A commission Thursday passed a congestion pricing plan for New York City’s central business district proposal that would generate an estimated $491 million annually to fund mass transit projects.
The plan, which was chosen from five alternatives and is similar to the one Mayor Michael Bloomberg originally proposed, now heads to the City Council and state Legislature where it faces an uncertain future.
Depending on whether it passes and how the law is written, it could bring billions of dollars of bonds to the market.
The recommendations call for congestion pricing revenue to be used for capital expenditures and debt service on those expenditures for the state’s Metropolitan Transportation Authority.
“Funding the MTA capital plan must be the primary goal of revenues from congestion pricing,” the recommendations state. They call for congestion pricing and taxi-fee revenue to be deposited into a dedicated MTA account the way dedicated real estate taxes are and be legally constrained to fund only MTA capital projects or short-term operating expenses associated with implementing the congestion pricing system.
While plan documents include language that refers to debt service, revenue streams, and bonding, it doesn’t explicitly recommend using long-term debt backed by congestion pricing.
MTA chief financial officer Gary Dellaverson said it was “totally premature” to speculate on whether the revenue stream would be used to back a new credit or provide revenue for one the authority’s existing credits since nothing has been enacted by the Legislature.
“In the event that there was such an enactment, that’s when the MTA would review to see whether or not, with tax counsel and marketability determinations, as to whether or not there was a [new] credit,” Dellaverson. “If this just ends up being a simple revenue, then it could be part of the operating budget that then is used to pays debt service.”
Commission chairman Marc Shaw said the way the funds would finance capital projects would depend on how the legislation would be written.
State lawmakers will “make a determination if they want to generate the kind of revenue that we all think they want to generate to pay for the MTA’s capital plan,” Shaw said. “The difference is whether this is going generate about $500 million a year in revenue or whether it’s going to allow for debt issuance of about $7 billion.”
Bloomberg’s original proposal envisioned the creation of a new issuing authority that would have issued $30.93 billion of bonds backed by congestion pricing fees and state and city appropriations.
The recommendations call for the revenue to be used for capital investments that include but are not limited to expanding and improving the subway system, buying new buses, creating bus rapid transit routes and park-and-ride facilities, building new bus facilities, and making improvements to the commuter rail system.
Drivers would pay a flat $8 fee for cars, $21 for most trucks, and $7 for low-emission trucks to drive into Manhattan south of 60th St. on weekdays from 6 a.m. to 6 p.m. The commission also called for a $1 surcharge on taxi rides and car service trips within the zone, higher parking meter fees, and eliminating a parking tax exemption for residents within the zone. Drivers who paid tolls on bridges and tunnels entering Manhattan would have that amount of the congestion fee waived for up to $8.
Under the recommendations, revenue from the congestion pricing would flow to into a special account set up for the MTA while revenue from the parking initiatives would flow to the city. MTA expenditures would be subject to approval by the authority’s Capital Program Review Board, whose members are appointed by the governor, Assembly speaker, Senate majority leader, and mayor.
If the recommendations are followed, borrowing for short-term improvements could come before the program is in place. They call for various short-term transit improvements that would be financed from congestion pricing fees to be put in place prior to the implementation of the plan.
The Legislature must approve a traffic mitigation program by the end of March to qualify for a $354.5 million federal grant to New York City and New York State conditionally awarded by the U.S. Department of Transportation in August.
The proposal could face a tough fight in the Legislature where Shaw received an cool response to the plan on Wednesday from a group of lawmakers.
The proposal received a icy response from lawmakers on Wednesday, according to news reports. Assemblyman Richard Brodsky, D-Westchester, was one of the two “no” votes on the commission
“This is a very bad plan for working families,” he said. A family in the Bronx would pay about $2,000 a year more under the plan, while a someone using toll tunnels or bridges wouldn’t have an additional fee. “I think there’s grave concern in Albany about how it affects the outer boroughs and the unfairness,” Brodsky added.
“I think the chances in the City Council are better than in the state Assembly,” said City Councilman David Weprin, D-Queens. “There were more people publicly supporting the plan than were publicly opposed to the plan.”
Weprin said he plans to vote against the proposal. He doesn’t advocate for higher taxes to generate revenue for transit project, but said that would be a more fair approach.
“You’re imposing a regressive tax that only applies to commuters who take the free bridges, particularly in Queens, Staten Island, the Bronx, and Suffolk County,” Weprin said.