NEW YORK CITY-The opening sentence of Lt. Gov. Richard Ravitch’s report on transportation infrastructure, released this past Thursday, spells out the problem in stark terms: “New York State currently lacks the revenues necessary to maintain its transportation system in a state of good repair, and the state has no credible strategy for meeting future needs.” Developing that strategy will entail the state mapping out what Ravitch calls “a long-term blueprint that explains how it will meet its transportation needs. Otherwise, the state risks losing its ability to deliver projects that are essential for preserving safety, improving quality of life and maintaining economic competitiveness.”
It’s an argument with which Richard T. Anderson, president of the New York Building Congress, wholeheartedly concurs. “Lieutenant Governor Ravitch has produced a report that expertly lays out the challenges and choices we must confront regarding New York’s vast network of roads, bridges and mass transit,” Anderson says in a statement. “His report can serve as a blueprint for the Cuomo administration and the State Legislature, which will need to quickly develop a set of priorities and financing options to reverse the recent declines in the condition of our highways, physically maintain the existing transit system, and continue with such major projects as the Second Avenue Subway and East Side Access.”
Although the issues Ravitch describes exist statewide, they’re especially germane to New York City and its metropolitan area. Large-scale capital projects such as the Second Avenue Subway and East Side Access, both under the aegis of the Metropolitan Transportation Authority, face funding shortfalls. These two projects alone account for $3.5 billion of the $10-billion gap in the MTA’s current five-year plan.
“The MTA is in the middle of its largest system expansion in more than four decades, and there is now legitimate worry that the MTA will have great difficulty in finding resources sufficient to complete its current slate of mega-projects,” Ravitch writes.
Then there are some of the largest state-of-good-repair headaches, including the Kosciusko Bridge connecting Brooklyn and Queens over Newtown Creek and the Tappan Zee Bridge connecting the city’s northwestern suburbs with its northern ones across the Hudson River. Both have reached the end of their useful lives and should be replaced, the Ravitch report states. The problem is actually paying for the jobs; the Tappan Zee project alone has been estimated at $18 billion.
Long-term bond sales represent the logical funding mechanism for capital projects, Ravitch writes, while borrowing for operating expenses “can be disastrous because it constricts borrowing capacity by driving up debt service costs. New York’s recurring revenues to support its transportation-related debt are not increasing at anywhere near the rate at which the debt itself is increasing. As a result, the state confronts a crippling debt service crisis.”
While acknowledging that “underlying economic conditions” make it difficult to plan for capital expenditures 20 years out, Ravitch says the state needs a five-year blueprint “at the very least.” He adds, “Because of the constraints on the state’s resources, New York must refocus its transportation program to emphasize state-of-good-repair, safety and security, more efficient and cost-effective project delivery, and better regional planning. It simply will not be possible for the state to fund every desirable project. While politicians often speak of doing more with less, the fiscal reality of the next decade may dictate that New Yorkers learn to do less with less.”
Ravitch writes that making tough choices between “equally compelling projects” will be necessary. He points out that both the incoming governor and the legislature will have to confront serious questions: “How large a transportation capital program can New York afford at this time? How should the state prioritize and finance its slate of multi-billion-dollar mega-projects? How will New York respond if Washington fails to fulfill funding expectations?”
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
