful exercise. This may work in Manhattan — and could help parts of additional phases of the Second Ave. Subway — but beyond that, I’m skeptical.
The MTA’s problems regard cost and sustainability. Can the MTA get a handle on its absurd capital costs? And is there a geographically neutral way to fund transit that doesn’t simply lead to more money for Manhattan and less for growing Outer Borough areas equally as overburdened? The 1 Vanderbilt model is a component to a capital funding plan, but it’s unlikely to be a panacea without significant other pieces.