OP-ED: Funding for MTA $7.7 billion Second Avenue Subway Phase 2 still not a done deal

New York Gov. Kathy Hochul's announcement concerning advancement of the $7.7 billion Second Avenue Subway Phase 2 project reminded me of Rod Tidwell in the 1996 movie "Jerry Maguire" who said, "Show me the money." The first contract to be awarded by December 2023 is for relocation of traffic lights, storm drains, electric, gas and telephone lines. This is just prep work prior to the actual real tunnel and stations construction. There are also outstanding private property to be acquired.

Both the Federal Transit Administration (FTA) and Metropolitan Transportation Authority (MTA) funding are still not secured, as both still need to come to terms on a Capital Investment Grant (CIG) Full Funding Grant Agreement (FFGA).This would cap federal participation at $3.4 billion. That would be the largest MTA FFGA in FTA history, even greater than the $2.63 billion Long Island Rail Road (LIRR) East Side Access to Grand Central Terminal to the MTA in 2006. Only the $6.8 billion FFGA for the Phase One HudsonTunnel Project (two new tunnels connecting New Jersey to New York Penn Station) would be the nations largest in FTA history.

The FFGA for Second Avenue Subway Phase 2 still remains a year or more away from approval. All the FTA previously provided to the MTA was permission to advance final design and engineering in January 2022. Eighteen months later, the project still faces a myriad of hurdles. The MTA claims it would benefit 100,000 anticipated New York City (NYC) Transit subway riders out of over 5 million pre-COVID-19 numbers. This represents a very small fraction of daily riders and may be wishful thinking. Any independent cost benefit analysis might cast doubt that this a sound investment for commuters and taxpayers.

MTA Chairman Janno Lieber has said the $4.3 billion local share would come from congestion pricing. What percentage of the anticipated $1 billion annual congestion pricing revenues will this represent? How many years will be needed to fully fund the local project share? What happens if congestion pricing raises less than the forecasted $1 billion annually?

Much of the initial congestion pricing revenues have been previously dedicated to fully funding the $51 billion MTA 2020 - 2024 Five Year Capital Plan. It is dependent upon receipt of $15 billion generated by congestion pricing. The bulk of these dollars are dedicated to support other projects rather than Second Avenue Subway Phase 2.

The MTA Traffic Mobility Review Board still needs to hold a series of meetings. This is to determine who will pay how much in tolls for those driving south of 60th St. in Manhattan. One hundred and twenty various constituencies have requested exemptions or reductions. Some New Jersey elected officials may file federal legislation or law suits to prevent the MTA from initiating congestion pricing.

The MTA must also demonstrate it has the financial capacity, with any unanticipated cost increases or funding shortfalls beyond matching local dollars to the FFGA? How will it do this when the agency continues to face a multi-year, multi-billion dollar financial shortfall? With $48 billion and growing long term debt, more money will have to be allocated to fund annual debt service payments. Recent MTA audits by New York State Comptroller Tom DiNapoli paint a dire picture for MTA's financial health in coming years.

Growing debt service payments means less funds for operating costs, capital projects and programs for MTA NYC Transit bus, subway and Staten Island Railway, MTA Bus, LIRR and Metro-North Railroad to reach a state of good repair for various system capital assets. The MTA must also demonstrate it will have sufficient operating and maintenance funds to support the second phase of the proposed new NYC Transit subway service.

The MTA $51 billion 2020 - 2024 Five Year Capital Plan was adopted in late 2019 under the assumption $15 billion would come from congestion price tolling. Not a dime will appear until June 2024 or the last six months of the current MTA Capital Program. How will the MTA raise $15 billion over six months rather than five years? Until congestion pricing revenues start, how can the MTA be able to provide $4.35 billion in local funding to leverage $3.4 billion or more from Washington, D.C., to pay for the $7.9 billion Second Avenue Subway Phase 2?

The MTA 2025 - 2044 Twenty Year Capital Needs Plan is promised to be released in October 2023. What will the costs and funding sources be to finance some of the 21 projects that are currently being reviewed and included in this document. How will this impact the promised allocation of congestion pricing revenues to pay for Second Avenue Subway Phase 2?

Given all the financial uncertainties, it would make more sense to postpone any consideration for the $7.7 billion Second Avenue Subway Phase 2 until the next MTA 2025 - 2029 Five Year Capital Plan is adopted.

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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.

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