BusesManhattan

BusTime arriving in Manhattan this month

by Benjamin Kabak
written by Benjamin Kabak on October 3, 2013

While exiting the Times Square station near the Shuttle platform’s Track 4 exit today, I noticed the sign you see at the top of the post. For Manhattan bus riders, a big day is coming soon as the MTA has promised that BusTime, it’s real-time bus tracking system, will be available on all of the borough’s buses some time this month. I reached out to the MTA for more details and was told that the announcement will come next week.

BusTime is the MTA’s distance-based bus location system that was developed in-house. While the system does not include countdown clocks, it comes with a text message-based system and smartphone enabled apps as well. For Manhattan bus riders, the arrival of BusTime will take the guess work out of waiting for some of the city’s least reliable and slowest bus routes around. It’s a solid first step.

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Capital Program 2015-2019

The 20-year needs vs. the 20-year wants

by Benjamin Kabak
written by Benjamin Kabak on October 2, 2013

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?

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MTA Economics

Link: Inside the MTA’s catastrophe bond offering

by Benjamin Kabak
written by Benjamin Kabak on October 2, 2013

When the MTA announced its move to purchase catastrophe bonds as a hedge against future storm surges, it raised a few eyebrows among both the reinsurance world and transit advocates. The catastrophe bond market is a highly specialized one, and the MTA had become the first major public entity to wade into it. Now, as details emerge the bond issuance appears to offer investments a big payoff and provides the MTA protection against unlikely events. It is, essentially, a private insurance.

In the first in-depth piece to examine the catastrophe bond sale, Tessa Stuart of The Village Voice looks at the big bet and the big payoff. As she frames it, after Sandy when the MTA had to turn to insurance to cover billions of dollars of damage, it was clear that the agency’s premiums would be unaffordable moving forward. And so to test the market, the MTA turned to catastrophe bonds. She writes:

That’s how the fate of the subway system ended up in the hands of just 20 investors. If a hurricane were to descend on New York tomorrow, repairs to the subway system would be paid for with money put up by those investors, who bought shares of a so-called catastrophe bond the MTA sold this past summer. It’s not philanthropy; it’s an investment. The same 20 bankrollers stand to make millions, provided another Sandy doesn’t hit tomorrow or anytime in the next three years.

Before Sandy, the MTA owned an insurance policy worth $1 billion. After the storm, says the agency’s director of risk and insurance management, Laureen Coyne, “It was impossible to get that kind of coverage.” Even half a billion dollars’ worth would have cost twice as much. The MTA was particularly concerned about its protection in the event of another flood…

Without a lot of options, the MTA dove headfirst into the small, strange catastrophe bond market, where an estimated 100 investors worldwide do $16 billion worth of deals…In order to sell the bond, the MTA’s in-house insurer, First Mutual Transportation, enlisted a law firm to create an offshore entity dubbed MetroCat Re, located—for “various legal and tax reasons,” Coyne says—in Bermuda. All the money involved in the bond arrangement goes through MetroCat Re.

Essentially, the bond is a simple high-stakes bet: If a catastrophic hurricane causes a Sandy-magnitude storm surge on or before August 5, 2016, investors lose every cent they ponied up. No hurricane, and they get all of their money back, plus a return that will top 13.5 percent.

The MTA put the bond up for sale in July, expecting to sell $125 million in shares, but the interest was overwhelming. The agency ultimately sold more than $200 million to just 20 investors. (Ostrovskaya describes the buyers not as individuals, but “pretty much specific catastrophe bond funds that specialize in this type of investment.”)

The surge protection supplements the $500 million in insurance the MTA has purchased to cover perils such as wind and fire. That policy costs the MTA $46 million a year.

It’s easy to see why the catastrophe bond was popular—it’s an incredibly lucrative proposition. A $10 million share could pay off more than $1.35 million in just three years. The money comes straight from the MTA, which makes quarterly payments into a trust, in much the same way that it would pay an insurance premium. At the end of three years, if disaster hasn’t struck, the investors cash out.

Stuart’s piece goes on to explain how a storm surge high enough to trigger the bond conditions is rather unlikely, but I think that’s besides the point. The only way the MTA could insure against future losses was through these bonds. All told, the various investors could make a combined $27 million — a total similar to what the MTA is paying for insurance — and the agency gets more coverage than it can from insurance companies right now. It’s an intriguing situation, and it’s the one time we’re hoping the MTA has to shell out the money in the end rather than suffer through another catastrophic storm.

