Four Better Ways To Raise Money For The Subway

Last week Governor Cuomo made headlines by announcing that the MTA would be seeking to implement a corporate sponsorship model for New York’s subway stations. Cuomo argues that conservancies, which are mostly funded through private dollars, worked for parks and thus could inject New York’s struggling subway system with some much needed capital. The city’s subway denizens who suffer through both chronic delays and dreary, nasty stations environments, may be inclined to agree.

While corporate sponsorship works for other forms of infrastructure, most notably bikeshare, it’s a poor fit for subway stations. For one, stations and trains are already packed with advertising, which lessens the value that a sponsor may achieve from “adopting” an individual station. Secondly, subway stations are “heavy” infrastructure. They’re expensive, with each station requiring millions of dollars to renovate and then to keep in a state of good repair.

New York has 472 subway stations.

Other cities, including Chicago and Philadelphia, have seen limited success with this model. Both cities have convinced corporate sponsors to “adopt” individual high-traffic stations, but the total amount of money generated from these deals is relatively low when compared with system budget and the model has failed to scale beyond one or two stations.

There are far better ways to generate dollars for transit infrastructure– sources that can produce billions of dollars for transit improvements, and that have been vetted and tested elsewhere. I’ve listed four ideas below

Congestion Pricing

London_Congestion_Charge,_Old_Street,_England
Transport for London generates billions via a congestion charging scheme

Congestion pricing is easiest and most obvious way to generate money for mass transit. Under this scheme, tolls would be implemented for vehicles entering the central business district and crossing the city’s bridges. The charge would lead to less congestion on the streets and money for the city’s transportation system.

A congestion charging scheme was successfully introduced to London in 2003, and has resulted in a 10% reduction in CBD traffic and billions of dollars for public transit improvements.

MoveNY, the most recent congestion charge plan for New York, could produce similar benefits, but has been met with resistance from Albany politicians, who don’t want to be seen as raising taxes on their suburban constituents.

Sales Tax

1280px-Metro_Rail_at_Los_Angeles_Union_Station.jpg
Los Angeles County plans to generate more than $120 billion via a 1% sales tax

Even a small transit sales tax could generate billions of dollars in funds for transit.

In Los Angeles, a 1 cent sales tax increase is expected to fund a $120 billion plan to improve transit infrastructure within the region. These tax increases, which were approved via a local ballot initiative, are the cornerstone in the city’s ambitious plan to double the size of the transit network over the next 30 years.

Real Estate & Value Capture

Hong_Kong_Skyline_Restitch_-_Dec_2007.jpg
Above: Hong Kong’s Transit agency turns a profit by investing in the city’s lucrative real estate

New York’s MTA could generate billions of dollars if only it could properly leverage its real estate portfolio and influence. Though few studies have been done, the MTA owns millions of square feet of real estate and even much more in the way of precious air-rights.

Think about all the space above MTA owned stations, right-of-way, rail yards and other facilities. Much of this space is sitting vacant, or is underutilized, but by working with a developer, the MTA could monetize.

The state could help by creating special assessment districts around planned transportation projects, taking advantage of the city’s red-hot real estate market to pay for infrastructure improvements. This approach could be especially useful in under-developed portions of the city like Staten Island, Utica Avenue and Eastern Queens, which can support high density development.

In Hong Kong, the local transit agency is able to generate a profit by combining real estate development, management and transit. With over $2 billion in profit last year, MTR is the owner of the city’s two largest skyscrapers, and is actively seeking to manage other subway systems across Asia and Europe.

Commuter Tax

grand-central-station-in-new-york-1467650581Sca
Above: Until 1999, out of city commuters paid a tax to support New York’s transit network

A progressive tax on incomes earned in New York City could also be another way to generate funding for the city’s transit network. Philadelphia levies a 3.924% income tax on residents and a 3.495% income tax on non-residents in order to fund its transit network.

New York City levied a tax on suburban commuters until 1999, which generated as much as $360 million annually for transit improvements. The tax was repealed as part of a state led, bi-partisan effort to bolster local candidates.

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