For the non-economists among us, variable-rate bonds are not very easy to understand. In sum, these stem from adjustable-rote loans in which the initial payments are low but can change over time. As we’ve recently learned, this change can be for the worse.

In Sunday’s New York Times, Charles Duhigg and Carter Dougherty explored how these adjustable-rate loans and variable-rate bonds from one bank in Ireland are impacting the MTA. The tale they weave is one of fiscal recklessness and global impact:

For years, municipal agencies like the M.T.A. had raised money by issuing plain-vanilla bonds with fixed interest rates. But then bankers began telling officials that there was a way to get cheaper financing…

The transportation authority, guided by Gary Dellaverson, a rumpled, cigarillo-smoking chief financial officer, had $3.75 billion of variable-rate debt outstanding. About $200 million of that debt was backed by Depfa. When the bank was downgraded, investors dumped those transportation bonds, because of worries they would get stuck with them if Depfa’s problems worsened. Depfa was forced to buy $150 million of them, and bonds worth billions of dollars issued by other municipalities.

Then came the twist: Depfa’s contracts said that if it bought back bonds, the municipalities had to pay a higher-than-average interest rate. The New York transportation authority’s repayment obligation could eventually balloon by about $12 million a year on the Depfa loans alone.

Basically, in a nutshell, the MTA got greedy. They could have plodded along with their regular bonds with fixed interest rates. These bonds, backed by the U.S. Government, could have served the MTA well even if they were not quite as efficiently sexy as the Depfa bonds. Now the risks are coming back to bite hard.

For their part, the MTA alleges that, for this year, it is within its debt-payment budget, but as we’ve seen time and again over the last six months, those debt payments could cripple the MTA over the next few years. While this year’s payments may be on pace, the subsequent years’ payments will be impacted by this financial crunch.

All of this economics mumbo-jumbo leads me to believe that perhaps the MTA needs some new fiscal leadership. Perhaps Dellaverson, the man who invested the MTA into this mess, needs to go. Perhaps he just needs new economic advisers who don’t play fast and loose with rather important public infrastructure funds. There is, after all, no such thing as a free lunch whether you’re a homeowner looking for a cut-rate mortgage or a cash-strapped public transit system beholden to millions of passengers each day.

Categories : MTA Economics
Comments (6)
Oct
31

Marathon weekend madness

By · Comments (2) ·

This is going to be some weekend in New York City.

We’re kicking things off tonight with one of the craziest nights of the year. When Halloween falls on a Friday, the city is in for a treat. At the stroke of midnight, the subways turn back into pumpkins as the myriad service alerts listed below go into effect. But it’s not a terrible weekend.

Meanwhile, on Sunday morning, the ING New York City Marathon hits the streets of the five boroughs, and the MTA has you covered. New York City Transit has released a a subway map of ideal viewing locations.

“We wanted to create a comprehensive guide that allows customers to easily navigate our system on the day of the race,” Paul J. Fleuranges, vice president of corporate communications at NYC Transit, said. “And we especially wanted to make marathon participants and their supporters aware that all of our downtown trains will be operating on their normal routes to Lower Manhattan.”

Sounds good to me. And now, on to the good stuff. Remember: These are subject to change and are only planned service advisories. Sometimes, the listing is 100 percent accurate; sometimes, things change over the weekend. Listen to announcements on the train.


From 12:01 a.m. Saturday, November 1 to 5 a.m. Sunday, November 2, there are no 2 trains between 96th Street and 241st Street due to several jobs, including track chip-out north of 135th Street, and communication and cable installations. Free shuttle buses replace the 2 between 96th Street and 149th Street-Grand Concourse. 5 trains replace the 2 between 149th Street-Grand Concourse and 241st Street.


From 12:01 a.m. Saturday, November 1 to 5 a.m. Sunday, November 2, there are no 3 trains running due to a track chip-out north of 135th Street station. Free shuttle buses and 24 trains provide alternate service.


From 9 a.m. to 8 p.m. Sunday, November 2, Manhattan-bound 4 trains skip 176th Street, Mt. Eden Avenue, 170th, 167th, 161st, and 138th Sts. due to cable installation south of Burnside Avenue.