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Penn Station

Previdi: Why can’t we all just get along?

by Benjamin Kabak
written by Benjamin Kabak on October 1, 2013
A set from the next Star Trek movie or an actual rendering of SOM's plans for Penn Station?

Interagency cooperation just isn’t as alluring as SOM’s futuristic dreams for a new Penn Station.

There’s an expensive movement afoot to replace Penn Station with something fancy while moving Madison Square Garden and generally spending billions on something that will have only a minimal impact on actual trans-Hudson rail capacity. It’s drawn support of various urban planning groups, and city politicians have granted the World’s Most Famous Arena only a ten-year occupancy permit as the various stakeholders struggle to develop a plan. There’s no doubt that something should be done to improve Penn Station, but I’m skeptical that spending billions on cosmetic upgrades is the right move.

As the debate over the train station’s future has unfolded this year, Bob Previdi, a fifteen-year MTA vet, has emerged as a voice against the new Penn Station. At least, he has argued, Amtrak, New Jersey Transit and the LIRR should try to work together to improve conditions at the old station. In April, he argued for through-running as a simple way to increase capacity, and today, he has an Op-Ed in The Times calling for multi-agency cooperation.

That these arguments need to be put forth in the first place speaks volumes about the provincialism of transit agency fiefdoms in the city, but let’s set that aside for now. Here’s Previdi’s argument:

Let’s face it, though. A new Penn Station, if it happens, would take billions of dollars, agreements between the federal government and multiple agencies of three states, and a decade if not more to accomplish. (Amtrak is expected to move across the street to the Farley Post Office by 2035.) Rather than wait for all of that to unfold, there are a few simple things those entities and Madison Square Garden should do now to improve the experience for the unfortunate 440,000 intercity and commuter rail passengers who pass through the station’s claustrophobic maze every weekday…

As a starting point, the executives of the three railroads that operate out of the station — Amtrak, which owns it, and New Jersey Transit and the Long Island Rail Road — should put their heads together to develop a plan to provide seamless customer information and ticketing. Now, New Jersey Transit operates on both the Seventh and Eighth Avenue sides of the station, Amtrak on the Eighth Avenue side, and the Long Island Rail Road below West 33rd Street, where the subways are. For all of the infrastructure issues that plague the station, the biggest problem for passengers is that each rail line operates as if the other two don’t exist. To navigate the station, you need to know where to buy your ticket and which monitor to watch for your train. Good luck if you’re not familiar with the station and its catacombs…

More visible and universal signs that point people to the various railroads, subway lines and street and building exits would help people find their way. So would maps that show passengers how to find the station’s many retail shops and food outlets. Most malls post maps of their layouts. Why can’t Penn Station have one map?

A more inviting retail atmosphere would also improve the customer experience. Grand Central Terminal, owned by the Metropolitan Transportation Authority, hired a professional leasing firm to manage the retail mix after the station was renovated in the 1990s. Union Station in Washington did the same thing. Both stations are now hugely successful as inviting retail and restaurant locations. Perhaps Penn Station could be, too. These goals — universal ticketing, access to all arrival and departure information, better signage throughout the station, a more engaging (and perhaps more profitable) retail experience — might seem obvious. The problem is that territorial claims within the station run deep.

It’s hard to put forward an argument against Previdi’s claims. I’ve tried to find one and can’t. It would be nice to have a Grand Public Space to welcome Amtrak riders into New York City, but that won’t happen for decades and at a steep cost. In the meantime, every politician worth his or her salt should be pushing Amtrak, New Jersey Transit and the LIRR to the negotiating table and forcing them to stay there until this is resolved. If the MTA could be pressured so easily by two state governors to hand out refunds over a temporary partial service outage, surely we can act to resolve some of Penn Station’s more fixable and obvious problems.

The problem with inter-agency cooperation is that, ultimately, there is no ribbon-cutting. There is no monument to the lasting legacy of the politicians who fought for the cause or delivered the funding. There’s an uptick in traveler appreciation and a corresponding downtick in stress and inconvenience, but that’s about it. Before we spend billions, though, let’s see what we can do with Penn Station spending just a few million and trying to cooperate. It’s a lesson we all learned in kindergarten.

