While Elliot Sander’s recent $10,000 package raise was largely symbolic, the timing, as I argued yesterday, could hardly have been worse. Today, the Daily News editorial board takes the MTA to task for approving the raise. Sure, Sander could have jumped to the private sector; sure, he’s not compensated as well as other transit heads. But when the MTA is rolling back promised service upgrades (more on that in a bit) and generally crying poverty, the time is not ripe for a high-profile raise no matter how small. [Daily News]
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?
Ever looking out for the public’s bottom line, New York State Comptroller Thomas DiNapoli has issued another report on the state of the MTA’s finances. This one reveals that the transportation authority has doled out over $1.2 billion for personal claims and property damage over the last 12 years.
The Times’ William Neuman broke the story on City Room on Thursday:
The report said that over all, the two commuter railroads and New York City Transit received a total of 86,875 claims of all types from 1996 to 2007. Since 1996, 85 cases have been settled for $1 million or more, at a total cost of $233 million, or a fifth of all claims paid.
Over the period covered by the study, claims have generally amounted to less than $100 million a year. Last year they reached $144 million because of the settlement of some unusually large claims. The authority’s annual operating budget is more than $10 billion.
The report — available here as a PDF — isn’t so much as critical of the MTA as it is just laying out the facts. Where the report is most critical is in the infamous LIRR armrest issue. The arm rest settlements have exceeded $285,000. That’s a lot of torn pants.
Most of the other claims and the big-ticket items in particular were focused around safety issues. People filed claims for falling into that LIRR platform gap, for getting struck by trains and for worker-related issues. For their part, the MTA in response focused on improving safety standards underground. Said Jeremy Soffin:
Protecting the safety and security of our employees and customers is the MTA’s top priority. The MTA has made great strides in improving safety over the past ten years, and we continue to pursue new initiatives. Since 1996, the employee injury rate has been reduced by 60% and in 2007 the MTA achieved its lowest employee injury rate ever. Customer injuries have also decreased. Since 1996 the number of customer injuries per million customers has decreased by 28% even while the MTA ridership is at record numbers. As a result, the MTA’s ultimate incurred cost for employee and customer accidents is less than what would have been expected, a savings of approximately $335 million from 1997-2007. In addition, two of the causes identified by the Comptroller of higher recent claims — gap incidents and torn clothing due to armrests on the commuter railroads — have both been addressed.
In the end, it’s hard to be overly critical of the MTA for this expenditure. Considering that billions of people ride the subways each year, the injury rate and the amount paid out per year are relatively slow. It would be better to see the MTA’s paying out zero dollars a year, but in our litigious society, that’s just a pipe dream.
Richard Ravitich’s clock is now ticking. By December 5, Ravitch and his newly-appointed 12-member Committee on MTA Finances will have a ten-year plan on the desks of Gov. David Patterson and the New York State legislature, and the fate of the MTA will be tied to that report.
Patterson on Tuesday unveiled the rest of Ravitch’s committee, and the governor filled it with transportation experts and officials and finance and electricity executives. The committee will now begin its unenviable task of finding tens of billions of dollars for the MTA to meet both its capital budget and its operations budget.
City Room breaks down the well-qualified committee:
- Laura L. Anglin, the state budget director since January.
- Kevin M. Burke, chairman and chief executive of Consolidated Edison.
- Robert B. Catell, chairman of National Grid U.S., a unit of the Keyspan Corporation.
- Douglas Durst, the prominent real estate developer who runs the Durst Organization.
- Peter C. Goldmark, who directs the climate and air program at the Environmental Defense Fund. He was formerly state budget director, executive director of the Port Authority of New York and New Jersey, president of the Rockefeller Foundation, and chairman and chief executive of The International Herald Tribune, part of The New York Times Company.
- Denis M. Hughes, president of the New York State A.F.L.-C.I.O. since 1999.
- Mysore L. Nagaraja, a transportation project consultant who was formerly president of the M.T.A. Capital Construction Company and senior vice president and chief engineer at New York City Transit.
- Mark Page, the city’s budget director since 2002.
- Kim Paparello Vaccari, head of the transportation group at Banc of America Securities.
- Steven M. Polan, a partner at the law firm of Manatt, Phelps & Phillips and a former general counsel to the M.T.A.
- The Rev. Joseph McShane, the president of Fordham University since 2003.
