The pros and cons of the MTA’s capital plan

The Metropolitan Transportation Authority released the broad strokes of its next five year Capital Program this week. At $51.5 billion, the 2020-2024 plan is the MTA’s most expensive to date, and about $20 billion more expensive than the previous one. Upon revealing the outline of the new plan – the complete version of which is still forthcoming – New York City Transit President Andy Byford said he was “ecstatically happy” about the proposed spending.

Byford’s happiness likely stems from the $40 billion going to New York City subways and buses, far more than the $16 billion set aside for his ambitious Fast Forward plan, which the the new capital plan heavily draws on. Among the proposed investments are 70 new accessible subway stations, 1,900 new subway cars, 2,400 new buses and funding for the next phase of the Second Avenue subway, which includes new Metro-North stations in the Bronx. 

The MTA’s 11-page presentation lacks detailed specifics that will be part of the full, 200-page capital program the board will vote on next week. In this week’s “Ask the Experts” feature, we looked at the initial proposal and what it means for New York’s beleaguered transit systems. Six experts offered their opinions: Rachael Fauss, senior analyst at Reinvent Albany; and Nicole Gelinas, senior fellow at the Manhattan Institute; Michael Horodniceanu, civil and urban engineering professor at the NYU Tandon School of Engineering and former president of the MTA Capital Construction Program; Ben Kabak, author of the Second Avenue Sagas blog; Robert Paaswell, distinguished professor of civil engineering at the City College of New York; and Andrew Rein, president of the Citizens Budget Commission. Their answers have been edited for length and clarity.

What is good about the proposed plan?

Andrew Rein: The plan is ambitious, which is important since improving MTA’s infrastructure and service is necessary for New York’s competitiveness and New Yorkers’ quality of life. From the sparse details so far available, the plan appears to target some of the right priorities. Signal modernization is crucial, and there are a number of projects focused on state of good repair, which must be the top priority if the MTA is to reverse the system’s deterioration and improve service for riders. However, the MTA has yet to make public a comprehensive needs assessment, without which there is no way to determine whether this plan’s investments will be sufficient to maximize progress on bringing the system to a state of good repair, especially considering significant investment in service expansion.

Michael Horodniceanu: The proposed $51.5 billion new capital plan for MTA is a terrific thing for the system and therefore for the city and its residents. If properly implemented, it will go a long way in improving our mass transit system by bringing it to the technical standards of the 21st century. Long, long overdue.

Robert Paaswell: The best part of the plan addresses riders’ highest priority – reliability. And the most critical part of this are the investments in new signals and new track. The plan proposes information-rich rolling stock, similar to advanced subways and buses in Hong Kong and Scandinavia. For buses, some improvements in the ability to control street movements is positive, but more cooperation with the city is needed. Basically, the MTA has heard the successes of the Subway Action Plan and has programmed – with final approval – money to carry it all the way through. This is the most ambitious capital plan since the Ravitch years. Finally, any new additions to the subway map – the next phase of the Second Avenue subway – is a plus.

Nicole Gelinas: What’s good is that we have a capital plan (so far) and that its priorities are – mostly – straight. This time around, subways and buses – which have nearly 93 percent of MTA ridership, according to the 2018 annual report – are supposed to receive 79 percent of the funding. For context, in the current capital plan (the one ending this year), subways and buses are slated to receive 61 percent of the funding. This allocation could change as the capital plan goes through the political process, now or anytime in the next five years, as it will be subject to amendments even after the MTA board, the state Legislature’s leaders, and the mayor approve it. And much of this change is just because East Side Access, the project to bring Long Island Rail Road trains underneath Grand Central Terminal, is finally winding down. Still, it is a good sign that Gov. Andrew Cuomo, for whatever reason, thought that he needed to present an initial plan that favors city riders relative to past plans. That the plan reserves $7.1 billion for aggressive signal-modernization projects, including the Lexington Avenue (4/5/6), and that the subways and bus chief pronounced himself ecstatic rather than resigning, are both good early signs. 

