Capital Program 2015-2019

Over the last few weeks, the MTA’s proposed $32 billion capital plan has faced criticism from just about everywhere. Staten Islanders are not happy with it; the state’s Capital Program Review Board flat-out rejected it; and State Comptroller Tom DiNapoli is concerned about the ever-ticking debt bomb. Now we can add the influential Citizens Budget Commission to the list.

In a Policy Brief released yesterday (pdf), the CBC does not pull it punches. Citing “misplaced priorities,” the CBC calls the plan “misguided” and says that riders should not be asked to pay for a plan that doesn’t spend money on the right things. Essentially, the charge amounts to one of recklessness — the MTA has asked for an incredibly high sum of money without making the right case for the expenditures.

“The MTA is a core asset of the New York region’s economy, and funding its capital needs wisely should be a high priority,” CBC President Carol Kellermann said in a statement. “The public debate over the proposed MTA capital plan should focus on what the funds would achieve as well as how much funding is needed.”

The CBC’s critique can be boiled down to three salient points. First, the report alleges that the MTA is not making sufficient progress in achieving a state of good repair for aging and aged infrastructure. “Most of the facilities,” the CBC noted in a refrain we’ve heard before, “are not in a state of good repair.” To make matters worse — or at least, not better — the next five year plan will not close the gap and will, says the CBC, “leave many features of the mass transit and commuter rail systems, such as stations and less visible power stations and pumps, in need of repairs and renovations; the consequence will be less reliable and less safe service than the public needs.”

Second, the CBC is not impressed with the MTA’s plans to modernize the subway’s signal and communications systems. This should be a clear priority at this point as it’s one of the few ways, absent massive capital construction projects, that the MTA can expand service on preexisting subway lines, but it’s a tough sell politically as you can’t have a ribbon-cutting for some new signal system or CBTC. The CBC summarizes: “In the next five years work will begin on only two additional segments, leaving the vast majority of the system with outdated components for at least the next 20 years.”

Third, and perhaps most importantly, the CBC alleges that the MTA hasn’t properly made its case to the public. “The proposed plan allocates substantial sums, and implicitly commits even larger sums in the future, to new projects that expand the transit network without analyzing their benefits relative to other possibilities and without identifying their total cost.” In turn, the CBC states that the MTA does not have clear priorities in selecting projects and a “weak capacity” for implementing projects efficiently (which is probably being nice about it). The CBC wants to see explicit criteria for priority projects and evidence of long-term investments before anyone forks over money.

That final point is a key one as the MTA’s five-year plan includes requests for $1.5 billion for the second phase of the Second Ave. Subway and significant spends for the Penn Station and East Side Access projects. The Second Ave. Subway, in particular, has been problematic as the MTA has refused to release a full cost estimate for Phase 2. When the MTA first proposed the four-phase approach over ten years ago, Phase 2 was expected to cost approximately as much as Phase 1, but the MTA must refresh the EIS and engineering reports. Thus, the agency does not wish to give a final cost yet but insists that it needs the $1.5 billion to begin planning now and construction toward the end of the five-year plan. It’s a weird Catch-22 of this half-decade funding process but one that bears a closer look.

So here we are. No one seems to like the MTA’s capital plan, but it needs to happen in some form or another. How we get there remains to be seen, but it seems clear that the MTA should answer to these complaints once (if? whenever?) everyone in Albany gets serious about the next round of funding and spending plans.

When the MTA unveiled its 2015-2019 capital plan a few weeks ago, agency officials knew it would not be smooth sailing. The agency had identified $32 billion in projects and $16.8 billion in steady revenue streams. The proposed budget included no contributions from New York State, and it was a challenge, in its way, for Albany to tackle the hard question of capital funding (and perhaps a Move NY Plan). It was then no surprise that the state’s Capital Program Review Board torpedoed the plan.

