Home Capital Program 2015-2019 SAS Phase 2 leads capital plan as funding questions loom

SAS Phase 2 leads capital plan as funding questions loom

by Benjamin Kabak

Progress at Second Avenue Subway’s 86th St.caverns as of July 17, 2014. Photo: MTA Capital Construction / Rehema Trimiew

As the MTA gears up to release its proposal for its next five-year capital plan within the next few weeks, agency CEO and Chairman Tom Prendergast went to Albany to preview the package. We learned that funding for Phase 2 of the Second Ave. Subway will be included in the request, and a variety of other plans that I’ve discussed over the eight years of this site’s life will slowly come to fruition. Still, funding questions remain, and Prendergast challenged Albany to do something about it.

Earlier on Thursday, I noted that Prendergast had requested $1.5 billion for Phase 2 of the Second Ave. Subway. Phase 2 includes stations at 106th and 116th and Second Ave. and one at 125th St. and Lexington. The subway will use a mix of preexisting and new-build tunnels. As far as the money goes, the MTA’s plan for the next few years involves wrapping up Phase 1, refreshing the environmental impact study and working out designs for Phase 2, and beginning construction toward the end of the five-year period. I assume then that additional funding will come from the feds and from the next five-year plan that covers the years 2020-2024.

Even with a slower timeline — the full four-phase SAS was originally to be finished by 2020 — Phase 2 is the key to this project’s future. It connects with the Lexington Ave. line and Metro-North at 125th St. and provides the option for westward extensions to Manhattanville and northward to the Bronx. It provides the entire East Side will easier service to Times Square and Herald Square and will relieve crowding on the 4, 5 and 6. It can’t come soon enough.

But what else awaits? Pete Donohue provides the details. In addition to much-discussed safety enhancements for the MTA’s commuter rails, Donohue noted the following:

Prendergast said the plan, which isn’t finalized, would likely include approximately $20 billion for so-called “state of good repair” maintenance projects, like replacing tracks, signals and older subway trains. It is also projected to feature $5 billion for expansion projects, like the Second Ave. subway and the Long Island Rail Road link to Grand Central Terminal that is now being built. Further, Prendergast anticipated the plan would provide anywhere from $2 billion to $5 billion for rider enhancements, including countdown clocks on lettered subway lines and a swipe-less replacement of the MetroCard fare-payment system.

But what of the money? Prendergast and other MTA officials discussed this funding gap as well. The agency wants at least $27 billion, and although Albany could permit the MTA to issue more debt, sending the agency further into the red won’t help improve operations or financial security. “We can’t keep adding to our debt load. [It is] a formula for failure,” Prendergast noted. “The bottom line is, the capital program needs an infusion of new, sustainable funding, and we need your support in that regard.”

How that support manifests itself is up for debate. I’ve been expecting a tolling/congestion pricing plan to make a comeback simply because the state has few other avenues for revenue that could be directly tied into transit improvements while improving traffic flow throughout heavily congested areas of the city. MTA officials have also discussed contributions from the real estate interests that have piled up dollars throughout the city, and the MTA Reinvention Commission is, hopefully, looking at the issue as well.

The funding will remain a concern throughout the next few months, but I’m relieved to see the MTA focusing on moving the ball forward. They have momentum as new projects come online over the next few months and years and should maintain and build on that expertise. SAS Phase 2 is a must-have, and the sooner it starts the better. How we opt to pay for it will be very telling indeed.

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Larry Littlefield August 8, 2014 - 7:45 am

So the MTA expects $5 billion per year in cash, after having gotten no cash for 20 years.

For 20 years the MTA Board allowed the state legislature and Governor to get away with that, and now they want the existing politicians to raise taxes and cut other services by that amount to make up for it. As for the cash they already had, the MTA just used it to pay for raises, and underestimated the amount those raises would cost.

Actually, borrowing for system expansions and rider enhancements isn’t so bad. It is the other $20 billion — borrowing for ongoing normal replacement — that is the disaster.

