With New York's Metropolitan Transportation Authority seeking funds for its proposed $32 billion, four-year
State officials see design-build as a means to lower costs, reduce projects and harness private-sector creativity.
Under design-build, one entity works under a single contract with the project owner to provide design and construction services, thus re-integrating the roles of designer and constructor. The concept is an alternative to the traditional design-bid-build system, which the MTA has more commonly used.
The capital program has about a $14 billion shortfall, though MTA finance officials said Wednesday they could whittle the gap to $12.4 billion in their proposed 2016 budget.
MTA officials say they are also looking from within to cut costs and maximize revenue.
MTA Chairman Thomas Prendergast acknowledged candid but positive discussions with state budget director Mary Beth Labate over efficiencies at the agency.
"She has been relentless in telling us we cannot afford to have inefficiencies," he said Wednesday as he concluded the monthly MTA board meeting in lower Manhattan. "You know what inefficiencies are, when we deliver projects over budget and extended, and we've got a couple of real outliers there that we cannot afford to have in the future."
Two megaprojects, the Second Avenue subway line along Manhattan's East Side and the No. 7 extension west of Times Square, have encountered delays, though MTA officials said this week the latter is scheduled to finally open Sept. 13.
A state review board last October rejected the capital proposal without prejudice.
The MTA, which operates the New York City region's subways and buses, Metro-North and Long Island railroads, seven bridges and two tunnels, is one of the largest municipal issuers with roughly $35 billion in debt. It was scheduled to issue about $420 million of Series 2015C transportation revenue refunding bonds on Thursday.
The Transportation Reinvention Commission, a 24-member panel Gov. Andrew Cuomo formed last year, urged the MTA to "re-engineer its way of doing business." It called on the authority to expand the use of design-build mechanisms, public-private partnerships and other innovative tools across a variety of projects and apply best practices in their implementation.
"More importantly, we've got to find innovative project delivery ways — design-build — different ways where other people bring finance [and] we transfer risk to other parties who can probably deliver these projects better than we can," said Prendergast.
Board member Charles Moerdler, citing the national trend of transit-oriented development, said the MTA should maximize revenue on real estate it already owns.
"Pointing the fingers at Albany or the city of New York is a great way of venting, but it achieves nothing," said Moerdler. "We have vast amounts of development rights, air rights, throughout the city.
"Indeed, the concept has just been tested in the Vanderbilt Avenue-SL Green deal as to how you can maximize value in the development of other rights. We need to explore that and do it."
Under a transaction the City Council approved in late May, developer SL Green intends to construct a 63-story tower on Vanderbilt Avenue. Plans include an estimated $220 million in transit upgrades, notably new subway entrances to alleviate congestion along the Lexington Avenue corridor.
New York City, meanwhile, expressed interest this week in joining the MTA funding discussions. First Deputy Mayor Anthony Shorris, in a letter to Prendergast, acknowledged "little fat" to cut from the proposed capital plan, and hinted at the viability of the MoveNY toll-swap and congestion pricing initiative championed by former city transportation commissioner "Gridlock Sam" Schwartz.
Shorris added that the crisis "is in part a reflection of the failure of the MTA governance model." Although city residents contribute most of the revenues through fares, tolls and taxes, the city has little to say over the state-run agency and its operating and capital properties.
Extracting a fee from tech-oriented livery service Uber could be a funding option for MTA. Shorris this week referenced "a particular focus on revenue for public transit" in announcing an overview of the city's livery industry after de Blasio shelved his plan to restrict Uber's expansion pending a traffic study.
Since 1982, the MTA has put more than $100 billion into capital projects. Its last capital plan, 2010 to 2014, involved separate funding periods of two and three years.
The nonprofit advocacy group Regional Plan Association this week called on New York State to grant the city authority to independently raise revenues for any additional expenditure for the capital plan and for the state to dedicate its own revenue — from new or existing sources such as the payroll mobility tax — to fully fund the capital program.
Lawrence Schwartz, one of the MTA's newest board members and Cuomo's former chief of staff, is confident the agency can obtain a workable capital plan.
"I think all things will fall into place," he said. "I know people are impatient. I get that and I understand it, but I think it will all come together."