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AsidesMetro-North

MTA Board approves some form of refund for New Haven Line riders

by Benjamin Kabak
written by Benjamin Kabak on October 1, 2013

The MTA Board voted this afternoon to approve some form of ticket credit for riders of Metro-North’s New Haven Line who hold weekly or monthly tickets valid during the current power outage. The railroad has not yet determined how the credit will be structured or when it will be available, but the agency plans to release further information later this week. All in all, the credit is expected to cost the MTA approximately $2 million per week in lost revenue, and it is likely that the agency will seek to recoup costs from Con Edison.

“Because of the unprecedented magnitude and duration of this disruption, the MTA Board has concluded that a credit for our customers is simply the right thing to do,” MTA Chairman and CEO Thomas Prendergast said in a statement. “I want to thank my fellow board members for taking swift action to address this situation while we work to support Con Edison in restoring full power to the line.”

Metro-North, meanwhile, is adding five more peak-hour trains tomorrow, bringing service back to about 65 percent of normal. In my view, that means any credit for tomorrow should top out at 35 percent of the pro-rated value of a ticket. During a press conference this afternoon, MTA officials cautioned that the refund should not set a precedent for future service disruptions, and some board members rightly argued that Metrocard holders should have received a similar credit for Sandy-related outages last year. In the poll I conducted earlier today, those voting for some form of refund eked out a 51-49 win over those voting against any refund.

Meanwhile, for those wondering what to do with their newfound riches sure to total ones or perhaps tens of dollars, why not check out the new Shake Shack in Grand Central Terminal which is opening on Saturday? The burger joint replaces Zocalo and will be forking over rent of around half a million per year for the next ten years with the MTA owed 8 percent of gross sales over a certain threshold amount.

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Metro-North

Quick Poll: The New Haven Line refund question

by Benjamin Kabak
written by Benjamin Kabak on October 1, 2013

Later this afternoon, the MTA Board will host an emergency meeting to consider the question of refunds for New Haven Line Metro-North riders. The move comes after Connecticut Gov. Dannel Malloy called upon the MTA to expedite a refund process for riders facing slower and less frequent service as Con Ed continues to repair the damaged feeder cable. With repairs unlikely to wrap before next week, regular riders will have suffered through nearly two weeks of delays.

“Approving a refund to commuters isn’t just the right thing to do,” Mallooy said in a statement yesterday, “it’s what they need to do. It’s incumbent on the MTA and ConEd to deal with this problem and get it fixed, and it’s critical that Connecticut residents get reimbursed as quickly as possible.”

So here’s my question: Is it the right thing to do? Is it that important? I keep thinking back to similar calls in the aftermath of Sandy when subway service was not just slightly worse but shut down completely for days. Metrocard users received no such refund or time extension. Why is Metro-North any different?

On the one hand, it’s far easier to process Metro-North refunds. Cards run for full calendar months or weeks, and the MTA can easily add more time. Plus, this was not an act of nature; in fact, it sounds as though Con Ed will carry the blame for the incident. The MTA should get reimbursed for any unplanned expenses incurred during the outage, making a refund as easy as spending someone else’s money.

That said, New Haven Line service hasn’t been non-existent in the intervening week and a half. Trains have run; the Harlem Line has cross-honored fares. The MTA is doing what it can to ease travel woes, and if Metrocard users couldn’t get refunds during Sandy when insurance would have covered some of the costs, why should suburban riders now?

We’ll know more at around 4 p.m. when MTA officials address the media, but I’m curious to see the results of this poll.

Should New Haven Line passholders receive a refund?
View Results
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Second Avenue Subway

GUYS, the Second Ave. Subway is really far underground, and The Times is ON IT

by Benjamin Kabak
written by Benjamin Kabak on October 1, 2013

Who needs subway ventilation grates when we’ve got this to look forward to instead?

One of the dirty little not-so-secrets about the latest round of MTA construction concerns just how far underground everything is. East Side Access checks in at a depth of 180 feet; the 7 line extension will be around 80 feet deep; and the Second Ave. Subway stations around the same. As a comparison, some of the original IRT stops were a flight of stairs below the surface.

