From article, (A significant portion of New York City property owners may soon find themselves giving the Metropolitan Transit Authority more money to fund new construction. Thanks to a provision in Governor Andrew Cuomo’s 2019 budget proposal, the MTA may soon be allowed to tax not only properties that will benefit from new construction going forward but also ones that have financially benefited from any major infrastructure project in the past 37 years.The MTA May Soon Be Getting Even More of Your Money
A significant portion of New York City property owners may soon find themselves giving the Metropolitan Transit Authority more money to fund new construction. Thanks to a provision in Governor Andrew Cuomo's 2019 budget proposal, the MTA may soon be allowed to tax not only properties that will benefit from new construction going forward but also ones that have financially benefited from any major infrastructure project in the past 37 years.
The MTA has borrowed more than half of
its funding for recent capital projects, according
to a New York Times investigation, or about $15 billion in the past six years. Paying off that debt
has become a significant line item for the transit
authority’s budget,
with debt service accounting for $2.6 billion, or 16 percent, of the agency’s
budget — more than the Long Island Railroad and MTA buses combined.
To address this massive debt, Cuomo’s
office has proposed something that looks an awful lot like value capture, a
common funding mechanism that, as the Village Voice has previously written, works under the “If You Build It They Will Come” theory of urban
development. When a new subway station gets built, property values around that
station rise. Under value capture, the resultant higher property taxes go
toward paying off the cost of that subway station.
Traditionally, value capture is not a new
tax, but
a tool for directing new property tax revenue toward paying off a specific project.
The logic is that the tax revenue would not exist if the new project was not
built, so it’s only fair for that revenue to pay for the project.
Value capture is widely popular because,
when designed well, it funds development without raising taxes and is paid off
by the property owners who benefit the most. It plays into the “consumer model
of government,” says Lauren Fischer, a doctoral student at Columbia University
who has done extensive research on value capture, “whereby people who pay more
in taxes deserve more direct benefits from the government.” When it comes to
mass transit improvements, value capture provides a palatable alternative to
raising fares or increasing taxes.
But Cuomo’s budget proposal is “not what people typically think of when they think of value capture,” according to New York City Independent Budget Office deputy director George Sweeting. The proposal allows the MTA to create “transit improvement subdistricts” of up to one mile in radius around capital projects that cost $100 million or more. The agency would then have the authority to add a surcharge, up to 50 percent of the increased property taxes.
Although the proposal’s broad outline fits the narrative of making those who benefit from infrastructure improvements the most pay for them, it differs from more traditional conceptions of value capture in several key ways:
- It is a new tax, not a reapportionment of existing taxes.
- It is determined and collected by an existing state entity, not a new local government authority, and because of this, the proposal specifically absolves such projects of following local zoning and environmental review laws.
- The revenue is not tied to a specific project, but to MTA capital budget in general. For example, the revenue captured from around the Second Avenue Subway could be used to fund East Side Access.
- The surcharge could continue in perpetuity.
- The MTA could designate transit improvement subdistricts around any project that meets the spending threshold of $100 million, even if it’s already completed, as long as it was finished after 1981, the year the MTA began five-year capital plans. According to Sweeting, this would potentially make eligible any property around Fulton Center, South Ferry, Coney Island/Stillwell Avenue, the 63rd Street extension, and a number of other projects. “The process they would set up calls upon the MTA to do an analysis that somehow (in an unspecified way) identifies how much the market value in the district increased due to an MTA project either already completed or newly constructed,” Sweeting wrote in an email. “The new tax would only be assessed going forward, but in a particular district it would be based on the estimated increment of current value that could be ascribed to now-completed projects (at least back to 1981).”
Unfortunately, the proposal is light on specifics, meaning there are a lot of details still to be revealed. Because it’s so broad, it gives the MTA a lot of power to issue a tax on many property owners in New York, far more than traditional value capture proposals, which tend to be limited to the area surrounding a specific project.)
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