- Elliot G. Sander, executive director and chief executive officer of the M.T.A. since 2007.
I’m a bit intrigued by the appointment of Mysore Nagaraja to the committee considering the circumstances surrounding his departure, but he does have the most intimate knowledge of the MTA capital plan right now. Veronique Hakim is simply the interim head of MTA Capital Construction right now and is not really experienced enough in that role to join this group.
Meanwhile, public officials said all the right things in unveiling this commission. “New York’s leaders have too often underestimated the critical importance of mass transit to the economic wellbeing of the region and the quality of life of our citizens,” Paterson said. “The congestion pricing debate highlighted the need for sustainable funding for the MTA. This Commission will help ensure that the MTA has the resources it needs to expand and maintain a mass transit system that can increase regional prosperity while also curbing sprawl, reducing traffic congestion and improving the environment.”
While the commission is bound to recommend some form of congestion pricing providing a dedicated revenue stream for the MTA and public transit, the commission may bring about some much-need organizational change at the MTA. Ravitch and his commission will investigate “initiatives to maximize MTA efficiencies,” and I have to believe that the commission may look into some of the fiscal problems inherent in the MTA’s operations.
As I’ve said before, Ravitch is facing a tough task, but we need him to fulfill the promise he brings to the job. He’s going to have to ask tough questions of the MTA and demand tough compromises from the agency as well as from the state and its citizens. The economic future of the MTA and our region will depend on it.
Three days ago, the MTA dropped the news that a second fare hike may become a reality in 2009. Lost in the news on Friday were some alarming reports about the state of the MTA’s capital plan.
In discussing the financial state of the transportation authority, Mayor Bloomberg dropped a bit of a bombshell about the MTA’s construction plans. Pete Donohue repoted on Mayor Mike’s statement:
Mayor Bloomberg warned Friday that straphangers could face another fare hike next year – and said the city is broke and can’t help.
The mayor also said the MTA’s construction plan is in “shambles,” and he slammed state lawmakers for sinking his congestion pricing plan – which would have raised transit money.
“I think there is a very good likelihood that we are going to have to face the issue of a fare increase or something else,” Bloomberg said on his weekly radio show. “The city doesn’t have any money to give. We are out of money.”
We know about the fare hike, but we hadn’t heard about the problems facing the MTA’s construction plans. For a while, rumors have swirled about the state of the progress on the MTA’s big-ticket items. Observers have noted a lack of above-ground work on the Second Ave. subway and the LIRR’s East Side Access project. Now, Bloomberg’s statement confirms our worst fears: The MTA could be facing a construction problem.
Across the city, the spiking cost of work is effective progress on buildings and development. Concrete costs are up; raw material prices have gone through the roof; and the MTA is not immune to these increases. A few weeks ago, the MTA noted that real estate revenues were down by nearly $81 million off of projected levels.
The MTA has long said that these problems won’t impact construction and expansion plans, but something has to give. Either we’re facing a fare hike or the MTA is facing a massive economic problem that could bring reduced service and a construction shut down. While these problems are not unique to New York, we can’t really afford to see the MTA fall into a recession reminiscent of the 1970s.
We’ll either see yet another fare hike or the government — the city, the state, the feds — will have to come through with the bucks. Either way, this tale is far from over.
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New Yorkers who rely on the subways for their daily needs are prone to complain, and everyone knows the typical refrains. “Another delay on the 7.” “The L train stalled just past Bedford Ave.” “Signal problems on the A/C/E again.”
At times, subway complaining can almost seem like a game. It’s Subway Misery Poker. Did you have a worse commute than your co-worker? And sometimes, it’s hard not to think that we’re all exaggerating how bad we have it. After all, twenty-five years ago, track fires were a common occurrences and train doors often broke, stranding passengers up and down entire subway lines. The MTA in 2008 is a far cry from the MTA of 1980.
Yet, here we are again in 2008, and maybe things are that bad. Much like in 1980, Richard Ravitch has again been asked to ride in and gallantly save the MTA from sure doom. But just what is the extent of that doom?
In an extended post on amNew York’s Subway Tracker blog today, Matthew Sweeney expounded on the precarious state of the New York City subway system. Those complaints of poor service and frequent delays may be more valid than we as a city would like to admit.
