Home MTA Economics Dodging a question, Lieber shows an MTA unwilling to confront its cost crisis

Dodging a question, Lieber shows an MTA unwilling to confront its cost crisis

by Benjamin Kabak
Well over budget and long delayed, London’s Elizabeth Line, shown here in a tour I took with Andy Byford in November, costs just one-third per kilometer than future phases of the Second Ave. Subway. (Photo by Benjamin Kabak)

Albany oversight hearings are staid and rote affairs. Every now and then, a panel of state legislators call in the technocrats in charge of state agencies to talk about the topics on the minds of those legislators. Unfortunately, those topics often run to the banal when it comes to transit and the MTA. Why is this bus stop in my district on one corner but not the other? Why isn’t the MTA building platform edge doors? When will Staten Island get better transit service?

These are questions with well-known answers, but for the sake of their constituents, our elected officials have to go through this exercise. I find it very frustrating. The Senate and Assembly could hold wall-to-wall hearings on any number of issues plaguing our transit system, but these 90-minute sessions once or a twice a year if we’re lucky is all we get. When MTA CEO and Chair Janno Lieber appeared before a joint committee panel this week, I didn’t expect much to come of it, and by and large, my low expectations were met. The session even featured Diane Savino asking why the MTA plans to build the IBX but there are no plans to build a subway to Staten Island, a topic worth its own post exploring why her constituents don’t want one and no one is currently pushing funding for it. But I digress.

Midway through Lieber appearance, one brief exchange leapt out at me. George Borello, a Republican who represents Jamestown and a district as far away from the MTA’s service area as possible, was the only member of the panel to ask about the MTA’s runaway construction costs. The exchange was brief, and the emphasis is mine:

Borello: It’s been widely reporting that MTA construction costs are up to seven times the global average. Why is that the case? And what steps is the MTA taking to address these out of control costs?

Lieber: The bigger question of how we compare to the rest of the world is part of a longer conversation, but when people throw those numbers around, they frequently don’t even look at what’s the scope. So comparing a mile of New York City subway tunnel to a rubber-wheel facility where they have three cars that carry 100 people is nonsense. So if these comparisons are going to go on, you have to do apples-to-apples work…When you look at those kinds of comparisons, frequently they are informed by nonsensical lack of effort to compare projects based on scope, technology and the conditions of work.

This is a breathtakingly dismissive answer from the MTA head, and it’s wrong. A lot of people, from advocates to journalists to researchers, have conducted rigorous examinations into the MTA’s cost problems. They have indeed compared apples to apples – they’ve compared the Elizabeth Line’s deep-bore subway tunnel underneath London to the Second Ave. Subway’s deep-bore subway tunnel underneath Manhattan – and these efforts are simply not “nonsensical” nor lacking in effort. These four sentences uttered by the MTA head to a panel of legislators during an oversight hearing tells me all I need to know about the lack of sincerity of the MTA’s cost reform efforts.

The MTA’s cost problems are well documented and rigorously documented. Brian Rosenthal of The Times produced a thorough and accessible piece four years ago analyzing how everyone from unions to contractors to public officials is to blame and how the MTA’s usual excuses – environmental review laws, powerful unions, old utilities, fire codes – don’t hold up when compared with the Parises, Madrids and Londons of the world. Alon Levy and Eric Goldwyn at Transit Costs have established a database of global transit projects that break down each by its components. These are the apples-to-apples comparisons that show the MTA paying between three or five times more per kilometer than even the second most expensive projects in the world. These are completely sensical comparisons that show out of control costs.

So why would Lieber dismiss this question out of hand when it’s one he should face every time he is called to Albany? For one, an entire ecosystem exists based on the MTA’s construction costs. Contractors in NYC are a powerful political interest group, and they would lose the most if the MTA could cut even a third of their astronomical construction costs. So the impetus to cut costs would come at a political price for Lieber’s boss. For another, cost reform is almost as impossible a task as it can be in NYC. Lieber alone can’t reform the MTA’s construction costs, and he’s overstepping his bounds to suggest the MTA is flushing money down the toilet. His job to lead to the agency, and it’s the politicians’ job to back work rule reforms and overhauls of review laws that drag down MTA construction projects. He doesn’t have the power or political backing to do any of this himself. It’s both a flaw and the purpose of the MTA as a quasi-independent government authority.

Ultimately, Borello was right to ask, and his fellow Senators should be beating the drum on this topic non-stop. The MTA will not be able to expand its network sufficiently until the costs are under control, and understanding how and why the costs are so out of control and admitting it all publicly is the necessary first step. And all those cost comparisons floating out there? They’re accurate, and they’re not nonsense. Anyone in charge of the MTA should admit that.

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9 comments

Ferdinand Cesarano February 18, 2022 - 2:31 am

The answer to the question of why the MTA’s construction costs are so high is its use of contractors. If the MTA did all construction in-house by means of a dedicated construction department, it would pay much less for this work. What’s more, we’d have cost certainty, and MTA management would exert direct oversight.