Looks like Generation Greed is heading for a reckoning. Perhaps the state legislature will just vote for every public employee, including themselves, to have their pensions irrevocably tripled, requiring the elimination of transit service and all other public services. And then retire to Florida en mass along with the rest of their crowd.

anon_coward August 8, 2014 - 1:00 pm

depending on the maturity dates of current bonds and where interest rates will go, there might be a lot of money left over for the MTA to sell new bonds for SAS Phase 2

i don’t think anyone pays for these kinds of projects with cash

eo August 8, 2014 - 4:54 pm

Maybe we should stipulate that anyone who moves out of state in retirement gets his/her pension halved. It is quite ridiculous to have to pay for former state employees to play golf while they do not contribute even a single dollar to the state including nothing in sales taxes.

Larry Littlefield August 8, 2014 - 6:38 pm

Public employee pensions are exempt from NY State and Local income taxes even if they live here.

Don’t mention sales taxes. Assemblymember Peter Abbate might get the idea to exempt from public employees from those as well, while raising them to 15 percent for everyone else.

tacony August 13, 2014 - 12:33 pm

I don’t think it’s too cynical to reason that if NYS public employee pensions were subject to NYS taxes they’d simply be raised to make up the difference, AND it’d be another reason for retirees to flee to Florida and the other Sunbelt states without state income tax. So I wouldn’t complain about that distinction.

Justin Samuels August 10, 2014 - 10:56 am

Dude, stop with the out of control complaining. You don’t run the MTA, have no ability to deliver funding, or do anything to advance the Second Avenue Subway or any transit project. Be happy that future phases are on the MTA agenda and that funding for Phase 2 is in the capital budget.

Government employees in all the states have excellent benefits, and I’m sorry you apparently have a job with no benefits and no potential for future benefits.

Larry Littlefield August 11, 2014 - 8:33 am

Let’s put the complaining in context.


If people are content with studies and deferred maintenance, and decide not a ask questions until the deals are irrevocably cut, then they will end up with — what people have been ending up with.

Let’s see what Generation Greed does with the MTA’s budget request.

Nathanael August 10, 2014 - 10:45 pm

“For 20 years the MTA Board allowed the state legislature and Governor to get away with that, ”

Remember who appoints the MTA Board. Not surprising when you consider that. The real problems have been the legislatures and the governors… and the mayors and city councils.

Larry Littlefield August 11, 2014 - 9:29 am

Of course. Unless you want to blame the people, who wanted more for less in the past and have left us with the reverse. The older people in Generation Greed. At least the system has been fixed up, but all with borrowed money.

So now, the head of the MTA has thrown down the gauntlet. We need $27 billion and we can’t borrow. Everyone else is demanding $5 billion too, the schools, health care, housing. And we already have the highest tax burden and debts in the country. So now what?

Here is my suggestion. First, invent a time machine and take us back 20 years. When we get there, I’ll tell you about step two.

Or we can just take a lot of pain. That will be pain for everyone. The TWU has already been exempted. So, less deservedly, has the LIRR. No one is suggesting the half fare for seniors go back to off peak only. And we’re already put through a “millionaire’s tax increase” at the state level.

That means, in the Russian proverb, “the shortage will be divided among the peasants.”

Nathanael August 10, 2014 - 10:46 pm

” Perhaps the state legislature will just vote for every public employee, including themselves, to have their pensions irrevocably tripled, ”

There have been some unfortunate precedents established over in Michigan which mean that this is quite impossible. A future legislature can always strip pensions from former legislative officials.

Larry Littlefield August 11, 2014 - 10:08 am

Not in this state, outside of perhaps bankruptcy.

In the 1970s the NYC debts and pensions were paid, even though that meant taxes soared, millions fled, jobs disappeared, the police stopped preventing crime, the infrastructure and education system were allowed to collapse, and the bag ladies were left to die in the street.

The people of Detroit weren’t exactly allowed to get off easy either.

Keep your eye on Chicago.

Larry Littlefield August 8, 2014 - 7:51 am

And by the way, $1.5 billion to update the EIS, do plans, and START construction?

How about asking those SOBs to exempt the Second Avenue Subway from the EIS process? They did it to widen the Long Island Expressway.

And ask for a waiver from the feds, or just use the federal money strictly for ongoing normal replacement?

And how about doing a preliminary design quickly in house, using some of the excess real estate transfer tax revenue that’s going away again with the end of this bubble and cannot be relied on for ongoing costs, and bidding the thing out for $2 billion design bid — every six months?

