Did you know that 2023 marks the 103rd anniversary for promised construction of the New York City (NYC) Second Avenue Subway? The project was first proposed in 1920. For decades, every generation of transportation planners and elected officials have advocated building the proposed Second Avenue Subway without success. Some even wanted it extended north to the Bronx and south to Brooklyn.
In today's dollars, the complete project cost from 125th St. to Hanover Square could easily reach $30 billion. In 1929, the anticipated cost was said to be $86 million. In 1939, the estimate was $249 million.
In 1942, the Second Avenue El ended service and was demolished. Steel from the structure was used to support the war effort. In 1950, full-financing bonds were issued with an estimate of $504 million.
In 1955, the Third Avenue El was demolished. Promises were made that a Second Avenue Subway would be built to replace it. Due to municipal financial issues, bond act funds were reprogrammed for other purposes. The proposed subway was subsequently reduced from a six-track to a two-track plan, replacing six tracks worth of elevated subways on 2nd and 3rd Avenue. Both lines had center express tracks.
Passage of the NYC 1967 Transportation Bond Act included funding. Construction started in 1972 at 103rd St. and Second Avenue. Work was completed between Chatham Square and Canal Street, 99th and 105th St.'s and 110th to 120th St.'s. Work was suspended in 1975 due to the municipal fiscal crises faced by the late NYC Mayor Abe Beame.
In April 2007, a second ground breaking took place. Within a year, the opening day service date of 2013 was revised to 2014. At a later date, due to cost overruns, it was delayed until 2015 and again to December 2016. It finally opened on Jan. 1, 2017, costing $4.5 billion.
In April 2019, the New York Metropolitan Transportation Authority (MTA) Office of Capital Construction President Janno Lieber claimed the MTA could save between $500 million to a $1 billion in costs for the proposed Second Avenue Subway Phase 2. This would have reduced the overall tab down to almost $5 billion. Promised cost savings were based upon reduction in excavation for the 125th Street Station and building the 116th Street Station in space no longer needed for other project work. Fast forward to February 2022 and instead the cost increased to $6.9 billion,
Under the $51 billion 2020 - 2024 Five Year Capital Plan, the cost increased by $1 billion. The previous federal share of $2 billion, or 33 percent, has now been assumed to be 50 percent, or $3.4 billion. There is no guarantee the final cost could not end up billions more. This is based upon future advancement of design and engineering, construction contractors responses to the procurement process for contract(s) award followed by change orders during construction due to unforeseen site conditions or last minute changes in scope.
The March Federal Transit Administration (FTA) Annual Report on Funding Recommendations for Fiscal Year 2024 now estimates the project cost of $7.69 billion. A significant portion of this cost increase is attributable to financing debt service costs and programming of contingency funding to deal with unforeseen costs.
The MTA has a history of low balling project costs by hiding both financing and debt service payments under the agency operating rather than capital budget. They also frequently program insufficient contingency funding. These funds are needed to cover costs when contractor bids come in higher than the engineer's cost estimate. They also pay for contract change orders during the course of construction due to unforeseen site conditions or scope changes requested by various maintenance, operations and other user groups.
U.S. Sen. Charles Schumer's (D-NY) claim the $496 million under this bill can quickly be used to start construction once the FTA and MTA come to terms on a Capital Investment Grant Full Funding Grant Agreement is wishful thinking on his part. A legal FTA Full Funding Grant Agreement (FFGA) to fund Second Ave Subway Phase 2, which would cap federal participation at $3.4 billion, still remains an open question. The FTA has yet to identify the remaining $2.9 billion balance which would make up the full federal commitment.
The MTA would be legally responsible to pay for any cost increases above $7.69 billion. The FFGA for Second Avenue Subway Phase 2 remains one to two years away from approval. All the FTA has provided to the MTA is permission to advance final design and engineering. The project still faces myriad of hurdles. It will cost hundreds of millions per block to advance the subway from 96th to 125th St.
Is this a sound investment for commuters and taxpayers? MTA Chairman Janno Lieber has made clear that without both the proposed $3.5 billion new financial bailout from New York State, plus implementation of congestion pricing, the money is just not there to begin work on the Second Avenue Subway Phase 2. Fully funding the $51 billion MTA 2020 - 2024 Five Year Capital Plan is dependent upon receipt of $15 billion generated by Congestion Toll Pricing.
There is no guarantee this will be implemented by June 2024, which would be 4.5 years later than previously assumed. The Federal Highway Administration (FHWA) has yet to complete the National Environmental Protect Act project review process. It will be finished when FHWA issues a Finding of No Significant Impact (FONSI).
The MTA Traffic Mobility Review Board has yet to meet. They will determine who will pay how much in tolls for those driving south of 60th St. in Manhattan. Various constituencies will be lobbying for exemptions or reductions.
The current Second Avenue Subway Phase 2 budget is still evolving. The most critical issue to be resolved is identifying and securing the $4.35 billion local share toward the total project cost. It is a basic legal requirement to leverage future FTA capital funding under an approved FFGA to support advancement of the project. The MTA must also demonstrate they have the financial capacity to pay for any unanticipated cost increases or funding shortfalls.
How do they do this when the agency continues to face a multi year multi billion dollar financial shortfall? The MTA must also demonstrate they will have sufficient operating and maintenance funds to support the next phase of proposed new subway service.
The MTA $51 billion 2020 - 2024 Five Year Capital Plan was adopted in late 2019 under the assumption that $15 billion would come from the planned Central Business District Tolling Program. 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? Will the MTA still 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 odds continue to grow favoring Second Avenue Subway Phase 2 being postponed 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 NJ Transit, New York Metropolitan Transportation Authority, NYC Transit bus, subway and Staten Island Railway, Long Island and Metro North Rail Roads, MTA Bus, NYCDOT Staten Island Ferry and 30 other transit agencies in NY & NJ.
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