Gotham Gazette

The Place for New York Policy and politics

Opinion

Opinion

Don’t Make It Harder for Minority-Owned Businesses in the Construction Industry


33578505675 8cb9ce38ed z

Street redesign project in Brooklyn (photo:Ed Reed/Mayor's Office Flickr)


After decades of work overcoming discrimination in the construction industry, minority- and women-owned businesses (M/WBEs) know that it is still very difficult for them to get a fair shake of opportunities. There is plenty of progress left to be made for black and brown contractors in a field historically dominated by white males. But the City Council is moving ahead with legislation that would turn back the clock on New York’s construction industry and send us back to a time when M/WBEs had virtually no shot at winning contracts. The bill, known as Intro. 1447, pushes a false argument about safety while creating impediments and threatening to undermine hardworking black and brown contractors across our city.

As someone who has spent most of his career working with small, emerging M/WBE contractors to help them access new opportunities, I am shocked and disappointed that our City Council members are not even addressing this issue. They need to hold off on Intro. 1447 and rewrite the bill to ensure it does not have an adverse effect on M/WBEs.

My experience in this field comes from developing programs that bring locally based, minority-owned contractors on to major construction projects – and many of these projects are hoping to meet or exceed specific M/WBE contracting goals. It is clear that the vast majority of M/WBE contractors find it so difficult to enter the industry because they are much smaller than their competitors and do not have the financial resources to cover the required up-front insurance and bonding costs.

One of the main strategies we have employed to help small businesses is to match them with larger contractors so they can at least do a portion of the work. For example, if an M/WBE does not have the financial resources to cover the costs of working on a 20-story residential tower, we can help them get a contract to do work for several floors of the project.

I have seen firsthand that when we afford M/WBE contractors opportunities, they have a very high rate of success and growth. These small business owners take safety and quality seriously, and they show us that they deserve a fair and level playing field.

However, Intro. 1447 would permanently damage M/WBE participation in the construction industry by fundamentally and unfairly changing the rules of the game. The bill would raise the barrier to entry with an arbitrary 59-hour training requirement – nearly six times the current standard – even though much of that proposed training would have nothing to do with safety.

Given what we already know, the results of passing a bill like this are easy to predict. Costs will skyrocket and small M/WBE contractors will no longer be able to afford to work on small parts of a project, let alone the whole thing. When they run out of work opportunities, these M/WBE contractors might just go out of business. Once again, virtually every single construction project in New York City will be overseen entirely by white men.

It does not have to be like this. If the City Council is willing to address the mistakes in this bill and do the right thing, there is no reason why they cannot put together legislation that increases safety while also protecting black and brown business owners. That must happen now.

***
Rohan DeFreitas is president of Crescent Consulting, a firm that connects M/WBEs with contracting opportunities in the construction industry.

***
Have an op-ed idea or submission for Gotham Gazette? Email This email address is being protected from spambots. You need JavaScript enabled to view it.

The Mayor’s Best Argument on Transit System Funding


de Blasio

Mayor de Blasio (photo: Edwin J. Torres/ Mayor's Office)


Governor Cuomo’s declaration of a state emergency after the Harlem subway derailment in June offered hope to suffering transit riders because it was an acknowledgement there was a crisis and the Governor was taking responsibility for addressing it.

An emergency declaration in New York law requires an affected agency to develop plans to deal with whatever disaster the Governor has declared. After a review, new MTA Chair Joseph Lhota  proposed to spend an additional $450 million in maintenance programming and $380 million in capital investments to reduce delays and breakdowns. The Governor and Lhota also are seeking half the new money from New York City, reigniting public rancor between the Governor and Mayor de Blasio and raising anew the question of responsibility for the transit system between the State and the City.

Both the State and the City have billions of dollars in reserve funds available now and can afford to make the contributions. Whether de Blasio makes a decision to contribute to the plan or not, an understanding of who is paying for the transit system at this time is essential.

The basic facts are that the City and its suburbs already pay virtually all of the MTA’s costs, either directly or indirectly.

The budget adopted by the MTA for 2017 reports that 57%, more than $4.5 billion, of New York City Transit’s costs are paid by the fares from riders of the subway and bus systems. The next largest amount, about $3.5 billion, came from a group of dedicated taxes which, although imposed by the State, are levied within the 12-county MTA region, and not in the rest of the State.