As a practical and operation matter, these depths mean lots and lots of escalators. The MTA will install fancy escalators at the end of the 7 line that are at an incline. They’ll install 47 escalators to deliver folks from the absurdly deep East Side Access cavern with travel times long enough to catch up on sleep, eat lunch or read a book. The Second Ave. Subway will also have escalators but clearly not to the same extent as the deepest of the deep.

New Yorkers aren’t used to these escalators in the same way as, say, subway riders in Washington and underground riders in London are. Our system is close to the surface with stays. Much of the system predates escalators, and at those stations that have them, constant maintenance problems seem to crop up. And anyway aren’t we all too impatient for a slow-moving staircase?

These deep stations will be a bit a shock to the system for those of us used to sub-surface transit being only a flight or two downstairs. Even the four-level descent to the 6th Ave. line at West 4th St. will seem a bit tame by comparison, and so instead of covering the why — why are we building such deep subways anyway? — The Times has taken human interest transit stories to a new level. These new subway stations will have no grates, Sam Roberts has discovered.

For nearly 110 years, since the advent of underground trains in New York City, the metal sidewalk grates have been about much more than mundane natural ventilation for miles of subterranean subway tunnels. They have become urban artifacts, all 39,000 of them. They are the bane of women in high heels; a place for flicking cigarette butts, for expectorating chewing gum or for dropping valuables; a source of warmth to ward off a stiff winter’s wind; and a frightening opening to detour around.

But when the first phase of the Second Avenue subway makes its debut in 2016 — the first major expansion of the system in over half a century — these familiar, if unappealing, pieces of the city’s streetscape will be missing. Instead of flowing naturally from sidewalk grates, air will be pumped in and out of mechanical ventilating towers near every air-conditioned station, said Michael Horodniceanu, the president of capital construction for the Metropolitan Transportation Authority. “No more heel problems,” Dr. Horodniceanu said.

In addition to breaking heels, grates are for … avoiding, because they emit the unmistakably dank smell of the city’s underbelly or because they may seem more rickety than a cracked concrete sidewalk. They give way on the rarest of occasions, especially ones in the road that are rattled by heavy vehicles. In 1988, a woman getting out of a taxicab in Brooklyn fell through a grate to the tracks 50 feet below; officials said the grate had been weakened by cars driving over it during road repairs.

It’s truly hard to grow nostalgic over subway grates, but somehow, Roberts has accomplished just that. And yet, he doesn’t explore why the subways will be so deep as to make grates completely useless and completely necessary. But we should know, why? It’s because the MTA is constructing deep-bore subways so as not to risk the ire of a cut-and-cover NIMBYism. Much as how an elevated line will not see the light of day despite advances in engineering reducing the noise and blight, cut and cover and the disruptions it brings will never return to New York.

In exchange, we have billion-dollar station caverns and tunnel boring machines that chew through Manhattan schist. We have massive ventilation structures that will likely be architectural eyesores above street level as well, but hey, at least your keys and Marilyn Monroe’s dress are safe. That’s what counts, right?

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PANYNJ

What’s really driving the PATH airport extension?

by Benjamin Kabak
written by Benjamin Kabak on September 30, 2013

So little for so much: A possible route for the PATH’s $1 billion extension to the airport.

A few weeks after hearing once more about the Port Authority’s on-again, off-again plans to send the PATH train to New Jersey, a new story in The Wall Street Journal has me wondering about the impetus for such an extension. New Jersey Governor Chris Christie wants one thing while Newark is angling for another reason, but the cost and planned connection — to airtrain and not the airport itself — should raise more than a few eyebrows.

Ted Mann writes on the horse trading involved in the PATH extension:

In talks with United Airlines, the Christie representatives have suggested that they would direct the Port Authority of New York and New Jersey to begin a long-contemplated extension of the PATH train to Newark’s airport rail station, providing a long-desired direct rail link with Lower Manhattan, these people said. In exchange, these people say Mr. Christie, via Port Authority Deputy Executive Director Bill Baroni, has asked United to provide service to a slate of cities from Atlantic City—a small airport with a spotty track record of supporting commercial service. United is the dominant airline at the Newark airport, carrying about 70% of the passengers.

