If you put three New Yorkers in a room you’re liable to get five opinions, but one thing everyone seems to agree on right now is the need to find new revenue for the MTA. The subway system is in crisis, the bus system is stagnating, and the commuter railroads have significant unmet capital needs – to say nothing of the need for new projects, like the second phase of the Second Avenue Subway, that are necessary to service a growing city and metropolitan region. While most of the attention on new funding recently has been focused on congestion pricing, “value capture” is another way to fund capital projects that is being hotly debated.
Most people value living and working near good public transportation, so much so that they are willing to pay more to rent or purchase a home, office, or retail property near a good route. This means that when a new public transportation project (or significant upgrade) is completed, property values around the project go up. With value capture, a portion of the higher property taxes that are generated by the new, higher property values go to pay for the transportation project. This way more capital projects can be completed with less money upfront. In fact, value capture is how New York City and the MTA paid for the extension of the 7 train to Hudson Yards, a commercial office space megaproject that would be much less valuable without easily accessible public transportation.
In his executive budget this year, Governor Cuomo proposed a value capture program that would allow the MTA to create “transit improvement districts” around major new capital projects including the Second Avenue Subway, East Side Access, and new Metro North stations in the Bronx. Some critics have said that, while value capture can be an important tool, this proposal doesn’t give the City enough input in the process. Others have argued that funding the MTA is too important to delay and that the proposal can and should be tweaked to provide for more local input. There are also questions about whether or not value capture should be applied to projects that are already completed and why this proposal exempts MTA projects outside the City’s borders. No matter how this shakes out in the final budget, NYLCV will be keeping a close eye on it.