In a brief note issued to the MTA last Friday, the CPRB simply said, “Nope. Good try, good effort.” They didn’t offer a rational — though the humongous funding gap was clearly to blame — and sent the plan back to the MTA “without prejudice.” That was the easy part. The hard part comes next. That’s the part where the MTA pares down the plan; Albany figures out some funding scheme; and everything gets approved.

It sounds so easy, but of course, it’s not. Along the way, the MTA will have to contend with the usual array of everything. In a Bond Buyer article about the CPRB decision, one know-nothing type putting himself out as a government consultant even tried to resort to that tired “two sets of books” trope. It’s an uphill battle every five years and one that no one ever seems to remember or learn from ahead of the next fight.

Yesterday, the obstacle was City Council. Now, MTA hearings in front of City Council aren’t all charades. It’s an opportunity for politicians to get MTA officials to say some things on the record, and what they said yesterday raised some concerns. The MTA seems to be planning the next phase of the Second Ave. Subway to go under pre-existing tunnels; they keep saying B Division countdown clocks are 3-5 years away, the same timeline they’ve had for 2-3 years; and plans to build a subway to Laguardia will proceed over a bunch of NIMBYs’ dead bodies in Astoria. That’s all been around in one form or another, but yesterday’s hearing served as a reminder.

Things went south when the capital plan came out though. A read through WNYC’s Kate Hinds’ tweets reveals city politicians arguing, after the fact too, for pet projects in their neighborhoods. While Mark Weprin deserves a nod for voicing some support for the Move NY congestion fee plan, some City Council members (and, um, MTA officials sitting in the hot seat) didn’t even know the basics of BusTime.

Overall, the hand-wringing seemed largely appropriate for a political arena, but as the City Council offered up some half-hearted solutions for someone else’s problem, no one bothered to talk about their contributions to the capital plan. In the MTA’s $32 billion plan to help improve mobility in and around New York City, the city’s capital funding contributions are pegged at all of $657 million or two percent of the total required funding. This meager amount of $131 million a year assumes a 25% increase over previous capital plans and some additional money for the MTA’s bus program. Who has skin in the game? Not City Council.

Ultimately, this is all about the dollars. Those people who pony up and take the step necessary to identify funding streams can have their say in the planning process. For now, though, the political charade plays itself out. The end game is obvious, but how we get there is not.

As the MTA gears up for a full-court press in Albany and City Hall concerning funding for its next five-year capital plan, reactions are coming in from across the spectrum. Few people are openly discussing congestion pricing, but one developer and MTA Board member spoke at the meeting yesterday advocating for East River bridge tolls. I’m sure we’ll hear more about that in the coming weeks and months. After all, the MTA doesn’t expect to resolve this $15 billion gap for another year or so.

I’ll have more on the specifics of the plan soon, but let’s round up the news and reactions in rapid response form.

The tireless Dana Rubinstein has two excellent pieces on the capital plan. They’re both worth a read. In one, she notes that the capital plan has appeared before the MTA Reinvention Commission had a chance to do much more than hold a bunch of hearings. They were supposed to come up with ideas to better fund and support transit in and around New York City, but I have been skeptical of the idea since the start.

In her other piece, Rubinstein tackles the thorny question of city funding. Direct contributions from City Hall to the MTA’s capital plan peaked during construction of the 7 line extension but still accounted for only around 10 percent of the total funding. In this five-year plan, the MTA expects very little from Mayor Bill de Blasio’s New York, but various factions in the agency want to change that. Can the MTA convince the city to fork over a whopping $125 million a year (up from $100 million) in direct contributions? I would hope so.

Staten Islanders are getting two new boats out of the feds for Sandy recovery and a brand new fleet of rolling stock from the Staten Island Railway. Still, advocates are not happy the next five-year plan does not include money for the North Shore BRT line or the West Shore light rail plan. More on that soon.

As part of a funding scheme, the MTA wants to use the payroll tax to bond out more capital money. This could lead to pressure on the operating budget (in the form of toll and fare increases and more debt obligations), but it is one way the MTA can stretch its existing revenue streams to beef up its capital spending.