United has balked, the people said. And the Port Authority has sent mixed signals about whether it will include the PATH expansion, which could cost $1 billion or more depending on its length, in its new capital plan…

United might be loath to accept a deal for Newark improvements in exchange for flying from Atlantic City because the PATH expansion would be a greater benefit for passengers than for the airline, which is already flying nearly full aircraft out of Newark, said Michael Boyd, president of Boyd Group International, a Colorado-based aviation consulting firm that has studied Atlantic City in the past. “Those airplanes out of Atlantic City probably won’t make money,” Mr. Boyd said. “Atlantic City’s airport is called Philadelphia. You go right across the Pine Barrens and you’re there.”

Since word of the Port Authority’s move to consider the extension leaked a few weeks ago, the back-and-forth has been confusing at best. An event planned for mid-September was canceled shortly after the original Crain’s article appeared, and Newark officials are pushing for the extension because it would benefit its residents seemingly more than anyone else. Still, this latest story raises a few questions.

Most importantly is the why of it all. Is Christie interested in a PATH extension because he wants to help out Jersey City and Newark (along with Lower Manhattan and Brooklyn) residents get to the airport quicker, easier and cheaper? Or is he trying to spend $1 billion of state money to convince United to fly into Atlantic City, for some reason? Does a $1 billion extension to the AirTrain terminal make sense without direct service to the airport terminals or would restructuring fares on New Jersey Transit between Newark-Penn Station and the EWR stop make more sense? According to Mann, a direct extension to the airport terminals would cost around $3.2 billion, more than three times the amount of the extension to the AirTrain. (And why does an extension to a preexisting station over a preexisting ROW cost $1 billion anyway?)

Maybe sending PATH to the airport is a good, worthwhile idea that can help ease travel to Newark; I’m not saying it isn’t. But a half-baked proposal that costs too much and is being put forward for purposes of a trade-off likely isn’t the right answer.

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Metro-NorthService Advisories

Refunds may be on tap as New Haven Line to be at 50 percent for another week

by Benjamin Kabak
written by Benjamin Kabak on September 30, 2013

I’ve been in Houston all weekend watching Mariano Rivera and Andy Pettitte close out their spectacular careers while the painful 2013 Yankee season drew to a merciful close, and I only now just realized that the service advisories never went up on Friday evening. My apologies for the oversight. I could try to make it up to you by bringing home by bringing home one of the eight billion parking lots that mars the face of Downtown Houston and has otherwise made it a ghost time after offices close up shop for the weekend, but I’m not sure I could fit them in my suitcase.

Anyway, joking aside, I have a variety of updates for those Metro-North New Haven Line riders itching to get back to a normal routine. Service is still not yet back to normal, but the MTA hopes to offer service for approximately half of its regular weekday customers. Still, the agency is urging those who can to travel outside of the rush hour and utilize some park-and-ride spaces in Westchester County and the Bronx, if possible. Considering how Joe Lhota has been pushing park-and-ride as a major piece of his transportation platform, we may see this week just how it all works out.

“Con Edison’s temporary substation allows us to run very limited electric trains through this critical section of the New Haven Line for the first time since power was disrupted last week, but it’s still far less than the normal service our customers expect,” MTA Chair and CEO Tom Prendergast said. “While Con Edison works to restore full power to their damaged feeder cables, the MTA is doing everything it can to accommodate New Haven Line customers on other services.”

The full schedule and all of the details are available in the trip finder on the MTA’s website. The current plan will remain in effect up to and including October 7, when Con Ed estimates it will finish repairs on the feeder cable its own crews knocked out of service last week. The MTa explained that the reduced schedule is a result of the temporary repairs made along an eight-mile section of track between Harrison and Mount Vernon. The limited power supply means that only two electric trains can operate at one time and only under very limited loads. These trains will run express along that stretch of rail as accelerating draws the most power. Diesel trains will provide additional service.

Furthermore, nearly 8600 parking spaces at Orchard Beach, near Yankee Stadium, near Rye Playland and at the Kensico Dam in Valhalla will allow riders to stash their cars and hop on a shuttle bus. It’s not ideal, but it’s a start.

