- REAL ESTATE EDUCATION
- GIVING BACK
Testimony of the Real Estate Board of New York at the MTA Reinvention Commission
July 17, 2014
July 17, 2014
PRESENTATION TO THE MTA REINVENTION COMMISSION
Let me thank Chairman Prendergast and the talented leadership of the MTA for holding these important sessions and for the extraordinary job you do each and every day. Let me also thank the members of the Commission for their time and commitment.
New York’s transit network—buses, subways, commuter rail—is the life blood of the city and essential to the continued growth and vitality of the region.
Our system has been here for so long that we take it for granted and have lost sight of the vital connection between transit and economic growth. Let me discuss three topical areas in which this linkage is clear: Hudson Yards, East Midtown, and a new trans-Hudson connection. All three of these examples highlight the fundamental issue facing the transit network—funding.
The Hudson Yards plan called for the transformation of an area in the heart of Manhattan from a severely underutilized industrial outpost to a thriving mixed use neighborhood. The 40 million square feet of new development will address our city’s housing, commercial and open space needs.
The linchpin of this plan was the extension of the 7 Line from Times Square to 34th Street and 11th Avenue with a station at 41st Street and 10th Avenue. The commencement of the subway line extension and the creative mechanism to fund its construction have been the catalyst for the surge of residential development we have seen at the northern end of Hudson Yards and the commercial development now underway at the southern end. A 3 billion dollar investment has to date resulted in more than 14 billion in private investment, along with jobs and taxes that come along with that investment. And we are not even half way done.
As successful as this new transit initiative has been as a catalyst for growth, with the growth ultimately funding the transit improvements, the elimination of the 41st Street station extension has impaired the effectiveness of this redevelopment plan. REBNY, its members and local residents and businesses advocated for a modification of the design of the 7 line extension that would permit the construction of a new station in the future when funding becomes available. We still believe that the plan is incomplete and view the development of the 41st Street station as essential to maximize the economic benefits of this monumental project.
In the circumstances where construction costs exceed the funding available, we should not permanently diminish a sound transit plan. Instead we should plan to build these vital components in the future and not eliminate that option in the present. This also holds true for the dropped LIRR station planned for Long Island City as part of the East Side Access project.
Another example of the vital link between economic growth and the transit network is East Midtown. East Midtown is the city’s premier office district and one of the most desirable office locations around the world due in part to its superior transit access.
Over the last fifty years, the City’s planning and zoning initiatives have attempted to restrict growth and direct new development to the west. Though somewhat successful, East Midtown continues to be a favored destination for many tenants. However, our transit network has not been able to keep up with the growth in demand in this area.
The City has recently announced plans that would address the planning issues that have limited East Midtown’s natural revitalization. A crucial part of this plan is to address the problems that plague the transit network in East Midtown, particularly at Grand Central Terminal.
Similar to Hudson Yards, essential transit infrastructure improvements would be funded through new real estate development along Vanderbilt Avenue. One benefit of the current plan is that the infrastructure needs triggered by the new development will be met simultaneously by the new development.
As you may know, the larger area rezoning will occur later, with recommendations on transit network improvements and funding from an East Midtown Steering Committee led by City Councilmember Dan Garodnick, Manhattan Borough President Gale Brewer and City Planning Chairman Carl Weisbrod. Though it is too soon to say what the funding mechanism for the additional transit improvements will be, it is likely to be linked to the real estate activity that is generated by the new plan. Community groups have already made clear that this funding should be solely for the impacts attributable to the East Midtown Plan, and should not go to address the transit network needs at Grand Central.
The transit network funding needs created by the plans for Hudson Yards and East Midtown are significant, but again are largely covered by the new real estate activity that these plans generate and are exclusively in the jurisdiction of the MTA. However, the transit needs of our city and our region cannot be met exclusively this way, and cannot be solved exclusively by the MTA.
7 Line Extension to New Jersey
It has been more than 100 years since we have built a rail connection under the Hudson River. Since then, the city’s population has almost doubled, and the population of the counties west of the Hudson has tripled. More significantly, almost a third of the city’s workforce is comprised of suburban workers, with a growing share coming from New Jersey.
In the absence of the Access to the Regions Core (ARC) project, a multi-agency study group that included the MTA and the City examined the feasibility of extending the 7 line to Secaucus at the Frank Lautenberg Station. This had been an alternative analyzed in the ARC EIS that ultimately concluded that a trans-Hudson tunnel project for a 7 line extension was feasible. While the concept is feasible, there remain many challenges aside from how to fund it, including what agency would operate it; what would the fare be and how to effectively address labor issues.
The MTA has begun to examine some of these issues in a very modest way with rail service to football games in the Meadowlands and with having the PATH system accept the per trip metro card. Though modest, it is a start to a better integrated transit network.
The 7-train extension proposal has become urgent for my members, especially those owners in Hudson Yards, as well as Community Board 4 in Manhattan and the residents they represent. In addition to improving transit access for the city, this proposal would effectively address the overcrowding at the Port Authority Bus Terminal and the lack of capacity at the Lincoln Tunnel to accommodate the increasing number of buses and riders coming to Manhattan. Even though these are not MTA problems, it highlights the need for transit agencies, like the MTA, to think regionally when addressing transit issues. We cannot allow avenues ready for investment and growth to remain a staging area for commuter buses waiting to get into the bus terminal.
We know that the 7 Line Extension proposal will be more expensive than the initial extension of the line to 34th Street or the improvements needed at Grand Central for East Midtown. Also, this proposal may not lend itself to the kinds of funding mechanisms used at Hudson Yards and East Midtown. Nevertheless, this proposal offers too many regional benefits not to continue to explore this idea further.
These extensions and enhancements to our transit network are essential to a growing and prosperous city for all New Yorkers. Another example of this that has already begun is the initial work by the Port Authority to bring rail access from downtown Manhattan directly to Newark airport. This is a critical infrastructure improvement for the future of lower Manhattan. The common element among the three proposals discussed earlier is funding. Even when a new source of funds is identified, such as the District Improvement Fund in Hudson Yards or the Zoning Bonus proposed for the Vanderbilt corridor, these funding sources may not provide all the revenue necessary to complete all the transit improvements identified. I wish I had a simple answer, I don’t.
Real estate activity through the transfer and the mortgage recording taxes, as well as the mobility tax that our brokers pay, are important sources of funding for transit already. We need to continue to find ways to make transit service better and ways to sustainably fund a state of good repair and system expansion. New York and the region will not continue to prosper without projects like these and a program of proper maintenance. I believe the number one task of this commission is identifying how the region can come together and find the funds for such important projects.