OP-ED: PANYNJ's $10 billion funding package for a new Midtown Manhattan bus terminal in 2024 isn't real

March 8, 2024
Finding the funding to pay for the new proposed $10 billion PANYNJ Midtown Manhattan Bus Terminal is still in limbo.

You can learn a great deal about the priorities of our elected officials by what they say and don't say when it comes to delivering funding for transportation projects. Several months ago, U.S. Senate Majority Leader and senior New York Sen. Charles Schumer (D-NY) and Sen. Kirsten Gillibrand (D-NY), joined by New York Gov. Kathy Hochul and others, announced federal funding of $1.3 billion toward advancing the $1.6 billion East River Tunnel reconstruction, $1.3 billion toward the $3.1 billion Metropolitan Transportation Authority's (MTA) Metro-North Bronx East Penn Station Access, $3.4 billion toward the $7.7 billion New York City (NYC) Transit Second Avenue Subway Phase 2 and $3.8 billion toward Amtrak's $16.8 billion Gateway Tunnel (for two new tunnels plus rehabilitation of two existing Hudson River tunnels connecting New Jersey with New York Penn Station) projects. Not a dime as a down payment to pay for any additional preliminary or final design and engineering to advance the proposed $10 billion Midtown Manhattan 42nd St. Port Authority of New York and New Jersey (PANYNJ) Bus Terminal.  

The PANYNJ Midtown Manhattan Bus Terminal has yet to obtain permission for admission into the Federal Transit Administration's (FTA) Capital Investment Grants (CIG) New Starts Core Capacity  national competitive discretionary grant program. It appears Schumer, Gillibrand and Hochul, by their actions or, in this case, inaction, have clearly indicated no interest in supporting any advancement of this project.  

Finding the funding to pay for the new proposed $10 billion PANYNJ Midtown Manhattan Bus Terminal is still in limbo. The price tag, which has grown from $7 to $10 billion during the past 10 years, could easily increase by several billion more before completion. 

Cost estimates would have to be refined as progress proceeds beyond the planning and environmental phases into real and final design efforts  History has shown that estimated costs for construction usually trend upwards as projects mature toward 100 percent final design. Progression of final design refines the detailed scope of work necessary to support construction.

The anticipated final potential cost would never be known until completion. Costs would be further refined by award of construction contracts followed by any unforeseen site conditions and change orders to the base contracts during the course of construction. This will be followed by beneficial use, completion of inspection, acceptance and contract punch list items, receipt of asset maintenance plans, followed by release of retain age and final payment to the contractor(s).
The approved PANYNJ's 2017 - 2026 10-year $32 billion Capital Plan provided only $3.5 billion toward construction of the new $10 billion 42nd St. Bus Terminal. The $70 million planning study started in 2019 was just the first down payment. It has assisted in laying the ground work for compliance with the federal National Environmental Policy Act (NEPA) environmental review process. A positive NEPA finding from the federal Environmental Impact Statement (EIS) anticipated from the FTA in 2023 never happened. It is now forecast for some time in 2024.

The new $210 million allocation for funding is just the second down payment. Several more years will be needed for completion of final design and engineering for a project of this size before construction bids could be advertised.  

PANYNJ was not granted admission by the FTA to enter the CIG New Starts or Core Capacity programs for Fiscal Year 2024. Without full funding in place, this makes the promised 2024 start of construction date unrealistic. There are many other transit agencies around the nation also seeking FTA funding under these programs. No one can predict the final cost and completion date for the new bus terminal.  

PANYNJ is counting on the sale of air rights for up to four high rise office towers. They would be located on 8th Ave. between 41st and 42nd Streets, 9th Ave. between 40th and 41st Streets, 10th Ave. between 39th and 40th Streets and 11th Ave. between 39th and 40th Streets as a source for several billion dollars to help defray construction costs.  

There is a glut of existing surplus office space in Hudson Yards and other Manhattan commercial districts. New York Gov. Hochul was counting on the same private sector investments to help raise billions to cover the cost of the Penn Station project. These competing projects for tenants are only six blocks apart.

Even Hochul has reduced the scope of her project. She has postponed the eight high rise office building components to a second phase at a later date to be determined. This is based on the ongoing soft real estate market for new Manhattan office space. Sooner or later, the PANYNJ will also have to deal with the same reality.  

Has PANYNJ reevaluated anticipated future ridership growth projections? Post COVID-19, many former commuters continue working from home. It will be many years before ridership comes close to 260,000 pre-COVID-19 numbers.

The PANYNJ anticipated significant ridership growth for utilization of the new facility may be overly optimistic. Increasing crime and homelessness in the surrounding neighborhood also has an adverse impact on utilization of this facility. 

If the air rights sale generates less than anticipated revenue, the shortfall will have to be made up by the PANYNJ via taxpayers and riders. Will this add to the PANYNJ's long-term deficit and ongoing financial difficulties? There needs to be agreements with NYC and various owners of underground utilities, including water, sewer, gas, electric, steam and cable before being ready to commence construction. This is especially critical for the proposed four new office buildings.

Successful completion of these agreements can take years. Who will pay for additional critical NYC municipal services such as fire, police and sanitation?  NYC faces its own financial crises and growing long term debt.  Why would City Hall honor a request from the PANYNJ to exempt developers from municipal taxes by issuing Payments In Liu Of Taxes ( PILOTs) that would defray these costs?

The promise by PANYNJ Executive Director Rick Cotton that electric buses will become the primary user of the new $10 billion PANYNJ 42nd St. Bus Terminal is wishful thinking  Who will pay for the cost of each bus operator to convert their respective fleets serving this facility by the promised opening date of 2032? This cost is not included within the $10 billion project budget and neither are funding sources or a procurement schedule for the purchase of electric buses.

This critical information is missing. The estimated cost of an electric bus is several hundred thousand more than a traditional standard clean diesel bus.  The price depends upon if it is a standard 40- foot, articulated, over the road coach or other model. The PANYNJ doesn't acknowledge these costs in the overall project budget. 

Each operator using the PANYNJ bus terminal would also have to modify their own respective bus garages to install plug in electric outlets and other features to accommodate electric buses. This could cost millions for each garage. None of these costs are included in the $10 billion overall project cost estimate. 

Who is going to come up with the funding sources of $1 to $2 billion more for these two additional tasks? How much funding will the PANYNJ contribute to New Jersey Transit (NJ Transit) and various private bus operators to pay for electric buses and facility conversions? Buses have a useful life of between 12 and 15 years. It would take the bus operators 15 to 20 years before they could convert 100 percent of their fleets assigned to the 42nd St. PANYNJ Bus Terminal routes to be all electric. How many long distance inter-city buses will be exempt from this requirement? 

These buses will also not be exempt from the MTA's proposed Congestion Toll Pricing upon entering Midtown Manhattan. What will the cost of the toll be? How will they find the funding to pay for these tolls? Will they pass along the cost to riders in the form of additional fare hikes to commuters? How will the PANYNJ coordinate construction with the potential proposed new intermediate Hudson Yards MTA NYC Transit #7 Flushing subway line station at 41st St. and 10th Ave.?  

About the Author

Larry Penner

Larry Penner is a transportation advocate, historian and writer who previously served as a former director for the Federal Transit Administration Region 2 New York Office of Operations and Program Management. This included the development, review, approval and oversight for billions in capital projects and programs for New Jersey Transit, New York Metropolitan Transportation Authority, NYC Transit bus, subway and Staten Island Railway, Long Island and Metro North railroads, MTA Bus, NYCDOT Staten Island Ferry along with 30 other transit agencies in New York and New Jersey.