Interest Rates Among MTA's Great Unknowns

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Higher interest rates could challenge New York's Metropolitan Transportation Authority over the next few years, its chief financial officer said at a budget briefing.

"We project interest rates for our debt-intensive capital program based on what we see in the marketplace for future interest rates. But even being conservative as we are, we don't know what rates are going to be over the next five years," Robert Foran said at Wednesday's monthly board meeting in lower Manhattan. "And if interest rates exceed our projections and the projections we have built into the plan, that's a risk for us, and something we're going to have to accommodate because we can't cut our capital program back."

The MTA is one of the largest municipal issuers with $36 billion in debt.

The full board is scheduled to vote next month on the authority's $15 billion budget for 2016 and four-year financial plan. The board has approved a $29 billion capital program, which a state review board must approve.

Foran said the November plan is $447 million favorable from his presentation in July, largely due to $240 million more real estate tax receipts over the plan period, $93 million more in toll revenue, $190 million in reduced energy costs and debt-service reduction of $109 million.

Offsetting factors, said Foran, include a drop in revenue from a 50-cent taxi-medallion surcharge, part of a 2009 state aid package that included a payroll mobility tax.

"The MTA aid is what I call the dogs and cats, the different revenues that we received at the time the legislature passed the payroll mobility tax," he said, referring to car registration, learner's permits, auto rental fees and the medallion drop charge.

"We have to offset our loss of revenue from the app-based livery services. In Manhattan Uber and Lyft are taking market share away from the medallion cabs," he said. That partly accounted for a $68 million drop in MTA aid forecasts.

Farebox revenue forecasts are down $31 million, said Foran, because earlier projections were "too aggressive and too optimistic." He also cited lower petroleum business tax forecasts.

Board member Allen Cappelli asked MTA officials to examine the affordability of providing free transfers for commuters who use Metro-North and Long Island commuter railroads within New York City.

Cappelli, a Staten Island attorney, spoke as transit advocates, notably from the outer boroughs, have been pushing the MTA to better serve what they called "transportation deserts."

"That's a discussion at least publicly that we haven't been able to have in quite a while between fiscal crises and then the impending capital budget being unfunded. [It] really sucked the oxygen out of the air the past few years, but many of us have had conversations on the side about looking at the expansion of certain things," Cappelli said two days earlier at a finance committee meeting.

"We have to have the ability to look at this with some cold, hard numbers, with a view of seeing if we can ease the burden of some of our city residents who use multimodal transportation within the city."

At a Nov. 12 New York City Council hearing chaired by transportation committee Chairman Ydanis Rodriguez, state Assemblyman Phillip Goldfeder, D-Queens, supported a council resolution calling on the MTA to conduct a feasibility study on restoring the Rockaway Beach rail line in his borough, and other railroad rights-of-way citywide.

"There is no greater asset to our transit network than existing rights-of-way. With the Rockaway Beach Rail line and the other underutilized rights-of-way throughout the city, we have a once-in-a-lifetime opportunity to make lasting improvements to our transportation network and meet the demands of our growing populations," said Goldfeder.

Queens has several subway lines, but none run north-south.

"With the MTA struggling for capital dollars for maintenance nonetheless expansion, it is incumbent on our city to evaluate the best and cheapest way to expand our public transit system: unused and lightly used rail," said Rodriguez, whose district includes Washington Heights, Inwood, and Marble Hill in northern Manhattan.

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