Trains are falling farther and farther behind since at least March 2006. It’s worst in the evening rush where NYC Transit rates itself as running 88% of trains on time in March — the most recent data available — down from almost 92% in March last year…
The number of delays is up as well — an average of 27% over the last 12 months. Delays are counted as any train “abandoned en-route, abandoned at the terminal, and arriving late to the terminal due to any incident.” Anything from a signal problem, a sick passenger or track work can cause a delay. Track work is the most common cause of delays. In March, delays spiked upward with 1,361 more incidents than February. Delays have been on the rise for a couple of years. There were 105,290 train delays in 2006, and 138,446 last year…
Another indicator — the mean distance between failures, which is the number of miles divided by delays caused by the cars themselves — has a bleak prognosis. In March 2008, cars traveled 12% shorter distance before having a problem than they did during the same time last year.
“Every month we’re showing record ridership and we’re not putting any more service out there to accommodate the ridership,” MTA Board Member Andrew Albert said at Thursday’s meeting. “Right now it is crush conditions.”
On top of — or is it behind? — all of these problems with the physical plant, the MTA is suffering an acute money crisis, spurred in part by congestion pricing, in part by a terrible economy and in part by decades of government neglect at the city and state levels. That is where Richard Ravitch comes in. Ravitch has been tasked with finding viable options for the MTA to fund its projected $17 billion capital budget gap. But besides the expansion plans that are in jeopardy, a gap this large would seriously impact the MTA’s ability to maintain what the agency calls a “state of good repair” which, as you can see from stations and cars, isn’t a very high standard.
Without the money, the system will quickly tumble from good repair to bad repair. While it’s hard to imagine returning to those dark days of the 1970s and 1980s simply because the city is safer than it was twenty and thirt years ago, the subways will quickly become grimier and more unreliable than many New Yorkers ever remember them to be.
Eliot Brown writing in The Observer earlier this week profiled Ravitch’s tough task, and there’s plenty to like about Ravitch and his commission. I’m eagerly awaiting their recommendations.
So it is left to Mr. Ravitch and his commission, with members expected to be named in coming weeks, to sort through the mess and chart a viable course for the M.T.A. and State Legislature to follow.
Commissions such as these often follow a similar formula, as politicized members produce a report with a more or less predetermined outcome so as to give the commission’s creators a perceived mandate to proceed with whatever policy action they had intended, perhaps with a few tweaks.
But such a result is unlikely from Mr. Ravitch, those who know him say, as he has a well-known reputation for freely speaking his mind and fiercely defending his independence, an element considered key to his successful track record.
“He’s incredibly blunt about things, and may put some people off, but on the other hand you can depend on what Richard is saying as being what he really believes,” said Robert Yaro, president of the Regional Plan Association. “He is a remarkable man.”
And that is where we are now with the subways. The system is nearly maxed out in terms of capacity, and the MTA is without the money — thanks to anit-congestion pricing foes — to address the situation. For the second time in less than thirty years, New York and the MTA will turn to Richard Ravitch to rescue their subway system. This time, the system is simply on the brink of collapse instead of a full-fledged nightmare, and we all have to hope that Ravitch can pull this rabbit out of his hat. The future health of New York depends on it.
The 1972 New York City Subway Guide courtesy of the Field Guide to New York City Subway Maps.
Every few months, the plan for a one-seat Metro-North ride from Manhattan to the Stewart International Airport in Newburgh rears its ugly head. At the end of last week, the MTA, at the behest of Senator Chuck Schumer, committed $2.7 million to study a possible Stewart Airport rail link. The Port Authority will contribute the same amount to the study.
While some commenters here in August noted that the Port Authority, operators of the airport, would be paying for the rail connection, that the MTA is now doling out money just to study the issue is a bad sign. Meanwhile, in my opinion, the region’s transportation agencies and the state’s political leaders are approaching the airport and its potential passengers through the wrong lens.
The Poughkeepsie Journal reported on the upcoming jointly-funded $5.4-million study:
Schumer said funding has been slow in coming but that the MTA’s allocation of the remaining $2.7 million needed to jump-start the study avoids the need to wait for a federal appropriation from the 2009 fiscal year. Instead of waiting until 2009, he said, the study can begin in the next few months…
“This is the moment when talk turns to action,” Schumer told a group gathered at the airport. He estimated the alternative study and the following environmental impact study would be done by late 2010. “It means the project can begin this summer,” Schumer said. “It’s also going to help us bring more air service.”
