What to watch for as New York charts congestion pricing

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Even the most ardent supporters of congestion pricing for New York admit the concept is a work in progress.

Now that congestion pricing is state law, the pressure is on for two organizations that struggle with fast project turnarounds to turn that concept into reality.

Toll pricing, street management, appropriate funding priorities for mass transit and controlling the expected mad scramble for exemptions are all in play.

With New York State and its Metropolitan Transportation Authority unit running point, the plan could take effect by 2021. Vehicles entering Manhattan below 60th Street will pay a fee. MTA division Triborough Bridge and Tunnel Authority will construct and manage the cashless toll infrastructure, working with the city's Department of Transportation.

The TBTA and a new traffic review board that Gov. Andrew Cuomo controls will establish the fee schedule and set exemptions for certain types of drivers.

While congestion is clearly a problem within the five boroughs, this plan is more about propping up the finances of the MTA, which runs the city’s subways, buses, two commuter rail lines and several intraborough bridges and tunnels. MTA is one of the largest municipal issuers with $41 billion in debt.

According to Mitchell Moss, director of the Rudin Center for Transportation Policy and Management at New York University, earmarking the funds where the MTA needs it the most — new and bigger trains, and signaling systems that can move the cars — is vital.

Exemptions can get unwieldy, Moss said.

“You can’t give spiritual healers a legitimate reason not to pay the tolls. London had too many exemptions and New York has to learn from London.”

Cuomo shepherded congestion pricing as a policy component to the fiscal 2020 budget, which lawmakers passed on March 31. Advocates expect the tolling program to leverage $15 billion for MTA capital needs.

Moss is confident that the MTA can earmark the money wisely.

“[Chief financial officer] Robert Foran is one of the great financial geniuses,” Moss said. “He’ll understand how to bond that money before it arrives.”

Upon completion, New York would be the first U.S. city with road tolling in its central business district. International cities that have adopted it include London, Stockholm and Singapore.

The right pricing is essential, said John Rennie Short, a public policy professor at the University of Maryland, Baltimore County, and the author of 47 books. Fees in New York could run about $12 per car, $17 per truck.

“You don’t want it too low because it wouldn’t have an effect over time,” said Short, whose research interests include cities, history of cartography and geopolitics. “If you have it too high, that would be negative, too.

“Like Goldilocks, you have to get it just right. There may have to be some adjustments necessary over time to get to the sweet spot.”

Nicole Gelinas, a senior fellow with the Manhattan Institute for Policy Research, criticized the provision exempting drivers in the zone who make less than $60,000 annually. “I don’t think it’s a good idea to exempt those people,” she said. “They have excellent access to transportation.”

According to Jamison Dague, director of infrastructure studies for the watchdog Citizens Budget Commission, congestion pricing in London was projected to generate £270 million ($353 million) to support mass transit, but actual net revenues in the first full year were £97 million.

“This was owing partially to the success of reduced traffic, but greater-than-expected evasion and operating costs also ate into revenues for mass transit,” he said.

In fiscal 2018, London’s congestion fees totaled £230 million but only netted £156 million for mass transit services. In Stockholm, too, congestion tax fell short of projections by 14% largely to the many exempted vehicles.

Critics of London congestion pricing also point to gentrification within the tolling zone.

“Gentrification would have taken hold there, anyway, with flight capital, Russian oligarchs and everyone else,” Short said.

New York, according to Short, is well-suited, given its density and expansive mass transit network. “It wouldn’t work in Houston or Phoenix, large spread-out cities where you have to walk five miles to get to the Metro.”

Los Angeles and San Francisco are conducting studies on congestion pricing while Philadelphia and Seattle are weighing it.

“Philadelphia has never formally considered congestion pricing in the past but is considering it now as part of several initiatives,” said Kelly Cofrancisco, deputy communications director to Mayor James Kenney.

“We always pay attention to policies in other cities to see if they can be adapted to fit Philadelphia's unique circumstances, and we’ll be watching New York City’s experience with congestion pricing closely.”

