Thursday, July 28, 2011

MTA Hits Up New York City For $250 Million To Continue Capital Projects

The MTA, which announced its intentions to raise fares twice in the next few years has now gone with hat in hand to New York City to ask for $250 million to complete two of the big capital projects that are still underway: the Second Avenue Subway and the East Side Access project.

The agency's theory is that with real estate taxes likely to rise after the projects are completed, the City would recoup any outlays and then some. In effect, this is essentially a roundabout call for tax increment financing to get the deal done (leveraging future tax revenues to pay for capital projects).

The problem is that the City doesn't exactly have the money to spare, and neither does the state. These projects must get completed and delays end up costing everyone billions more down the road.

However, the MTA needs to show that it can control costs on its capital projects better than it has done to date. Had it been able to keep within budget on existing projects like Fulton Street, the 2d Avenue Subway or the South Ferry projects, the agency would have had sufficient funds available to complete the two other projects with money to spare.

This goes back to the way that the projects are bid and calculated but highlights a further need to contain costs within the capital budget to make sure that critical projects are completed on budget and on time.

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