That should give you enough to read and ponder for now.

Update (4:00 p.m.): The full proposal for the MTA’s 2015-2019 Capital Plan has been posted online in pdf form. You can read the glorious details as the MTA plans to spend over $30 billion on repairs and expansion work it and New York cannot afford to delay. I’m particularly intrigued by the gondola proposal on page 228 of the packet. Read on for my take on the whole thing.

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It takes a lot of gumption to ask for approval to spend $29 billion, but that’s what the MTA is poised to do on Wednesday. As the last item on the agenda for this week’s Board meeting, the MTA’s fiduciaries will vote to approve all $32 billion of the 2015-2019 capital plan, including a request to the state’s Capital Program Review Board to approve $29 billion of the plan. It is the MTA’s most costly plan in the 30+ year history of five-year spending programs and arguably one the agency needs to see approved the most. It should usher in a new discussion focusing around the question of just how we’re going to pay for all of this.

The two-page staff summary included as the final pages in this month’s Board books list out the planned expenditures, and although I’m still anticipating some fancy materials from the MTA detailing the spending plans, we have a glimpse of the various priorities to anticipate the full-court press. The MTA plans to spend over $23 billion on the so-called “core program” which includes rolling stock and vehicle purchases, PTC and CBTC installations, an indeterminate number of Select Bus Service routes, a contactless fare payment system, double-tracking the LIRR’s Ronkonkoma branch and, for some reason, Help Point intercoms at every subway station.

Another $5.5 billion will be spent on the sexier stuff. This request includes money to finish (ha ha) East Side Access, money to start Phase 2 of the Second Ave. Subway which would bring the line north to Lexington and 125th St., and money to add four Metro-North stations and bring the rail line into Penn Station. (That plan, called Penn Station Access is a minefield for New York State and City political interests.) The final $3.1 billion, which doesn’t require CPRB approval, will go toward the MTA’s bridges and includes money for open-road tolling at the Henry Hudson Bridge, a sign that the ongoing pilot has been a success.

So that’s the good. How about the bad? According to the MTA, they’ve managed to cobble together barely half of the money needed to fund this beast. They get a meager $657 million from the city, a few billion dollars from the feds, $6 billion in bonding, $3 billion in local funds, and $200 million from developers earmarked toward station improvement. All in, this leaves a funding gap of $15.2 billion, also the largest in MTA capital plan history.

To address this gap, the MTA proposes two solutions, and it is the closest the MTA comes to an ultimatum on requesting money from Albany:

“The MTA will work with its funding partners and stakeholders to developer proposals to fill this gap from the system’s many beneficiaries, including such option as dedicated revenue sources, partnerships that leverage private investment, additional appropriations from state, federal and local governmental partners, or new MTA debt…In the alternative, the gap can be overcome by reducing the size of the proposed programs, or increasing fares and tolls, or a combination of these options.

Fully funding the proposed Capital Program is critical to enabling the MTA to renew, enhance, and expand its to meet the mobility needs of the region. A reduced program will not keep pace with state of good repair renewal needs, adversely impacting the MTA’s ability to continue delivering safe and reliable service at current levels, and would compromise the ability to deliver enhancement and expansion projects that address the evolving needs of MTA customers and the region and to make the MTA system more resilient.”

“Dedicated revenue sources” might as well be an indirect call for Albany to debate some sort of congestion pricing plan or Sam Schwartz’s MOVE NY proposal, and I wonder if this extremely expensive and extremely underfunded five-year capital plan will finally push the state down this inevitable path of most resistance. If so, you won’t hear a peep about the MTA’s 2015-2019 capital plan until after Election Day, and even then, such a funding proposal won’t go down easy. It may, though, be the only one around a gaping hole that amounts to $15.2 billion and won’t get much smaller.