We don’t have to wait forever to pay money we don’t have. Cut the process and the graft, the public hearings for the political blowhards and the consultants. DO IT NOW as if it mattered, the way Cuomo rammed through the Tappan Zee replacement after 20 years of BS.

Bolwerk August 8, 2014 - 5:02 pm

Why not use clean water funds?

Grant August 11, 2014 - 9:27 am

Tell them Bolwerk,Why not use clean water funds? can someone answer this?

Quirk August 11, 2014 - 12:41 pm

Why did NYS ‘enact a special legislation’ that hooked the contractors on cost overruns/delays for the Tappan Zee Bridge?

Can they do that for subway construction as well?

Ellen August 8, 2014 - 9:27 am

AMEN Larry

Larry Littlefield August 8, 2014 - 9:35 am

By the way, for those who think spending is a matter of “political will,” the Alliance of Quality Education has released a report demanding $5.7 million dollars per year for NY public schools, even though we spend massively more than anyone else on education — even with an adjustment for the cost of living in Downstate NY.


And why do the schools need more money? Because spending “on the classroom” is falling. And why is spending on the classroom falling? Because teacher pensions were retroactively increased multiple times, causing pension and retiree health insurance costs to soar.


Pensions are to the city’s schools what debts are to the MTA. And the MTA would have been just as bad off if the TWU strike for 20/50 had been successful. Then there is the breaking open of the Social Security “lockbox,” all those multi-tier contracts with lower pay and benefits for new hires, etc. etc. etc.

Generation Greed. In what form will younger generations be sacrificed to pay? And how much lower will Generation Greed exempt itself from the sacrifices?

Ken August 8, 2014 - 3:50 pm

The unions are smart waiting until election years to negotiate new contracts. Transit strikes always blow back on the mayor and governor, not the unions. And elected officials want to be re-elected.

However, unions stop modernization and change and their time is limited. Working in the private sector, change is a fact of life. Transit unions need to join the real world of the people they move every day. It is really hard to sympathize with union demands and pay. Based on day to day observations, transit employees do not perform at some stellar levels that requires any pay raises without additional productivity. It is only a matter of time before the unions lose. The sooner the unions negotiate their surrender, the better off union members will be. Unions should check with Wisconsin and Indiana.

What is causing the exorbitant expenses for public construction in New York. You would think with all the advances over the past 100 years that subway construction costs would go down. Instead the construction costs go up exponentially. The elected official who can change the trajectory on construction costs will be a hero for the next 100 years. Major buildings go in up in NYC every day. Why are public construction costs so expensive? Should subway construction be farmed out to private companies like the transcontinental railroad and the IRT/BMT subways?

Justin Samuels August 10, 2014 - 10:53 am

Subway construction is done by private contractors? The MTA opens up the bid and accepts the bid it thinks is the best deal.

The IRT and BMT went bankrupt because NYC would not allow them to raise fares and also NYC owned key parts of the IRT and the BMT.

In short, owning NYC public transportation is a money losing businesses, particularly with the interference from City Hall. No private company would want to own that, nor would it be politically acceptable in NYC to dramatically raise fares so a private company could turn a decent profit. Bloomberg himself had the city take over the last 4 private bus companies in Queens (that were profitable only because of city subsidies).

Larry Littlefield August 11, 2014 - 12:07 pm

“What is causing the exorbitant expenses for public construction in New York?”

I don’t know, but I do know this. If the MTA publicly announces a budget estimate of $4.5 billion for Phase II of the SAS, no one is going to bid less. They’ll start with that, and work their way up with change orders, etc.

Which is why I say put it out design-bid at $2 billion, evaluate responses or the lack thereof, try again six months later if not satisfied, perhaps increase to $3 billion a year after that, etc.

If we skip the EIS and the rest of the garbage, the MTA can keep bidding this out until the next recession cuts private construction and contractors are hungry for work and still get it done faster.

JAW August 18, 2014 - 7:00 pm

The price tags that the MTA puts out for construction projects are overall budget costs: design, real estate acquisition costs, in-house expenses and construction. In addition, Mega projects like this are split up into many Contracts. There’s no way a contractor could start with the number that the MTA has estimated, and then just put that in as a bid.

Design-Build is an interesting way of delivering the project, but if you think that you’re just going to put a design build contract out for $2B and get what you want… think again. Design-Build transfers risk from the owner to the contractor, and it’s a guarantee that the private sector will be finding a way to cover that risk, usually in upfront cost. That said, allowing a design-build consortium to provide a competitive design might help to drive costs down.