Meanwhile, the MTA is considering refunds for New Haven Line customers (though I question if Con Ed should be the ones fiscally responsible). Prendergast says he will make a “strong recommendation” to the MTA Board to allow for refunds or credits for those with monthly or weekly tickets. In the past, the agency has eschewed refunds, and recently, for instances, Metrocard holders were unable to draw a refund or see added time added to their cards in the aftermath of the extensive Sandy shutdowns last year. But under pressure from Connecticut Gov. Dan Malloy, agency officials have reconsidered their stance. We’ll see where this goes.

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MTA Economics

As economics improve, should the MTA stave off planned fare hikes?

by Benjamin Kabak
written by Benjamin Kabak on September 27, 2013
The MTA's debt problem, in handy chart form.

The MTA’s debt problem, in handy chart form.

The MTA is sitting on top of a substantial debt bomb. By 2017, the amounts owed by the agency to its creditors will reach $39 billion, and while much of this debt comes from capital expenditures, debt service payments — which are expected to reach $3 billion annually by 2018 — burden the operating budget instead. These figures do not account for the MTA’s next capital plan of around $28 billion, a significant portion of which will be funded through the issuance of more debt.

Agency officials are well aware of the debt problem. They know that the MTA’s lending capabilities may soon be maxed out, but a perfect storm of conditions have left the agency with few other choices. With drastically reduced direct contributions from the city and state, the MTA has to bond out maintenance projects that keep the system running or else risk a slide back into the conditions of the malign neglect of the 1970s. These problems aren’t new or a secret.

Debt, though, is boring. It’s complicated and abstract, and few people from riders to consumers of the news truly care about the abstract debt on the books of a state bureaucracy. What they care about instead are the fares and the service. In a utopian world, customers pay less for more service; in the real world, customers are paying more for incremental service upgrades. Sometimes, they pay more just to maintain the current service levels. Fare hikes rile up the angry masses and provoke outrage, some warranted and some not, from politicians. Fare hikes, of course, are tied to debt, but that’s a level of complexity that most people don’t need or want to care about.

Still, certain government bodies should rise above the populist calls against fare hikes. Whenever the MTA’s budgetary conditions improve, as they recently have, anyone with a megaphone yells for fare hike reductions. It may make for happier customers and, perhaps, more riders, but it does not make for sound fiscal policy. Today, from New York State Comptroller Thomas DiNapoli, we have one of those calls.

In a generally positive report issued today [pdf], DiNapoli found that, after years of troubles, the MTA budget looks pretty good. A combination of unexpected financial contributions and aggressive belt-tightening has led the MTA to realize nearly $2 billion in resources. Over the past seven months, the MTA has reduced out-year gaps to a total of $240 million (down from $638 million) and did so through higher tax revenues, lower pension contributions, lower energy costs, lower debt service and lower health insurance costs. Internal restructuring and cuts as well as an attempt to lower paratransit expenditures has contributed as well.

Yet, even while acknowledging the MTA’s debt problems, DiNapoli chose to focus on how fare increases have outpaced inflation over the past decade and how avoiding planned fare hikes in 2015 and 2017 should be a priority. It is a truly populist stance from someone who is supposed to be responsible for maintaining the fiscal integrity of state agencies. “The MTA’s financial outlook is much improved,” DiNapoli said in a statement. “While funding the next capital program and improving services are critically important, reducing the size of planned fare and toll hikes must also be considered. There is plenty of time before the next scheduled fare increase for the MTA to refocus its efforts on reducing waste, which could go a long way toward easing the financial burden on commuters.”

The MTA’s problems stem from a history DiNapoli is in danger of repeating. For decades, politicians kept the subway fares artificially low at five and later ten cents. Only through recent aggressive fare hikes have the historical inflation trends matched the five-cent fare in 1904 to the current fare in 2013. Fares over the last seven years have risen 47 percent with no corresponding inflationary jump.

But the agency finds itself between that proverbial rock and a hard place. The best and most reliable way for the MTA to generate more revenue is through fare increases, and without a more stable funding stream, fare increases will continue. It’s also disingenuous for the state comptroller to complain on one page about skyrocketing debt and on the other call for a moratorium on fare increases.

So straphangers and the MTA are stuck. We’re stuck with fare hikes that won’t step and debt obligations that won’t simply disappear. It would be nice to keep fares at current levels for longer than 24 months, but it wouldn’t be a prudent fiscal decision on behalf of the agency tasked with overseeing our transit system to do so.

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