Whenever I hear about another task force or panel or committee charged with some grand objective, I raise a skeptical eyebrow or two in its direction and hope for the best. Over the years, we’ve seen All Star panels come and go in a variety of capacities, and although some lead to change, improvements are incremental, not revolutionary. The MTA has received its fair share of recommendations — often at the urging of Richard Ravitch – and New York State and its leaders have hesitantly embraced measures designed to improve the agency’s operations and its financial security. Still, a panel is a panel is a panel.

A few weeks ago, right before I left for vacation, Gov. Andrew Cuomo and the MTA announced the MTA Reinvention Commission. This thing clearly has lofty goals. Reinventing the MTA is a monstrous task that would do wonders for the future of New York City but involves a fair of amount of Robert Moses-esque consolidation of power that no one seems willing to take on. It would require challenging, instead of caving, to antiquated and entrenched labor, construction and general operations malaise. It would be hard.

So who’s up for the challenge? The Reinvention Commission has a high-falutin’ title and some bold-faced names attached to it, but when you start to peak under the hood, it may just be an attempt to thoughtfully plan out $30 billion in capital expenditures. That’s not a bad goal, per se, but it’s not going to reinvent much of anything. Ultimately, per Gov. Cuomo and the MTA, the group will “consider changes in customer expectations, commuting trends and extreme weather patterns as it develops future Capital Plans, the multibillion-dollar five-year programs of MTA investments to renew, improve and expand the transportation network.” Reports and recommendations will follow public meetings, and the spectacle will seem very, very familiar.

“The MTA has made incredible strides in rebuilding the network that makes New York grow and thrive, but we can never be satisfied with what we have done so far,” MTA Chairman and CEO Thomas F. Prendergast said in announcing the commission. “As we prepare the next Capital Plan to guide investment for the next five years, as well as future five year plans, we want experts, stakeholders and customers to offer their thoughts on how to make those investments work for decades to come.”

As far as personnel, Ray LaHood and Jane Garvey are co-chairing this behemoth, and it reads as an international and local who’s who. Academics from New York and officials from Toronto and London will chime in; Enrique Peñalosa will join Denise Richardson and Gene Russianoff. Kathryn Wylde and Robert Yaro will sit at the table as well, and only Richard Ravitch himself didn’t seem to get an invite.

So as the public meetings begin next week at MTA HQ, we can see what’s in store for the reinvention of the MTA. The first questions seem highly practical to those paying attention, but they’ll generate rote answers from the public at large who can attend meetings that run from 5:30-8 p.m. during the week or 12-1 p.m. on a weekday.

What challenges do you think the MTA needs to focus on as it develops its capital plans over the next century? How will population growth impact service? How can we overcome institutional, inter-governmental and jurisdictional barriers? How does the MTA keep pace with technology? Energy efficiency? Innovation? How can the MTA pay for all of this? And how can the MTA do this all more quickly than it does today?

These are obvious questions with hard answers, and while I’m not one to cheerlead when yet another panel is announced, if these professionals can answer even one of these questions, we may be better off after than we are today. It’s a tall order for an agency tasked with carting 6 million people around the New York City area everyday. How can they do it better? Let me count the ways.

In bits and pieces this past summer, the MTA set forth its vision for New York City’s next twenty years. As the city continues to grow and modernize, the MTA and its subways, buses, commuter rail lines and bridges will continue to drive the city’s economy in more ways than one, and as part of an effort to meet demand and continue to provide reliable service, the agency has been arguing since July for twenty years of investment. We know it’s going to cost over $100 billion, and today, those costs and the plan crystallized as the MTA published the 140-page 20 Year Needs Assessment.

The document itself is an impressive feat of planning and an impressive feat of chutzpah too. The MTA is asking for $105 billion over the next twenty years — or approximately the same amount it has spent over the past 30 — without including any funding estimates for expansion projects. (Stephen Smith, now writing for Next City, has more on the cost comparisons.) So the $64,000 question is: What do you get for $105 billion?