From 12:01 a.m. Saturday, November 1 to 5 a.m. Sunday, November 2, 7 trains run in two sections due to switch renewal north of Willets Point:

  • Between Times Square-42nd Street and Willets Point-Shea Stadium and
  • Between Willets Point-Shea Stadium and Flushing-Main Street


From 12:01 a.m. Saturday, November 1 to 5 a.m. Monday, November 3, there are no C trains running. Customers should take the A instead. Uptown A trains run local from Euclid Avenue to 168th Street. Downtown A trains run local from 168th Street to West 4th Street, then on the F line to Jay Street, then resume local service to Euclid Avenue. These changes are due to Chambers Street Signal Modernization.


From 12:01 a.m. Saturday, November 1 to 5 a.m. Monday, November 3, Manhattan-bound D trains skip 167th, 161st, and 155th Sts. due to tunnel lighting installation.


From 6 a.m. to 6 p.m., Saturday, November 1 and Sunday, November 2, free shuttle buses replace D trains between Coney Island-Stillwell Avenue and Bay Parkway due to light pole installation at Stillwell Yard.


From 12:30 a.m. to midnight, Saturday, November 1, E trains run local between Forest Hills-71st Avenue and Jackson Heights-Roosevelt Avenue due to electrical work.


From 12:30 a.m. to 12 noon, Saturday, November 1, Jamaica-bound ER trains run express from Queens Plaza to Jackson Heights-Roosevelt Avenue due to installation of track drains.


From 12:30 a.m. to midnight, Saturday, November 1, F trains run local between Forest Hills-71st Avenue and Jackson Heights-Roosevelt Avenue due to electrical work.


From 8:30 p.m. Friday, October 31 to 5 a.m. Monday, November 3, there are no G trains between Forest Hills-71st Avenue and Long Island City-Court Square. Customers should take the E or R instead.


From 1 a.m. Saturday, November 1 to 5 a.m. Monday, November 3, J trains run in two sections due to structural work at Canal Street:

  • Between Jamaica Center and Essex Street and
  • Between Essex Street and Chambers Street


From 12:01 a.m. Saturday, November 1 to 5 a.m. Monday, November 3, free shuttle buses replace L trains between Canarsie-Rockaway Parkway and Myrtle-Wyckoff Avs. due to the replacement of the old concrete roadbed at Bushwick Avenue-Aberdeen Street.


From 12:01 a.m. Saturday, November 1 to 5 a.m. Monday, November 3, N and Q trains run on the R between DeKalb Avenue and Canal Street due to the biennial inspection of the Manhattan Bridge.

Categories : Service Advisories
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As I sat in the last car of my Coney Island-bound F train en route to 7th Ave., I glanced up to check out the placard ads decorating the car. My eyes quickly landed on the SubTalk ad. It was promoting the Second Ave. Subway!

As you can see — and if you can’t, click the above picture to make the image bigger — the MTA is already starting to promote the Second Ave. Subway, six or seven years before it aims to see the light of day. It will indeed help relieve overcrowding on the Lexington Ave. line.

When I saw this ad, I smiled and thought optimistically about the Second Ave. Subway. To me, this ad is a sign that the MTA is committed to perhaps finishing at least section I of the subway. If all they have for now is a train that runs from 96th St. and 2nd Ave. through the Upper East Side before cutting west to join up with the existing Q line, that will be progress.

Maybe we’ll never get the Second Ave. Subway. Maybe this budget drain and the bad economic times will mean the end of the current Second Ave. Subway project if they run out of money with a 15-block tunnel. Maybe with the volume of federal contributions, the MTA will push this project through this time. But no matter; the Second Ave. Subway is making its presence known even if it’s just through a SubTalk ad in a lone F car.

One day, we’ll ride on that Second Ave. Subway, and that SubTalk will promote Phase II of the Second Ave. Subway. Hopefully, that isn’t just a dream.

  • MTA prepping city for cut in services · In two weeks, the MTA is going to issue a revised financial outlook for 2009, and everyone is expecting a call for a fairly substantial fare increase. At the same time, the MTA is clearly planning on cutting services, as Pete Donohue reported today. It’s important to note that these services do not include train service.

