By now, it is pretty much agreed that the transit system, apart from the small matter of safely moving nearly six million people 365 days a year, is a multistory mess.
Ignoring what lies beneath the daily success is reckless, but endless moaning would be just as bad.
That’s why it was stirring to hear this week that people at the Metropolitan Transportation Authority are pushing an idea that long ago was ripe and ready: harvesting slivers from the city’s tremendous real estate wealth to help pay for the transit system that created it. New York has a long, long history of not doing this — of providing mass transit to real estate owners, making them rich, but not getting anything directly back. It would be as if building owners did not have to pay water charges for the city reservoirs in the mountains and miles of aqueducts that make habitation possible. Mass transit irrigates skyscrapers. It makes density possible.
Yet nearly every expansion of transit since 1940 has been paid for by the riders and the general public. That means close to half the debt service carried by the public is an outright gift to real estate owners along new routes. It has become embedded as an entitlement.
Now, it seems, perhaps for the first time, the M.T.A., including the governor’s appointees, wants to change who will bear the costs for new projects. At a meeting Wednesday where the board approved construction of 10 miles of new track on Long Island, a board member, Carl Weisbrod, argued that some of the cost should be paid by the real estate development the new service will make possible. The urban planners call it “value capture.” The chairman of the M.T.A., Joseph J. Lhota, replied, “All future projects will take that into account.” He said the agency would ask for legislation to make it practical, and Patrick J. Foye, its president, is leading the effort.
Not a century too soon.
Faced with billions of dollars in new projects to pay for, and with debt now taking up three times as much of the mass transit budget as in 2003, other board members chimed in.
The cost scourge is similar to that of East Side Access, a colossal underground labyrinth and cavern that are bringing the Long Island Rail Road into Grand Central Terminal, Mr. Vitiello noted. The first price tag of $4.3 billion has grown to $10.8 billion, he said, and signs are that it will climb yet again. As a matter of scale, he said, just paying for those two projects — the new track and East Side Access — would take up every cent of business taxes collected in the entire state for two years, or all the property transfer taxes for six years. (The M.T.A. receives taxes on mortgages recorded inside the 12 counties it serves and certain real estate transactions.)
“We need to find a way to stop absorbing the cost of creating economic value while being left out of the upside,” Mr. Vitiello said. The debt sucks oxygen from the same budget that pays for maintenance and service, and has driven the current crisis.
Another project on the drawing board is the next phase of the Second Avenue subway on the Upper East Side of Manhattan. Soaring property values along the first three stops are already evidence of the line’s worth, said Charles Moerdler, another board member, urging that capturing some of the value in the next phase was essential.
Value capture has hazards. Linking the transit system’s upkeep entirely to real estate development could harden inequities that have developed over the last three decades, with short commutes now an expensive privilege. More than 750,000 people in the city ride an hour or more every day to get to work. Most of them have incomes under $35,000.
Other cities have made value capture work, or are trying. The Hong Kong transit system owns malls, shops and parts of skyscrapers, profitable investments that help pay for transit expansion and keeping fares low. Chicago has created special tax districts to support its system. Other American cities have done it, too, among them, San Francisco, Washington, Seattle, Denver, Los Angeles, Houston and Dallas.
“Money has been left on the table,” Mr. Foye said. “We don’t want to do that anymore.”