These dedicated taxes include a payroll tax, a corporate profits tax, a sliver of the sales tax, the New York City real estate transfer tax, and others. The New York City government directly contributes $362 million to New York City Transit, including a required match of a corresponding State subsidy, as well as reimbursements for paratransit, students, and the elderly. New York City Transit also receives a cross-subsidy from excess cash available from the tolls of the Bridge and Tunnel system of $287 million.

The State’s General Fund provides about $356 million, including a contribution to compensate for a cut in 2011 of an unpopular payroll tax enacted within the region during the recession. While these funds derive from the general taxes of the State, a Rockefeller Institute study in 2011 reported that New York City and its suburbs were paying 72% of the State’s tax revenue in 2009, and that study did not reflect the fact that most economic growth in the State has occurred downstate since then.

The bottom line is that this all means that only about 1% of New York City Transit’s operating funds come from outside the MTA region.

All these resources together don’t just fund the operating budget, they also pay for the debt service on the tens of billions of dollars the MTA borrowed to pay for the capital programs of prior years as well as the ongoing borrowing  for the new one. About $1.3 billion a year goes to pay interest on debt associated with New York City Transit from these flows of funds, with another $250 million a year covering New York City Transit-related debt from Bridge and Tunnel toll surpluses.

The New York City government also pays substantial subsidies to other parts of the MTA system.

It provides $460 million a year to MTA Bus, the express bus system taken over by the MTA during the Bloomberg Administration; $58 million for the Staten Island Railway; and $98 million for station maintenance for Long Island Railroad and Metro North facilities that are within the City.

New York City also pays the cost of the New York Transit Police, more than 3,000 police officers who patrol the subways and other mass transit facilities. The Police Department budget is $10 billion a year, meaning the 10% of the police force committed to safety in mass transit costs the City roughly $1 billion a year. This large level of support is barely reflected at all in the MTA or New York City Transit budgets. Embedded within the State and City budgets are payments for interest on bonds issued by State and City government for the benefit of mass transit, with $301 million paid by the City and $180 million by the State, according to a 2015 report by the New York City Comptroller.

Commuter rail system support is comparable to New York City Transit. Fares, excess cash from Bridge and Tunnel tolls, and dedicated tax revenues collected from the suburban counties around the City pay the costs of Metro-North and the Long Island Railroad. The commuter rail systems receive more generous subsidies from Bridge and Tunnel tolls than New York City Transit, about $400 million a year compared to $287 million a year. Long Island Railroad fares contribute only 47% of the costs of that system, compared to 57% for New York City Transit and 59% for Metro-North. Money from the General Fund of the State contributes just a very small portion of the commuter rail budget, just like New York City Transit. The MTA Police patrol the commuter rail system, and the costs are included within the commuter rail system budgets.

Governor Cuomo has said that the State was adding a historic level of funding to the current MTA capital budget, the 2015-19 capital plan. There is but a scintilla of truth to that pronouncement. That is because, of the $8.3 billion claimed to be committed, sources for $7 billion of the contribution have yet to be identified, and the State law providing the support says the State does not have to come up with the $7 billion until the MTA exhausts all its own resources first, with a deadline of 2025 for the State’s $7 billion to be found.

Even when the State finally comes up with the money, it will likely come from the MTA region, either through some form of congestion pricing or a diversion of some current tax receipts from the region. The City’s $2.5 billion promised contribution to the plan, part of a deal with the State, is to be paid on a schedule concurrent with the State’s schedule, and the City’s own budget does not forecast its contribution being paid until after 2019.

If the Mayor wants the public to understand why the City won’t contribute further funds to the MTA, he needs to clearly explain that the City’s residents and businesses already cover the costs.

***
Jim Brennan was a member of the New York State Assembly for 32 years, where he chaired four committees. On Twitter @JimBrennanNY.

***
Have an op-ed idea or submission for Gotham Gazette? Email This email address is being protected from spambots. You need JavaScript enabled to view it.

 

BQX: An Innovative Solution to a Growing Problem


bqx corridor rendering

(image: BQX rendering via NYC EDC)


Near daily failures in New York City’s transit system this summer have accomplished the seemingly impossible: they’ve sparked a wide-ranging conversation among New Yorkers of all stripes about overdue investments in our existing transit infrastructure, while also highlighting the limited alternatives to our century old subway system.

So how can we improve both with a limited budget? The proposed Brooklyn Queens Connector (BQX) provides a good example of how we can fix today’s transportation problems while planning for the future. A vibrant, sustainable and equitable city must do both.