    Rather, the MTA will first look to eliminate staff workers who provide cleaning and maintenance services. “I would define it as anything that impacts the service that we provide to the public,” Sander said to the Daily News. “So, I would would view a reduction in cleaners and station agents as something the public would experience.” Cuts are never good news, but at least the MTA is doing all it can to make sure the trains run with the same frequency as they do now despite trying economic times. · (1)

Things did not look good for me when I arrived down on the platform at 7th Ave. in Brooklyn at around 8:40 a.m. yesterday morning. A Q train was pulling in, and I thought I’d hop it to DeKalb and switch to my W. 4th St-bound B.

There was but one catch. This Q train was far too crowded to board. When the B then pulled up, it too was far too crowded to board, and a subsequent Q suffered the same fate. When a second Q pulled up moments later, I was able to cram my way in for the short hop to DeKalb. Then, I had to wait nearly 15 minutes for a B train. As usual, at no point did the MTA announce a problem, and it wasn’t until I arrived late to class that I learned I suffered through some good old “residual delays.”

Except I hadn’t really. A steady stream of Q trains kept arriving, but they were too full. Simply put, the demands of the ridership could not, for a morning, keep up with the supply of the trains New York City Transit had to offer.

This overcrowding to an extreme isn’t a new phenomenon. The MTA’s ridership levels over the last few years have approached records set over fifty years ago, and overcrowded trains have become a major problem.

Perhaps, though, the end is in sight. With thousands of people losing their jobs due to the recent economic slowdown, the MTA expects ridership levels to end their climb. Marlene Naanes has the report:

Transit ridership is at a 40-year high, continuing a steady increase since 1996. However, this month City Comptroller Bill Thompson predicted more than 150,000 job losses in the next two years, which could affect the number of people taking trains and buses or being able to afford fares.

An MTA spokesman, however, said that it is unclear if the number of straphangers will decrease. “There will be some reduction in the pace of growth, not necessarily a drop in ridership,” MTA spokesman Jeremy Soffin said.

In all likelihood, actual ridership won’t decline, but it won’t increase either. The MTA will lose some revenue because they won’t have the projected money from increased ridership, and the agency will still have to deal with overcrowding.

But, to find a silver lining to this cloud — or perhaps it’s the other way around — the trains won’t be even more crowded. This morning, as I crammed myself into a Q train packed to the gills with people, I could barely move. I doubt it could actually get much worse.

Categories : MTA Economics
Comments (14)
  • Subway porn · I’m not taking about pictures of new cars or sparkling tunnels. I’m talking about real pornography on someone’s iPod. According to Free Williamsburg writer Brian Ries, one of the passengers on his L train this morning was watching pornography, and the entire car knew about it. Perhaps a crowded train at rush hour isn’t the best time for one to fulfill his or her pornography needs. · (4)
  • New bus depot already in need of $1.1 million repairs · In 2003, the MTA opened up a fancy new bus depot on 100th St. between Lexington and Park. Five years later, the depot is already in need of substantial repairs. The walls are buckling, and bricks have fallen from the building. While some critics will claim this as par for the MTA’s course, it is in reality the fault of the contract, and according to NYC Transit head Howard Roberts, the MTA will not take this sitting down. “We will initiate proceedings against the original contractor,” he said to The Daily News earlier this week. Justice will be served. · (3)

We’ve all shared in that familiar experience of knowing that we’re going to miss the train.

We get to the top of the staircase, and we can hear the train pulling in. We swipe through the turnstile, pushing back against a wave of passengers pouring of the gate. We hear the announcement. “Stand clear of the closing doors.” We dash downstairs, hoping that maybe someone will block the doors. Maybe the conductor will have to hold the train.

With marked futility, we jump down the stairs only to see the train pulling away to the station, mere seconds separating us from the comfort of a train. While the next one isn’t that far behind — except late at night, it never is — there’s nothing more frustrating than just missing that train. For the next few minutes, we’ll stand at the platform’s edge peering into the dark tunnel. We’ll check our watches, tap our feet and think that maybe we shouldn’t have lingered in the shower. Everyone knows this feeling; no one likes it.

