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?
9 comments
Wouldn’t it behoove the MTA to KEEP the property and just move out? They can move out and lease the space out. The cost to lease would include how much they pay for the place yearly PLUS the cost of moving into another space (in Queens I would assume lol)… heck, I’m not going to own a property just to sell it (at the worst possible time) and then and start renting in NYC; the most expensive places to rent in the world.
Then this only solves my financial problems for what? A year or 2?
I think this Queens politician needs to speak to a financial advisor. You don’t sell your property and become a renter and expect things to get better. And where in Queens would they move? lol
As I wrote already, you move to a rental and rent out your space of your property and set the rent at a price that pays for the property and at least part of the rent of where you have moved to. Now you are in a new spot, still own the old spot and you are not paying very much for the rent of the new spot.
I think my idea can actually work. At least its better than his.
I agree with The Secret Conductor.
Also, I agree with Mr. Gioia in spirit- it’s a good idea to decentralize the city by creating local downtowns/commercial areas. That way, more people can live close to work (or deal with the potentially nightmarish scenario of using public transit to get to work when it’s not located in Manhattan. But that’s a different story). Also, it would help Manhattan’s overinflated real estate prices come down, reduce overcrowding in Manhattan’s transit choke points, and revitalize neighborhoods.
But Mr. Gioia is way off on selling property to make up a budget shortfall. That just doesn’t make sense.
The MTA administers services to Westchester, Nassau, Suffolk, Rockland, etc., so it makes sense that its HQ would be located near Grand Central. You’d think Gioia would have just a little shame in making such a stupid and self-serving declaration.
On the contrary, it’s a bad idea to decentralize the city. Mass transit systems are inherently centralized, because for cost reasons they can only serve the most popular routes. It’s possible to have some decent suburb-to-suburb travel using through-routing of commuter rail and circumferential lines, but even then the train can’t compete with the car on speed.
To see how this works, suppose that a new downtown gets developed around Jamaica Station. If you live in Queens, Long Island, or the parts of Manhattan and Brooklyn that are reasonably close to Penn Station or Flatbush Terminal, you can get there with trains. Otherwise, you have to use a car or else the trip will take more than an hour and a half.
People can’t just decide to live close to where they work. They change jobs too often. They sometimes live with people who work elsewhere. I work at Columbia; my girlfriend works at Cornell Medical Center. The only parts of the city from which you can get to both on the subway in under half an hour are Midtown and the Village, neither of which is affordable.
What makes this all the much worse is that he represents me (and I VOTED for him???) !!!!!
For shame!
Alon,
These several downtowns would still be dense enough to have public transit make sense. Although, building a few more subway lines wouldn’t hurt either. But some changes would be easy to make. Here on Staten Island, for example, some people are clamoring for an express bus to downtown Brooklyn. It’s an area with quite a few office buildings but as much or less public transit as the typical Manhattan residential neighborhood.
Boris,
Downtown Brooklyn is actually a good example of a place that can at best function as a secondary downtown. It has good transit connections to Manhattan and the rest of Brooklyn, and could have good transit connections to Queens and Staten Island. However, it doesn’t connect well to the Bronx, to say nothing of New Jersey. The one transit line it does get from Queens, the G, is perenially underused.
In contrast, look at Midtown, which began as a secondary downtown to Lower Manhattan and became the primary downtown. At the time it developed, the most populous bedroom communities were in Uptown Manhattan, from which Midtown was very accessible by subway or el. The boomburbs in Queens and the Bronx were likewise closer to Midtown. Even Brooklyn, the source of the second highest number of commuters, was reasonably close by subway. New Jersey is situated in such a way that it made sense to send the Hudson Tubes both downtown and uptown.
[…] 12:10 p.m.: Eric Gioia — yes, that Eric Gioia — has released a statement about this debacle: “Vice Chairman Mack should either clarify […]
[…] The three senators are "demanding" that the MTA agree to a forensic audit conducted by an outside entity and a complete accounting of all its assets – including real estate holdings, which is an issue other lawmakers have been hammering on for a while now. […]