Given the decades-long scale of the Second Avenue line, and also the possibility of Hochul’s new interboro line, our public transit agency should itself employ the large workforce it needs for these projects, instead of relying on the wasteful and thieving private sector.

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John R April 6, 2022 - 6:59 am

100% agreed. We need an in-house construction agency. I’d also advocate for a public bank that is responsible for raising funds not only for MTA capital, but other public works such as sanitation, roads, waterworks, education, housing, etc.

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Vicki February 18, 2022 - 9:00 am

That snarking at “rubber wheels” makes me think of the Montreal metro, which serves a city of a couple of million, plus suburbs. One thing I don’t miss when I’m there is the screeching of steel wheels against metal tracks when trains turn or brake suddenly.

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DFM February 19, 2022 - 10:24 am

Maybe NYC should outsource its capital construction to RAPT (Paris Transit System) since they are constructing subways at a quarter of the cost. And Paris is a very tough construction area with complex labor laws. Just hand them the job.

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Larry Penner February 18, 2022 - 10:15 am

Here is one way to learn what is going on with costs The Federal Transit Administration provides $1.5 billion in annual capital grants to the MTA. This is accomplished under the FTA Transit Award Management System (known as “TrAMS”) used to award and manage federal grants. The MTA currently manages an active portfolio of federally funded capital improvement projects and programs in open grants worth over $12 billion.

As part of the requirements contained within all master grant agreements, using the FTA TrAMS System, the MTA, provides updated Quarterly Financial and Milestone Progress Reports to the FTA on active capital improvement projects and programs.

Explanations for project delays and change orders over $100,000 have to be provided that they are fair and reasonable. Project delays require recovery schedules and revised interim milestones to document future completion.

The FTA has its own independent engineering consultant firms to supplement in house staff for oversight. These companies provide both oversight and technical assistance for capital projects. The FTA assigns their own engineering consultant firms to those projects over $100 million. Engineering firms monitor the progress of these major capital projects and prepare monthly progress reports. These monthly reports are made available to MTA Chairperson Janno Lieber, HQ staff, Agency Presidents and their Chief Engineer, FTA HQ & Regional Office senior management teams and in house project oversight staff.

Governor Hockul promised that her administration will be above board and honest. When will she promote transparency by having all of these information sources submitted to the FTA by MTA posted on their agency web site as well? Riders, taxpayers, transit advocates and transit reporters deserve nothing less.

(Larry Penner is a transportation advocate, historian and writer who previously worked for the Federal Transit Administration Region 2 New York Office. This included the development, review, approval and oversight for billions in capital projects and programs for the MTA, NYC Transit bus and subway, Staten Island Rail Road, Long Island and Metro North Rail Roads, MTA Bus along with 30 other transit agencies in NY & NJ.)

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Larry Penner February 18, 2022 - 12:02 pm

Projects with more contractors and subcontractors increase the odds of greater costs. Ninety days after a contract is awarded, it is common for the prime contractor submitting a detailed construction schedule that includes the critical path for completion of the project. This is reviewed and approved by the transit agency. The critical path documents what any future delays could trigger other delays to the overall project schedule It integrates the scheduling of work to be performed by the prime contractor, other contractors and all subcontractors. If the work of one falls behind their portion of the project, it could delay the start of work by another contractor or subcontractor This, in turn would delay the overall project. The more contractors and subcontractors you have, the greater the risk something could go wrong. Just take a look at past history for the MTA LIRR $11.2 billion East Side Access to Grand Central Terminal with 36 contractors and see for yourself

(Larry Penner — transportation advocate, historian and writer who previously worked for the Federal Transit Administration Region 2 New York Office.

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Hank February 18, 2022 - 4:17 pm

I worked for 6 months on the new east side access tunnel as a construction worker . I was paid along with hundreds of other works to build this . WHAT I didn’t understand was why the MTA needed about 40 white hats to walk around as a group with an IPad checking the work. I’m sure they could have done it with 20.

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Max Wyss February 19, 2022 - 10:48 am

Mr. Borello’s comment to Lieber’s answer should have been a loud “Hähhh???”

…followed by a harsh attack at the governor why such bullshitters are allowed at that position…

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Larry Littlefield February 21, 2022 - 1:32 pm

People at New York City Transit are well aware of this issue. The reality is the MTA has been used as a piggy bank to pay for retroactive pension increases for construction pension funds decades ago, and for a variety of others.

Meanwhile, one of the more stunning excess costs in New York is how much is spent on road maintenance Upstate, compared even to other rural states/areas such as Vermont, New Hampshire, and Maine. And how overstaffed that function is compared with other places. Something I’ve been reporting and trying to find some explanation for over the past few decades. Medicaid? Public schools? Same extremely high spending compared with other places, relative to the services received.

I can only point out that MTA capital projects and upstate road maintenance are controlled by the same New York State legislature. And those incumbent legislators, and the incumbent Governor, are backed by every special interest in the state.

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