NEW YORK CITY-Citing concerns about an under-funded capital program for the New York metropolitan region, the Metropolitan Transportation Authority proposed a financial strategy at its Wednesday morning board meeting to increase its debt plan to $6.9 billion for its 2010-2014 capital projects budget, while retiring $6.2 billion of existing debt this year. The move comes on the heels of ongoing mega-projects such as the expansion of the Long Island Rail Road to Grand Central Station, the 7 subway line extension to Manhattan’s Far West Side and the Fulton Street Transit Hub, which are all under construction.

The plan is comprised of a $3 billion federal loan from the Railroad Rehabilitation & Improvement Financing (RRIF) program, $2.2 billion of which would be used for new expenditures; and a $4.7 billion bond issue that would be reallocated to support existing debt. The program--with no new taxes or fare increases--will utilize longer maturity bonds and flexible terms, which the MTA says “are appropriate for new infrastructure projects that have very long, useful lives.”

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The $6.9 billion is one chunk needed to help fund the MTA’s total $24 billion capital budget for next seven years. Since June 2010, the MTA has cut $2 billion from its capital program and is “committed” to doubling that to a total of $4 billion by finding ways to deliver benefits more efficiently, officials said at the meeting. In an effort to produce cost-savings, the MTA will complete an overhaul of business practices by eliminating 15% of administrative staff, reducing costs of train and bus purchases and partnering with contractors to reduce bid costs.

In addition, the MTA has considered selling its real estate assets--like its Madison Avenue headquarters--to help offset capital program budget deficits. The MTA will also continue its partnership with New York State and the City Council, and will restore the Port Authority of New York and New Jersey’s joint program to purchase rolling stock, totaling $1.7 billion.

The authority will also capture $80 million in savings by consolidating programs and by re-doing the benefits contract for 150,000 New York City Transit and MTA bus employees, relatives and retirees.

In response, Robert Yaro, president of the Regional Plan Association, tells GlobeSt.com that today’s proposal was essential for the health of the region. “We don’t have much of a choice and they need to keep the capital plan going,” Yaro says. “I think given the political realities in Albany, this is probably the best that’s we’re going to do. A big share of the MTA budget is devoted to debt service, and they are keeping that under control because they are retiring several billion dollars in debt during this same period. I think they are making the best of a tough situation.”

Richard T. Anderson, president of the New York Building Congress, says in a statement that the MTA’s financial restructuring plan is an "innovative approach" to what seemed like an "intractable" problem. “New York’s Congressional delegation must ensure the FRA loans are indeed approved, and the State Legislature must maintain the Regional Mobility Tax as a direct source of MTA revenue," Anderson says. "Both steps are essential to successful implementation of this proposal.”

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