Peter Cannito, president of Metro-North railroad, said the study is broader than just rail access to Stewart Airport. He said the study, called the West of Hudson Regional Transit Access Study, will include upgrades to the Port Jervis line that runs through Orange and Rockland Counties to reduce the travel time into New York City.
This study will also include looking at all means of getting to and from Stewart, including ferries and buses to Beacon’s Metro-North station.
I’m all in favor of extending commuter rail service into parts of the state that don’t have it but only if the areas could really use it. I’m not at all in favor of spending billions of dollars to build a one-seat ride to Stewart Airport at the expense of other, more vital projects that would have a more immediate impact on the Metropolitan Area.
As I wrote in September, the idea of a one-seat ride from Manhattan to Stewart is simply misguided. “It right now takes an hour and a half on Metro-North/NJ Transit to reach the Salisbury Mills stop from Penn Station,” I wrote. “Considering that it would take another train ride to get to the airport and airlines are asking people to get there 90 minutes earlier, travelers would have to begin their journeys up to four hours before their scheduled departure time.”
But that’s not to say that an expansion of service at Stewart would not be useful. Rather, the Port Authority should figure out how to make Stewart transit-accessible so that it siphons Westchester and Northern New Jersey travelers away from the city’s three major airports. If the Port Authority can beef up Stewart service so that travelers north and west of the city avoid the endless commutes to JFK, LaGuardia or Newark Liberty Airports, Schumer could realize his goals of cutting down air traffic congestion from those three airports while providing travelers with a viable alternate airport.
In the end, the $2.7 million are relatively small beans for the MTA. But what if the study recommends a Metro-North line to the airport. While I’m sure the Port Authority and state will elect to bear some of the costs, as we’ve seen with the 7 line extension, “some” never equates to “all,” and the MTA is bound to be at least partially on the hook for a project that simply isn’t worth it.
If the subways seem more crowded that usual lately, it’s not an illusion spurred on by sluggish trains and grumpy commuters. According to the numbers released by New York City Transit, subway ridership is on the climb yet again, and the figures could reach near-record levels by the end of 2008.
The MTA this week announced the final tally of subway and bus riders through February. The subways have seen over 256.5 million riders this year while 118.5 million have ridden the city’s buses. Last year through February, 240.2 million swiped their MetroCards through subway turnstiles while 114.9 dipped their way onto buses.
If the subways maintain this six percent growth rate throughout 2008, we could see upwards of 1.66 billion subway riders this year. This total would be a new record in the MTA era and just 300 million off the all-time peak subway ridership figures.
The make or break moment will come next month when the MTA releases the March 2008 ridership figures. Then, we’ll see what — if any — effect the most recent fare hike had on ridership figures. In March 2007, 135 million people rode the New York City subways, and I believe even more rode the trains this March despite an early March hike. But will that number increase again by another six percent?
Internally, New York City Transit and the MTA don’t anticipate a decline in ridership, and they say that an increase is overwhelmingly likely. The average fare, after all, didn’t increase too much beyond the February 2008 levels of $1.29 per subway ride per customer. No matter how you slice or dice the fare hike, it’s still significantly cheaper and way more convenient to pay $81 for a monthly Unlimited Ride MetroCard than it is to pay $45 every five days to fill up at the pump. So the numbers will go up, but the rise might not be as drastic as it was from February 2007 to February 2008.
Meanwhile, while the increased ridership figures means more bucks for the MTA’s coffers, the demands of 1.6 billion people on the system will soon become a bit overwhelming. The shortcomings of under-served lines will grow more evident; the crowds on the packed lines will grow worse. Soon, we’ll need a tit-for-tat from the MTA. More people will ride the trains, but we also need more service to meet that demand. From where will the funds for that service — a vital necessity for the economic health of New York — come?
Photo above of a crowded 7 train by flickr user scottpowerz.
In early April, as the depths of the MTA’s financial problems came into view, Gov. David Patterson asked former MTA Chair Richard Ravitch to lead a blue-ribbon panel. Ravitch’s task is to find and present the various ways through which the MTA can find the money it needs for both the $3-billion gap in its current capital plan and the $17-billion abyss in its next five-year construction program.