Philadelphia, Chicago and San Francisco are ripe for it, Short said.

"You also have a form of congestion pricing in [Washington, D.C.], where there's tolling in real time."

Virginia's Department of Transportation adopted a demand-based tolling system outside downtown Washington whereby tolls rise with overcrowding. Prices drop with lighter traffic.

Problems at the MTA, beyond operational and capital funding, range from clunky procurement processes to arcane work rules.

“Congestion pricing will certainly help because if they didn't get that through, it would have been detrimental to the MTA's bond rating and how the paper trades, but [there are] a lot of other issues to focus on,” Howard Cure, director of municipal bond research for Evercore Wealth Management, said on a Bond Buyer podcast.

The MTA, whose workhorse credit is the transportation revenue bond, received two downgrades last year from S&P Global Ratings, landing its issuer credit rating at A.

The authority expects to submit its 2020 to 2024 capital plan, roughly $40 billion, later this year to a state review board. While questions remain about overall funding for the plan, Moody’s Investors Service called congestion pricing agreement a credit positive for the state, city and MTA.

A drop in vehicle flow, said Moody’s, could benefit the MTA, whose ridership has dropped for four straight years despite population and job growth. Service disruptions and competition from ride-sharing services such as Uber and Lyft have contributed.

Additionally, the state relies on a strong city economy. The city generates 40% to 45% of state tax revenue, according to the Rockefeller Institute of Government. The business group Partnership for New York City estimated that the MTA’s capital expenditure could generate $62 billion of statewide economic output over five years and support an average of 57,400 jobs during that period.

According to Moss, the greatest challenge for the MTA working with Transport Workers Union Local 100.

“It’s very important getting the TWU to participate in modernizing work rules,” said Moss. “It's an uphill climb, but it's doable. You could have incentives.

“We have a 21st-century system with 19th century work rules. One of the first questions I would ask is why they still give a full day off for an employee’s birthday. Maybe there’s a good reason, but someone should ask.”

Patrick Foye, whom Cuomo named MTA chairman on March 29, told reporters that revenue generated from new sales tax collections on internet transactions and a progressive "mansion tax" will go into a transit lockbox, adding another $10 billion in bonded funds, totaling $25 billion among the three new revenue streams.

Foye also expects a further $7 billion in federal funding.

Moss called Foye, a Cuomo loyalist and for six years the executive director at the Port Authority of New York and New Jersey, aptly suited to coordinate congestion pricing.

“Pat is a seasoned leader, one of the most courageous,” said Moss. He cited Foye’s order while Port Authority executive director to reverse politically motivated lane closings in Fort Lee near the George Washington Bridge as the so-called Bridgegate scandal emerged in September 2013.

During the Bridgegate trial of former New Jersey Gov. Chris Christie aides Bill Baroni and Bridget Anne Kelly, both convicted, Foye testified that reopening the lanes was essential to public safety. He cited ambulances caught in the gridlock.

A full plate of tasks awaits Foye at the MTA.

“This is the biggest job he’s ever had, and he knows that,” Gelinas said of Foye. “MTA is the Port Authority with a subway and bus system attached to it.”

A renewed initiative to improve efficiency and transparency at the MTA will accompany the new funding, as will an effort to expand use of design-build project delivery to speed capital project construction.

Congestion pricing could also have a ripple effect on the Brooklyn-Queens Expressway project.

Mayor Bill de Blasio announced Wednesday that he is forming a panel to re-examine the estimated $3 billion-plus fixup of a crumbling 1.5-mile triple-cantilevered stretch of Interstate 278 from Atlantic to Sands streets in Brooklyn Heights, near the Brooklyn and Manhattan bridges.

According to think tank Regional Plan Authority, congestion pricing and other measures such as requiring at least three occupants in cars on the BQE during peak periods, could reduce traffic to where a four-lane highway could accommodate the remaining volume.

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Infrastructure State budgets Transportation industry Transportation technology Andrew Cuomo Bill de Blasio Patrick Foye State of New York Metropolitan Transportation Authority New York