NEW YORK BUILDING CONGRESS REPORT URGES ADOPTION OF DEDICATED USER FEES TO PAY FOR MASS TRANSIT, ROADS, AND OTHER VITAL CITY INFRASTRUCTURE IMPROVEMENTS
Published on Dec 17, 2013 by
New York Building Congress
Rubenstein Communications
Contact: Bud Perrone (212) 843-8068
NEW YORK, DECEMBER 17, 2013 – The New York Building Congress is urging the State and the City to create new, protected revenues to support transportation and other vital infrastructure in a new report being released today. As government agencies have modernized transit, schools and the water and sewer system, their debt burden has swelled, leaving little margin for continued support in the future unless new sources of funding are found.
In its report, How to Save New York City’s Infrastructure: Dedicate Revenues, the Building Congress found that an impressive $18 billion was invested in 2011 by the City of New York, the Metropolitan Transportation Authority (MTA), the Port Authority of New York & New Jersey and other government agencies to fund general upkeep throughout the five boroughs, while also undertaking critical network expansions, such as the Second Avenue Subway, the Third Water Tunnel, new public schools, and parks.
However, the report also warns that as capital needs have grown, the public sector has relied increasingly on debt financing for the vast majority of its capital funding. The debt burden for the City of New York – which is the largest single investor in its own infrastructure – currently stands at $100 billion and is expected to grow to $109 billion by 2017. Servicing this debt absorbs about $5 billion annually out of the City’s general revenues, and is forecast to rise to $7 billion a year between 2014 and 2017.
Similarly, the MTA devoted approximately 16 percent of all 2011 revenues to meet its debt service obligations. By 2018, the Building Congress expects debt service to consume 22 percent of annual revenues.
“Debt financing is vital and entirely appropriate, as it seeks to spread large upfront costs over the generations of New Yorkers who will benefit from the investments,” said Building Congress Chairman John M. Dionisio. “And the public sector deserves a great deal of credit in recent years for making their capital programs more efficient and reducing costs, while also taking advantage of a low interest rate environment to lower the cost of its debt. These measures have allowed a number of City, State and regional agencies to maintain their capital programs in a period of fiscal uncertainty.”
Added Building Congress Infrastructure Campaign Co-Chairman Milo E. Riverso, “We are rapidly reaching a tipping point in terms of how much new debt we can absorb. All levels of government face a future of having to devote increasing portions of their revenues just to meet debt service obligations – leaving less available to maintain this infrastructure over the long run and build new projects to meet the needs of a growing region.”
Building Congress President Richard T. Anderson said, “Without new, dedicated revenue sources, government will not be able to maintain its current level of support for critical capital projects, much less make the additional investments necessary to harden New York City’s transportation network and infrastructure in the wake of Superstorm Sandy and climate change.”
In its report, the Building Congress recommends that State and City officials carefully examine and work to adopt the following revenue-enhancement measures.
UNIFORM TOLL POLICY
In 2007, Mayor Michael Bloomberg proposed, and the City Council approved, a plan to charge drivers for access to Manhattan’s core business districts. The proposal dedicated new revenues to regional mass transit infrastructure. The Mayor’s plan, however, was shelved by the State Legislature.
The Building Congress report endorses a refined plan that would charge vehicles a more uniform fee for crossing bridges and tunnels within the five boroughs, or for entering Manhattan below 59th Street. The plan could initially lower the cost of some crossings, while generating more than a billion dollars of new revenue annually.
PARKING PERMITS AND PAY-BY-PHONE METERING
The Building Congress also advocates a Residential Parking Permit program which would charge car owners a fee in return for easier and preferred access to a parking spot. The report notes that New York City possesses up to 4.4 million unmetered on-street parking spaces from which it derives zero revenue.
Of America’s 10 most populous cities, New York is the only one without a residential parking permit program. Such programs can help reduce congestion, improve residential quality of life, and generate new revenues, which could be dedicated to the $2 billion annual cost of maintaining and modernizing the City’s transportation network.
A second parking innovation endorsed by the Building Congress is Pay-by-Phone parking in commercial areas, allowing the City to introduce more sophisticated metering along already priced commercial thoroughfares and enhance enforcement and revenue collection.
VMT FEE
The Building Congress recommends consideration of a Vehicle Miles Traveled fee for New York State, similar to one recently adopted in Oregon, as a partial replacement for its gas tax. The VMT is a more accurate measure of each vehicle’s actual use of public roads and can generate more stable revenue than the gas tax at a time when cars are becoming more fuel efficient.
Currently, New York State pays for its roads and bridges through a Dedicated Highway and Bridge Trust Fund, which is underwritten by a variety of taxes on petroleum, but the Fund is used more and more to service existing debt and requires a substantial subsidy to meet its other obligations. The Building Congress reports that the Fund can no longer support significant new transportation infrastructure investment.
PAY-AS-YOU-THROW
The report also urges investigation of additional new revenue sources and looks to the City’s sanitation department, whose budget has quadrupled in the last twenty years, as one source. A Pay-As-You Throw system, which requires residents to pay based on how much household waste they generate, has proven effective in other cities, and could reduce sanitation costs by creating incentives for residents to recycle more and waste less.
ADDITIONAL RECOMMENDATIONS
The Building Congress also advocates greater use of public-private partnerships (PPP), which encompass a variety of collaborative design, delivery, financing and maintenance arrangements between government and the private sector. “PPPs have the potential to reduce upfront design and construction costs, shave months or even years off of projects, and permit creative financing options that can reduce the long-term cost of maintaining an asset after its completion,” said Building Congress Infrastructure Campaign Co-Chairman Richard Cavallaro.
In addition, the Building Congress report recommends increased use of transparent and independent public entities similar to the City’s Water Finance Authority, which was created to accept dedicated water and sewage fees from individual property owners and devote them exclusively to the operations and capital programs of the water and sewer system.
“The Building Congress has offered a number of options to support continued investment in New York City’s essential infrastructure,” concluded Mr. Anderson. “The City’s elected and civic leaders, starting with the new de Blasio administration, should seriously consider these and other viable revenue generating alternatives. There is no more pressing policy issue for New York City.”
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The New York Building Congress is a membership coalition of business, labor, association and government organizations promoting the design, construction and real estate industry in New York City.
The New York Building Foundation was formed in 1998 to complement the New York Building Congress through a program of targeted philanthropy, research and educational activities.