Over the weekend, Verlyn Klinkenborg, a member of The Times Editorial Board, penned a thoughtful piece on what he termed the “If Only” train. He writes:

Somehow, I always imagine that missing the train is the result of a single delay, not the loss of a second here and a second there since the alarm first went off. Perhaps I’d have caught that train if I’d gone to bed a few minutes earlier the night before. And while I stand on the platform, waiting for the next train, I have time to ponder the significance of the train that just pulled out. I can’t help feeling that if I’d caught that train, I’d already be in the future — and not the future I’ll eventually enter by hanging out in the present until the next train comes. How much better or worse that future would be I can’t really say.

This, of course, leads to another thought. Over the past 30 years, I’ve missed lots of “if only” trains in the New York subway system. What if I’d caught one of them, say, 25 years ago? Where would I be now? And what about the trains I made by a hair all these years? Surely those were almost “if only” trains. Because I caught them I must already be in a different future than I would have been had I missed them and gotten stuck in the present back in the past. Time travel is so confusing, even on the Broadway local.

While he is more resigned than I’ll ever be to missing that train, Klinkerborg so captures the essence of missing for that train by a second that it will be hard for me not to smile ruefully the next time I see the orange B gliding through the tunnel away from me.

Photo of a train doing just that by flickr user UKASEME.

Comments (3)
  • MTA gearing up for second round of budget projections · For an unprecedented second time this year, the MTA will soon be revising its budget projections, according to a report in Metro. Earlier this year, the MTA updated its financials to project a $900 million budget deficit. As the markets have crashed since that number was released, the agency will meet again to pour over the books in two weeks. What emerges from that meeting will not be good news for the MTA’s bottom line or passengers hoping for a small fare increase next year. This will be ugly. · (2)

Elliot Sander, the MTA’s first CEO and Executive Director, has a tough job right now. He’s supposed to be wielding the power once left to the chairman of the MTA’s board, and he’s supposed to be guiding a beleaguered public-benefit corporation through some very tough economic times.

While I think Sander has done an admirable job, he has steered something of a bumpy ship. In a very well done piece in today’s Times, transit beat writer William Neuman analyzes Sander’s tenure. The transportation expert-turned-MTA head has his supporters, and while his detractors are rather guarded in their words, they’re still there, assessing his every move.

When Mr. Sander took over the authority in January 2007, he became the first executive director to take full advantage of the expanded powers. But Mr. Sander’s position is also something of an unwieldy hybrid: he has much of the power once held by the chairman but not the broad sway and job security that comes with a fixed term and a vote on the board.

Though Mr. Sander is an employee of the board, he serves at the behest of the governor and can be removed at any time. And the governor he serves today is not the one who appointed him: his friend, Gov. Eliot Spitzer, who resigned earlier this year in disgrace. Though Mr. Sander says he has a strong relationship with Mr. Spitzer’s replacement, Gov. David A. Paterson, the two are clearly not as close.

Richard L. Brodsky, a Westchester assemblyman who helped lead the push for the 2005 change in the authority’s structure, now worries that it was a mistake. Having no fixed term, he says, might undercut Mr. Sander’s ability to make demands of the governor, who is struggling to close his own widening budget shortfall.

“Lee has been a very good C.E.O.-slash-executive director at a time when that was needed to get the M.T.A. functioning again,” Mr. Brodsky said. “But it also needed a 400-pound gorilla who didn’t need the job and could say ‘No’ to governors, and I don’t think Lee ever thought of himself as having that job.”

Neuman’s article goes on to touch upon some of the ammunition Sander’s critics have used against them. He took a significant pay raise a time when the MTA’s finances were in shambles. He promised service increases and then had to roll them back a few weeks later. His State of the MTA speech, while appropriately grand, has approximately no chance of becoming a reality.

In the end, I give Sander a good grade for his effort. He’s overseen the agency through some of its toughest fiscal times while ensuring that the trains continue to run and that service levels remain the same. While there’s trouble brewing on the financial horizon for the MTA, for now, Sander remains the man for the job. He has the expertise and political support to see the MTA through some dark days.

Categories : MTA Politics
Comments (2)
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