It is a daunting task indeed, but if anyone is up for the challenge, it is Ravitch, who helped lead the MTA out its darkest days. In 1979, Ravitch took the reins of the beleaguered transit authority. When he stepped down four years later, he had implemented the first five-year plan and had the dangerous and decrepit subways on the rebound. Twenty five years after stepping down from his MTA post, Ravitch is set to lead what Patterson, in his April 8 speech announcing the commission, called “a blue ribbon panel of business leaders, civic leaders and economists.”
“Basically, I want the commission to examine three basic issues,” he said. “One is how to balance the subsidizing of the MTA Capital Plan, through the subscription of those who use the services and a broad balance of taxes for businesses and the rest of the public. Secondly, what we want to look at are the elements of Mayor Bloomberg’s plan that all of us like, and that perhaps we can still weave them into the process. And finally, we have to get the MTA out of its habit, which is 25 years old, of refinancing and basically covering debt with excessive borrowing.”
In acknowledging the weight of this task, Ravitch also noted the near-impossibility of adequately addressing this charge. “I am not sure it is anything but a Sisyphean task, but I will undertake it with energy and enthusiasm,” he said to The Sun on April 9.
An an overview piece released this week by the Gotham Gazette, Graham Beck, the managing editor of Transportation Alternative’s Streetbeat newsletter, tackles the challenges facing Ravitch and offers up the usual suspects as revenue sources:
To cover all these costs, the MTA has four potential funding sources: fares from subway, bus and commuter-rail riders; city, state and federal government contributions; an increase in existing taxes dedicated to transit, like the mortgage recording tax; and new revenue streams slated for transit, such as congestion pricing.
An increase in all four of these sources will almost certainly be needed if the MTA wishes to maintain the level of service, reliability, cleanliness and safety that 8.5 million daily riders have grown accustomed to and if the agency hopes to expand and improve the system.
Another fare hike within the next 20 months or so seems inevitable at this point. Without the congestion pricing revenues, the MTA has been pushed into a corner by the New York State legislature. But at the same time, congestion pricing may not be so dead. As Beck writes, Ravitch and his commission are sure to suggest traffic fees as a means to securing the financial future of the MTA.
Beck also speculates, as per prior Regional Plan Association studies, that the commission could turn to payroll and commuter taxes or an increase in the gas tax as well. The panel will also probably urge the state and federal governments to up their contributions to public transportation as well.
Right now, we know what the commission will produce, and it’s hard to argue with any of their outcomes. It also will be hard to imagine many — or any — of their proposals garnering much support among our elected officials. We can only hope that, when the time comes to fight for the money and the measures, those in favor of them wage a better PR campaign than the failed effort put forth by Mayor Bloomberg to back his congestion pricing scheme. The money is there; we just have to find a way to funnel it to the MTA.
Metro cars in Stockholm come wrapped in advertising. (Photo by flickr user MalteR)
As the depth of the MTA’s financial crisis has come into focus, I’ve written extensively on advertising options that aren’t being exploited underground. Each time I discuss advertising, I run across a few people passionate about their dislike of possibilities of more subway advertising.
I started this advertising exercise last July when I suggested that the MTA explore full-station branding options. We could have a Times Square station sponsored by Disney or a Yankee Stadium stop sponsored by Adidas. We’ve seen station-wide poster campaigns, but truly branding a station could result in a windfall for the MTA’s coffers.
I’ve also discussed floor-to-ceiling ads for subway cars. We’ve seen this in the 42nd Street Shuttle, and while these cars are not alway aesthetically pleasing, these types of advertising campaigns exploit available surface space. Some people find them ugly; some find the implementation to be less than ideal; but money is money.
Last week, the MTA unveiled another potential ad campaign in its infancy: Much like buses, the MTA will begin to sell advertising space on subway car exteriors. According to The Post’s Patrick Gallahue, the Shuttle will once again serve as the test for new forms of advertising. Some cars are running Continental Airlines posters to complement the internal ads, and if this campaign is successful, the MTA may look to expand this form of advertising to other train lines.
Again, I am all for this type of thinking. If the MTA can capture additional revenue this way, then so be it. If you don’t like it, thank Sheldon Silver and the State Assembly Democrats for derailing congestion pricing. Thank Mayor Bloomberg for his poor PR campaign in support of his PLANYC2030 measures.
Over the last ten years, the MTA has nearly tripled its advertising revenues from $37 million in 1997 to over $105 million in 2007. With purse strings in New York tightening, the agency needs the money anyway it can get it, and outside of a fare hike, advertising is the best route for revenue.