Henry August 11, 2014 - 10:50 am

It’s expensive because of the bidding process, and paradoxically may also be because of the lowest-bid system we use; we don’t screen out potential conflicts between design consultants and engineering firms, and we certainly don’t look at whether companies are actually able to deliver the project for the promised amount of money (which leads to overruns, etc.)

We also still do IND-style construction with full mezzanines, which is infinitely more expensive than a vaulted station with two pocket mezzanines, or even a spartan Underground-type station with two tubes and pocket mezzanines. Blasting out that much rock for stations is easily the most expensive component of subway construction.

Nathanael September 25, 2014 - 7:22 pm

A lot of people who’ve been involved in bidding in NYC and NYS point to the state’s bidding laws. Apparently the state biddinfg laws encourage awarding the contracts to irresponsible companies which bid low with no intention of delivering — companies which seek out loopholes in the specifications in order to cheat the city or state.

In most jurisdictions, such companies can be blacklisted, and the bid awarded to the lowest *responsible* bidder,

Not sure what needs to be changed to fix this.

BruceNY August 8, 2014 - 5:21 pm

Yes, funny how where there’s a will, there’s a way…

D in Bushwick August 8, 2014 - 3:47 pm

Shouldn’t building the promised 10th Avenue station on the 7 Subway Extension be a top priority especially given all the new density being added to the neighborhood?
The Extension became a big ripoff when they canceled that station creating a $2.4 Billion single station at Javits.

Bolwerk August 8, 2014 - 4:55 pm

Why a bigger priority than SAS? I have my criticisms of the bang:buck ratio SAS provides, but it’s kind of necessary reactive project. We created density, now we have to deal with it.

The 7 extension is a more proactive project. It’s being made to create density. Nothing inherently wrong with that, but it doesn’t seem so important to serving people.

BruceNY August 8, 2014 - 5:24 pm

The area west of the Port Authority all the way past 11th Avenue has seen a huge increase in population over the past 15 years. A station at 10th Avenue would be very helpful for that part of Hell’s Kitchen. Besides, didn’t the MTA leave ‘provisions’ for this station to be added at a later date?

Bolwerk August 8, 2014 - 7:22 pm

I know it has grown, but I doubt it’s as dense as Second Avenue.

Yes, they did. I hope they do it because that project makes way more sense with that station.

Henry August 11, 2014 - 5:01 pm

Per rider, SAS is actually a reasonable project; the sheer number of people who are expected to use it makes up for the exorbitant costs, and it does perform significantly better than many projects around the country in this regard.

Per mile, it’s ridiculous, but how much of that is property acquisition and how much of that is oversized stations is not something I’m entirely clear on.

Bolwerk August 16, 2014 - 10:25 am

Per-rider is a good way to compare feasible alternatives, but without a baseline cost analysis (as in, “Why does this cost this much?”) it’s very relative and not very useful.

SAS is overpriced whether there are zero riders or a billion.

eo August 8, 2014 - 5:00 pm

IMO the only way that station will get built is through re-zoning around it and allowing for the resulting real estate taxes to pay for it. Sorry, but politically there is no points to be scored by putting $1B in a new station serving only its neighbourhood. There are not enough voters next to the station to make it worth it for a politician to do anything.

Henry August 11, 2014 - 10:51 am

The extension project already uses TIF funding, which was also supposed to pay for 41st and 10th until the city yanked it off the shelf.

pkyc0 August 8, 2014 - 5:57 pm

since taxes on real estate transactions already go to the MTA, how about a special real estate transaction tax on the areas that will benefit from the SAS and other projects for x-number of years or x number of transaction on each property.

Henry August 11, 2014 - 10:52 am

At least over here, that’s not a super effective method of finding capital funding. The 7 Line extension is only going through with TIF because they’re essentially building a business district from the ground up, and for obvious reasons that can’t be replicated everywhere.

Justin Samuels August 20, 2014 - 1:12 pm

The MTA has said elsewhere it expects the real estate industry to place a crucial part in funding Second Avenue Subway phases 2-4. Yorkville is experiencing massive real estate investment and gentrification due to the Second Avenue Subway and this is spilling into lower Spanish Harlem.

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