New York’s Metropolitan Transportation Authority last week approved a revised $26.27 billion, five-year capital program at its monthly board meeting. The plan slashes $1.8 billion from an earlier proposal that Gov. David Paterson rejected last year as unaffordable. It now goes to a state oversight board for consideration.

The program assumes a reduction of $1.76 billion of federal funds. Even with  cuts the program still has a $9.91 billion funding gap. The MTA envisions selling $6 billion of bonds backed by a payroll tax enacted last year on the 12 counties served by the MTA to partially fund the first two years of the capital plan.

The board also approved a lease transaction with the Related Cos. to develop two railyards, known as the Hudson Rail Yards, on Manhattan’s West Side. The 99-year lease is worth about $1 billion to the MTA at net present value. The deal was first approved by the MTA in 2008, but was not finalized due to the deteriorating economy. The revised deal allows the developer to delay closing the deal until economic targets signalling a recovery of the real estate market are met.

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