What I find most interesting about the document is the way it divides MTA needs from the MTA wants. From the start, the agency is very forthcoming in its needs. It needs $105 billion to maintain current service levels, continue toward a state of good repair and prepare the system for more usage and 21st Century technology. It wants an unstated amount for future expansion which should include a 7 line station at 10th Ave. and 41st St., the rest of the Second Ave. Subway, capacity upgrades for the West Side IRT and the Queens Boulevard line, the reactivation of the Rockaway Beach Branch (page 127!), and even articulated train sets. The price tags for these expansion efforts — the wants — haven’t been included because the MTA, I’ve been told, doesn’t consider them part of the necessary needs for maintenance of and upgrades to the existing system.

One line in particular struck a chord. After presenting a table that shows how the MTA will spend $105 billion with the bulk of that going toward New York City Transit projects, the MTA notes how they restrained themselves. “On a fully unconstrained basis,” the report reads, “the agencies’ needs are even greater than what is included in this assessment since more backlogged state of good repair needs exist than can be implemented.”

Mull that one over a bit. The MTA wants to spend $105 billion on repairs over the next twenty years after spending $100 billion since 1982 and could spend more due to a backlog of work. That is the legacy of neglect and a tell-tale sign that a system which still employs signal components from the 1930s. To defend the ask, the report explains, “The significant investments identified in this assessment, constrained as noted above, are prioritized according to such factors as age, condition, performance, safety and reliability in order to provide the greatest service benefits and maintenance savings to the operating budget.”

In no particular order, then, the MTA has identified a variety of areas for its needs. It needs to upgrade the signal system to implement communications-based train control while bringing online B Division countdown clocks and generally making more real-time information available to the public. It needs to upgrade the city’s bus network. It needs to bring more stations into compliance with the ADA. It needs to add more transfers to streamline operations. It needs to add system resiliency in the face of changing weather patterns.

As the money adds up, though, the MTA argues that many of these needs will result in operational savings. CBTC, for instance, can allow the MTA to run more trains at lower costs. Another need — the Metrocard replacement — can improve interagency relations and reduce fare collection costs. “The future promises the ability to use a single smart card or a cell phone with a smart chip — cell phones being nearly ubiquitous in the New York region — to ride any and all of the MTA region’s transportation systems, from NYC Transit’s subways and buses to the commuter railroads,” the assessment says. This new approach could offer many benefits to the MTA, including increasing bus speeds by shortening the boarding process, reducing labor and cash handling expenses, supporting inter-modal fare payments options and improving customer service through simplified and expanded fare payment options.”

Outside of these operational needs and system upgrades, though, the MTA has capital needs as well. Combining these expenditures results in $68 billion in projected New York City Transit investments. This total includes over $15 billion for signals, $9.4 billion for stations and $8.4 billion for cars. The rolling stock replacement plans for the next 20 years include retiring cars purchased in the early days of the capital plan in the 1980s. The MTA wants to stick with a 40-year replacement cycle, and as it struggles to maintain something resembling a state of good repair, components replaced seemingly recently will near the end of their life cycles.

But what of the fun stuff? We like to dream big, and the MTA here is dreaming practically (albeit expensively). One project set for the 2015-2019 capital plan involves rehabbing the 42nd St. shuttle terminal in Times Square, the only part of that station complex that hasn’t seen work in recent years. “Work will include renewal and reconfiguration of the Shuttle station, both to improve passenger circulation and to make the station ADA-accessible,” the MTA promises. “The existing Shuttle station has various deficiencies, including circuitous customer paths, platform edge gap fillers and other components that are not in good repair, and a general station appearance that does not match the standard achieved through the rest of the Times Square complex.” The Rockaway Line will have to be rebuilt before 2034 as well.

So now what about those wants? The wants are what I like. The wants are what will continue to make the city more accessible and less dependent on cars while permitting growth in areas that are underserved by transit. Those wants are up in the air. The Second Ave. Subway should wrap at least 100 years after it was first proposed, and articulated train sets would do wonders for crowding during peak-hour subway trips. But these are projects that need more dollars and more champions. The MTA has a $100 billion need; how can it find the money for the wants as well?