Rachael Fauss: We're calling the outline presented by the MTA earlier this week the “everyone gets a pony” plan. MTA leaders, elected officials and advocates have been told they will all get their top priorities, ranging from costly expansion projects to new subway and commuter rail cars, buses, signals and elevators. Who wouldn’t want to be a part of this huge investment? The problem is that this is not grounded in reality.

Ben Kabak: There’s a lot to like about the proposed capital plan. It’s bold and ambitious. It attacks the root causes of the recent decline in subway service. By promoting an aggressive modernization of the signal systems, the capital proposal puts the MTA on a path toward a true 21st century subway system. The ADA accessibility upgrades are a big step in ensuring physical limitations aren’t a bar to accessing the subway, and the commitment to phase two of the Second Avenue subway provides much-needed and long-promised subway service to East Harlem. Furthermore, it is a validation of Andy Byford’s work on the Fast Forward plan. When the governor listens to the experts he brings in, good things happen, and he can enjoy the benefits and political praise that come from these good things.

What is bad about the proposed plan?

Ben Kabak: Unfortunately, with the good comes the bad. First, the capital plan isn’t even a plan yet. Although the MTA needs its board to approve the plan next week so it can deliver a document to the state’s Capital Program Review Board, the only document released to the public is an 11-page PDF overview. In the past, the public has seen a full plan months before a vote, rather than days. It is also not clear that the MTA has done enough, or anything, with regards to cost containment. Without massive cost reform, any future attempts at expanding the subway system in any meaningful way will die via sticker shock. Considering the MTA’s recent rhetoric on cost containment, these high price tags are worrisome.

Robert Paaswell: What is lacking is any sense of how the capital plan would be integrated in the proposed MTA reorganization. To operate as a 21st century transit system, the MTA needs to be both data rich and organized in a much more flexible way. Simply, the capital plan, good and needed as it is, reflects the current way of doing business. But the funding sources are not fixed – too much rests on congestion charges – which may not provide adequate revenue before the transit is improved. 

Rachael Fauss: With a plan that can't possibly be done in five years, what gets done first matters. The slideshow proposes what would be the largest investment in signals for New York City Transit ever of $7.1 billion. This comes with other large investments for elevators and subway cars, while large expansion projects are continuing, such as East Side Access and Third Track. With limited spending and staff capacity, the MTA will have to choose which projects come first and which come last. Without an implementation plan, we don't know if they can and will focus on the right things first.

Michael Horodniceanu: Part of the funding, approximately 20%, will be provided through additional bonding by MTA, which will further exacerbate the burden on the system to repay the debt. This will probably require additional moneys, most probably raised through taxes to cover the future deficits.

Andrew Rein: Elements of the financing plan are at risk. The assumed $3 billion in funding from both New York state and New York City are not included in their most recent financial plans. In addition, both have fiscal stress that may impede their ability to contribute. (The state still has not contributed over $7 billion of its commitment to the 2015-19 plan.) The plan relies on $9.8 billion in MTA-backed bonds and pay-as-you-go capital, similar to the 2015-19 plan, but supporting this amount may be challenging given the MTA projects cumulative cash shortfalls of $740 million by 2023, assuming all savings and transformation plans are perfectly executed and delivered. The MTA should update its operating plan and show how this financing will be supported. Federal funding for Phase II of the Second Avenue Subway has not yet been approved, and the federal transit grant formula funding depends on the next federal transportation bill. Finally, bonding out revenue from the new sales tax intercept and real estate transfer tax expansion means that equivalent funding in subsequent capital plans would require additional revenue increases.

This also reminds us that congestion pricing has yet to be fully designed. While the legislation says the charge should generate funds to back $15 billion of capital investment, carve-outs or credits for various constituencies threaten both the congestion impact and the ability to generate revenue.

