For the past few years, the MTA has relied on various sources of real estate revenue to cover budget gaps. The authority had to turn to real estate taxes to keep pace with their operating budgets, and it has banked on land deals — such as the Hudson Yards sale — for vital economic contributions.
In the long run, this is, not to mince words, a terrible strategy. As we’ve seen this year, real estate taxes are very much at the whim of the economy, and when the housing market collapses, the MTA’s tax-based revenues follow suit. When those funds are supposed to be a key part of an annual budget, a public transportation agency will find itself strapped for cash.
In an ideal world — and one that New York State’s former three-term governor denied for the better part of a decade — the MTA’s operating budget would come from a separate dedicated revenue source. Whether that source be annual government contributions from the state for something — in this case, a transit system — that drives New York’s economy or, as it probably will be in the future, a congestion fee pricing structure, the MTA should not be dependent upon something as volatile as the real estate market.
By now, with the MTA’s repeated cries of poverty and financial problems, one would hope that New York politicians would start to understand that real estate does not a public transportation budget make. Alas, they do not. In a press conference on Sunday, City Council member Eric Gioia — from Queens — urged the MTA to sell its real estate holdings. He, of course, had an ulterior motive.
The Sun’s Benjamin Sarlin reports:
The Metropolitan Transportation Authority should sell the roof over its head before raising fares on New Yorkers twice in one year, Council Member Eric Gioia said yesterday.
Mr. Gioia, a likely candidate for public advocate in 2009, is calling on the MTA to sell off the 20-story building it owns at 44th Street and Madison Avenue to raise the money necessary to avert a fare increase.
“There’s no justification for the MTA to be on Madison Avenue,” Mr. Gioia, of Queens, said at a press conference in front of the building yesterday. “This is a glaring example of an asset being underutilized.”
He estimated that the property, which contains more than 230,000 square feet of prime office space, could fetch “at least” $200 million on the open market. Mr. Gioia suggested that after the sale, the MTA should move its offices to Queens.
Now, I could debate this point with Gioia. I could tell him that the $200-million infusion of cash, if the MTA could actually sell their Madison Ave. space in a weak seller’s market, would do wonders for the MTA’s budget gap this year. I could say that this transaction would do absolutely nothing to shore up the MTA’s finances for next year or further into the future, and I could argue that the rent the MTA would have to pay on whatever property they move to would probably exceed the money they draw in for the sale sooner rather than later.
But instead, I think I’ll just laugh at Gioia for giving it the old college try. This statement was nothing but an attempt to look good in the eyes of his Queens constituents. The MTA should sell their office space — and move to Queens? There must be a better way to fund the MTA than that, Eric. How about some real proposals instead?