Addressing New York City's Urgent Capital Investment Needs

Testimony by Robert D. Yaro, president of Regional Plan Association

New York City Council, November 3, 2014

Good Morning. I'm Bob Yaro, president of Regional Plan Association. I deeply appreciate the opportunity to testify before you today on one of the most urgent issues facing New York City: the need to invest tens of billions of dollars in our basic infrastructure of roads, bridges, sewers, water lines, gas and steam systems, subways, train stations and airports. The long-term decline of these systems threatens the city's future economic potential as well as everyday public safety and quality of life.

Although the deficiencies in many of these systems are hidden from view, when they fail the results are often catastrophic, as we learned, for example, when earlier this year a broken water main on 13th Street in Manhattan flooded streets, basements and nearby subway tunnels. While not an everyday occurrence, this kind of event is happening with increasing frequency across all five boroughs. And even when the results aren't as glaring, the long term impacts of our deteriorating infrastructure on the city's economy and quality of life are even more pernicious.

The responsibility for maintaining many of these systems --in particular, the city's roads, bridges, and water and sewer lines-- lies with the City of New York. But city government also has an important stake in seeing that the rest of these systems are maintained at a state of good repair, whether they are managed by private utilities like Con Ed or National Grid, or public authorities, such as the MTA or the Port Authority. We learned in the early 1980s that when the public transit system, for example, was allowed to decline, it took a large part of the city's economy and quality of life down with it. When the subways approached collapse three decades ago, this led to the city's loss of hundreds of thousands of jobs and more than one million residents.

Similarly, however, as we've learned from the MTA's investment in more than $110 billion in the region's transit system, these investments can also contribute to the revival of our economy. The city and region's resurgence over the past thirty years closely tracks these investments. We have the opportunity to achieve similar benefits from a large scale investment program in all of our infrastructure systems, creating new economic and social opportunities across the city's diverse communities. An ambitious program of infrastructure investment could create the kind of public works employment opportunities achieved by Mayor LaGuardia in the 1930s, when tens of thousands of New Yorkers from every corner of the city were employed building the IND Subways, the Triborough Bridge, dozens of parks and parkways other major infrastructure systems. Investments can also prioritize failing infrastructure in many of the city's poorest communities, for example addressing the challenge of failing storm water management systems in southeast Queens, where frequent street and basement flooding across this largely low- and moderate-income area undercuts property values and public health.

The city has already made great progress in addressing its infrastructure needs. Since the 1980s tens of billions have been invested in reconstructing aging bridges and water and sewer lines, when disinvestment in these systems brought them to the verge of collapse. And we have also demonstrated smarter approaches to meeting these needs. The city's Watershed Management Program, for example, has ensured the high quality of our public water supplies through partnerships with upstate communities. This common sense, low cost program has obviated the need for construction of expensive water filtration plants. Similarly, improved waste water treatment has dramatically improved water quality in our harbor, rivers and ocean waters and catalyzed tens of billions in waterfront development in all five boroughs. And we have also made progress in creating greater redundancy and reliability in these systems, for example, with the Third Water Tunnel, now approaching completion. Now is the time to build upon these achievements.

The Center for an Urban Future's recent report, Caution Ahead, documents the need to invest $47.3 billion in the infrastructure systems managed by the city, the MTA, Port Authority, NYCHA and CUNY over the coming five years. This report also identified a $34.2 billion gap in available funds to finance these investments. Regional Plan Association strongly concurs with this report's findings and most of its conclusions.

RPA has also conducted its own assessments of the region's airports, transit systems and storm water management systems, which support the Center for an Urban Future's' assessment of the state of these facilities. The region's airports require tens of billions of dollars to bring them to a state of good repair and to create the additional capacity they will need through the 2030s. And fully funding the MTA's recently announced $32 billion capital program will require that the state and city find $15 billion in new revenues. RPA believes that while meeting these challenges will be difficult, this effort will not require commitments that are beyond our means.

RPA disagrees with Center for an Urban Future in one important respect, however, and that is in the urgent need not only to bring existing systems to a state of good repair, but also the necessity to create new capacity in all of these systems to accommodate a growing population, economy and workforce. In this sense, we need to make the same kinds of far sighted investments previous generations of New Yorkers made a century ago when they over-sized the subways, water supply and other major infrastructure systems to accommodate the needs of a growing city throughout the 20th century. Many of these investments have now reached or exceeded their useful lives and require replacement. Similarly, we need to create the capacity in all of these systems that a growing city will need throughout the 21st century. Our global competitors, in places like London, Paris, Tokyo, Hong Kong and Shanghai are all making these investments, and to compete for talent and new industries we will need to do likewise. In so doing we can create a virtuous cycle in which a growing economy and tax base with rising household incomes across the whole city pays for these investments.

Financing these investments will require political courage and significant new revenues. RPA believes that we will need to take an entirely new approach to funding our infrastructure needs, including the imposition of new user fees.

For this reason RPA strongly supports Sam Schwartz' Move NY proposal to rationalize tolls on East River Bridges and reduce congestion in the Manhattan Central Business District. In addition to its congestion reduction and quality of life benefits, this program would provide $1.5 billion in recurring annual revenues --enough to support as much as $20 billion in bonds to finance needed investments in the MTA capital program and the city's bridges and roads.

Other options to be considered should include increased automobile registration and other fees and creation of resident parking permit programs across the city, all to ensure that automobile owners pay their fair share of the cost of driving. The city should also follow the lead of London, Hong Kong, Singapore, Chicago and other cities in creating "value capture" systems to finance transit investments. Under these systems a modest surcharge on commercial property taxes is levied to reflect the increase in values created by new transit investments. The city used a similar system to finance the #7 subway extension to Hudson Yards.

RPA also believes that another key investment must be the reconstruction of Pennsylvania Station and construction of the new Gateway Tunnels under the Hudson River. While these projects will be the primary responsibility of federal and state agencies and Amtrak, the city should play a role in redeveloping the district surrounding a new Penn Station, and perhaps helping finance the station itself through a value capture system similar to the one established to finance the #7 subway extension to Hudson Yards.

Superstorm Sandy underscored the need to create new resiliency, redundancy and capacity in all of these systems in the face of climate change. While this is one area where the federal government has provided important financial support for the city's efforts, the cto  pital program and the City must sustain these investments to anticipate future climate related impacts. The Department of Environmental Protection's "green infrastructure" demonstration projects have shown how we can meet increased storm water management and other climate-related challenges in a cost-effective way.

Finally, we need to aggressively pursue reforms to permitting, procurement, project management and archaic labor practices to lower the cost of new infrastructure investments. There is no reason why new transit investments in New York, for example, should cost many times more than comparable projects cost in Chicago, Los Angeles, and Washington, DC, not to mention London, Paris and Tokyo. New York State recently achieved major cost and time savings on the new Tappan Zee Bridge by using design-build procurement, accelerated permitting and project labor agreements. We can achieve similar benefits across all of the city's infrastructure systems by pursuing similar reforms for the city's own capital investments.

Let me conclude by saying that Regional Plan Association strongly believes that investing in the city's basic infrastructure will yield both immediate and long-range economic, public health and quality of life benefits to this and future generations of New Yorkers. We look forward to working with the Council and the de Blasio Administration as you address this important issue.

Thank you, again, for the opportunity to testify before you today.