Nicole Gelinas: What’s bad is (as usual): where is the MTA going to get $9.8 billion? Even with $25 billion that the MTA expects to receive by pledging the next 30 years’ or so worth of congestion pricing and other new tax and fee sources, and even if the federal government provides the $10.7 billion desired – ambitious but not unreasonable – the MTA expects, or is expected, to borrow another $9.8 billion to complete this plan. Yet the MTA faces operating deficits: $740 million worth over the next four years, even without a recession. Long-term, the MTA is essentially insolvent, and an opportunity to spend, or “commit,” more than $50 billion in five years won’t come along again soon. Another bad thing: The MTA expects that it will cost $6.9 billion to build the next three stations of the Second Avenue Subway through Harlem. Even after accounting for inflation, this estimate is about 20 percent higher than what it cost to build the first three stations. So, we’re not being very aggressive here – to say the least – about cutting costs and thereby building more than three more stations. 

Will it get done?

Nicole Gelinas: Nope – not in five years, anyway. Consider that even though the existing $33.3 billion 2015-2019 capital plan will end this year, the MTA has spent only 37 percent of the dollars that ‘belong’ to that plan. Modernizing subway signals the right way – that is, shutting down entire lines so that workers can have full-time access to the tracks – could itself require years of coordination between the MTA and the city. But, at the end of five years, if New York has made some significant progress on subway-signal modernization, purchased new subway cars and buses, made more stations reliably accessible to people who can’t easily walk up stairs, and made some physical progress on the Second Avenue Subway, it will be an accomplishment, although one dearly bought, given our cost and time inefficiencies.

Rachael Fauss: Unfortunately, the numbers just do not add up. The governor says he wants the MTA’s capital plan to be 70% larger, but the MTA’s capacity to spend that much will not grow nearly as quickly. The MTA spent a record $6.6 billion on all capital projects last year. However, only $4 billion of that was for current projects in the 2015-2019 plan – the other $2.6 billion was spent on previous plans, dating back to 2005. There is at least $20 billion left to spend on the 2015-2019 plan. The MTA simply can't finish this new plan in five years even if it keeps up the record pace it set last year. This is all while they have a hiring freeze and are reorganizing the MTA's capital project staff, looking to do even more with even less.

Robert Paaswell: The MTA does not always complete its five-year plans in five years – many projects do not get started, and many go well beyond their design periods, causing overspending and project delays. There are too many unknowns in this program, like in the Second Avenue subway’s next phase. What caused delays in the first phases? How were the neighborhoods impacted? Escalators and elevators – when will the current ones be finished? And how will reorganization impact capital priorities and the new operating needs they create? The MTA should publish a transparent five-year calendar showing when the major components of the capital plan will be started and finished.

Michael Horodniceanu: MTA could get the job done:

• if the funding will be in place in a timely fashion,
• if they will adopt new ways to contract for the work,
• if they adopt new technologies that will disrupt the current status quo,
• if they adopt a participatory rather than confrontational approach, risk-sharing being a critical component  

Ben Kabak: The plan, in one form or another, will be approved by the state. The governor has his fingers on enough levers of state control that the plan is likely to pass in a form substantially similar to the one presented this week. Whether the MTA can spend this much in a short period of time is another question entirely, but the blueprint is there for transit investment and modernization.

Andrew Rein: This plan is extremely large. It is nearly two-thirds larger than the last plan, of which the MTA has only been able to commit two-thirds. To deliver this plan and complete projects already behind schedule, the MTA would have to increase the pace at which it executes projects. That is a very tall order, and perhaps made more so since the MTA is in the process of changes required by the Transformation and Budget Reduction plans. 

Still, the projects from this plan and prior projects are unlikely to all be executed, and this elevates the importance of focusing first on bringing the system to a state of good repair. These priorities should not be delayed. While an ambitious plan that promises to deliver so much to so many is widely appreciated, actual delivery of projects that bring the system to a state of good repair would deliver what New Yorkers need.