The Manhattan-centric pattern of our subways was laid over 100 years ago when economic development was largely concentrated in the city’s core. This hub and spoke system is no longer reflective of how New Yorkers live, work, and play in 2017. The Brooklyn-Queens waterfront is one of the fastest growing corridors in New York City, yet there has been no significant investment in its transportation infrastructure, leaving some neighborhoods behind and limiting access to jobs and opportunity.

The proposed BQX is an emissions-free light rail system that will unify the currently fragmented transportation corridor along 14 miles between Astoria and Sunset Park, connecting to various subway lines, bus routes, ferry landings, and Citi Bike stations. It will be able to serve at least 50,000 riders a day, greatly easing the burden on existing transportation infrastructure in the area. The demand for more transportation options along the Brooklyn-Queens waterfront is clear, evidenced by the large crowds lining up to take the newly launched ferry system.

People living on the waterfront who have long faced limited transportation – including over 40,000 residents of the New York City Housing Authority – will have more employment opportunities and easier access to schools and healthcare facilities with the BQX. Local small businesses in these neighborhoods that are currently isolated from the rest of the city will be more accessible, and a new transit line will help attract even more businesses and employers to the waterfront.

But the direct benefits of the BQX to New Yorkers is just one aspect of this smart infrastructure investment. It also provides a model for how we can both fix today’s problems and plan for the future.  

First, because of an innovative financing tool known as “value capture,” the BQX isn’t in competition with laudable transit initiatives like Fair Fares or Bus Rapid Transit. Value capture works like this: based on the fact that access to transportation typically increases property value, funding for the BQX would be derived from the additional value it generates in properties surrounding the transit line over 30 or 40 years. While details of how this value capture mechanism would work are still being studied by city government, the concept is that the largest commercial and residential landlords who will see the greatest increase in their property value as a result of increased access to mass transit would pay additional property taxes on new value that is attributable to the BQX —  a more progressive form of taxation than a sales tax, which many other cities have used to finance public transit. This expectation of new value could be bonded and sold to investors, similar to how the city funded the extension of the 7 train to Hudson Yards.

This is why calls for BQX funding to be used elsewhere are misguided – money used for this project are not being drawn from already existing dollars in the city’s general fund or its critical annual contribution to the MTA because the money does not yet exist and will never exist unless the BQX is built and operates effectively.

Second, much like recent ferry and bikeshare expansion efforts, the BQX is a city-led, owned and controlled transportation project, providing an alternative to the confounding structure of the MTA that has led to quarrels over who is legally responsible for paying for upgrades and repairs of our transit system. And if the BQX is successful, the model could be expanded to other parts of the city.    

The positive impact this project will have on transportation in New York City – as well as its creative funding mechanism – is why the BQX has received strong support from some of our city’s most experienced transit leaders, along with local business leaders and community groups. MTA Chair Joe Lhota sits on the board of directors of the group that I run, Friends of the Brooklyn Queens Connector, as does Jay Walder, who has held roles as CEO of the MTA and Managing Director of Finance and Planning at Transport for London.

Leaders of the Resident Associations from five different NYCHA developments that will benefit from the BQX also sit on our board, and our coalition includes the Regional Plan Association, tech advocacy group Tech:NYC, the Transport Workers Union, and a long list of local small businesses and community groups.

When it comes to transit investment in New York City we need to be able to walk and chew gum at the same time. We can and should find ways to fix our current system while also expanding transit options where they are needed most. The BQX and its proposed funding model does just that.  

***
Ya-Ting Liu is the Executive Director of the advocacy group Friends of the Brooklyn Queens Connector. On Twitter @yating_liu and @BQXNYC.

***
Have an op-ed idea or submission for Gotham Gazette? Email This email address is being protected from spambots. You need JavaScript enabled to view it.



Print Friendly and PDF

Editor's Choice


Gotham Gazette: New York Voters Approve $4.2 Billion Environmental Bond Act
New York Voters Approve $4.2 Billion Environmental Bond Act
Gotham Gazette: 
New York City Voters Approve Racial Justice Ballot Measures
New York City Voters Approve Racial Justice Ballot Measures
Gotham Gazette: 
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Gotham Gazette: 
City Council Examines Low Voter Turnout, Moving Local Elections to Even Years City Council Examines Low Voter Turnout, Moving Local Elections to Even Years