Gotham Gazette

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New Subway Projects And Their Benefits

The New York City subway, which celebrates its 100th anniversary next year, was built to provide faster and less crowded transit service than the street cars they replaced, and thus to open new areas of the city for development. One hundred years later, the next generation of proposed new subway lines embraces very similar goals. The proposed Second Avenue subway, for example, is intended to relieve severe overcrowding on the Lexington Avenue subway and create faster, more direct travel options from the Upper East Side to Sixth Avenue in Midtown. East Side Access, which will bring Long Island Rail Road trains into Grand Central Terminal, will shorten the commute for thousands of LIRR riders who work near Grand Central. The proposed extension of the #7 subway line in Manhattan would spur office and residential development on the Far West Side.

While these and other big-ticket transit projects have many benefits, the city clearly cannot afford all of them and must thus decide on priorities. Unfortunately, comparing the relative merits of different projects is no easy task. A new report released by the Partnership for New York City, a prominent business group, takes up the daunting challenge of estimating the costs and benefits of seven major Manhattan-oriented transit projects. The results of the report, "Transportation Choices and the Future of the New York City Economy," are surprising, provocative and hotly debated.

The partnership report focuses on two types of benefits - transportation benefits and economic development benefits. Transportation benefits are based on the value of savings in personal travel time, waiting and walk times, changes in the number of transfers and reduction in overcrowding and congestion. Time savings are translated into dollars based on the value of the saved time to travelers.

The partnership report tallies economic benefits based on the value of new office and residential space constructed as a result of better transit accessibility and increases in property values, jobs, incomes, retail sales and tourism.

The value of transportation and economic development benefits are then compared with the cost of constructing the project. The table below summarizes benefits as a percentage of costs, a standard way of comparing projects.

Benefits of Seven Transit Projects
(Net Present Value for Next 50 Years)
Project Economic Benefits as
Percent of Project Cost
Transportation Benefits as
Percent of Project Costs
Farley/Penn Station
#7 train extension
Lower Manhattan Transit Hub
East Side Access
(LIRR to Grand Central Terminal)
Second Avenue Subway
Access to Region's Core (tunnel from NJ)*
PATH to Newark Airport*

* Projects include only benefits to New York, not New Jersey. Source: NYC Partnership

The most striking aspect of this table is that economic benefits are far larger than transportation benefits for most of the projects. Of course, the two are closely related; faster and more comfortable commutes to work make the city a more attractive place for employers and employees. But these results suggest that the economic benefits of transit projects should be weighed at least as heavily as the transportation benefits. The partnership, reflecting its business orientation, thus brings to the fore the question of which transit projects generate the greatest economic development "bang for the buck."

At the top of the list are the Farley/Penn project, which expands the existing overcrowded Penn Station into the Farley Post Office building; extension of the #7 train to Manhattan's West Side; and the Fulton Street Hub in lower Manhattan, which will connect PATH trains to subway trains and try to rationalize the tangle of subway lines at Fulton Street. Each of these three projects returns five to nine times its cost in economic development benefits and one-half to 1.36 times its costs in transportation benefits, according to the partnership report.

Of these three projects, the most attention has focused on the #7 extension because financing for the Fulton Street Hub and Farley/Penn projects is essentially in place. Indeed, the partnership report recommends building the #7 line extension "because it will generate significant economic development benefits and is essential to the redevelopment of the Far West Side."

Another striking result is that the Second Avenue subway, long prized by transportation advocates as the number one priority for subway system expansion, comes out in fifth place on the list. According to the partnership report, the Second Avenue subway returns only 82 percent of its cost in economic benefits and only 55 percent of costs in transportation benefits.

These figures are relatively low in part because the Second Avenue subway is projected to take 17 years to complete. Given the long construction timetable, the partnership recommends consideration of phasing in the project. Much of the benefit of Second Avenue would be realized from the segment north of 63rd Street, which would allow trains to run down Second Avenue, then across 63rd Street and down Broadway in the center of the island. It may be possible to open this "stubway" segment while the rest of the line is under construction.

Not surprisingly, advocates of the Second Avenue subway are unhappy with the partnership report, which can be seen to undercut the case for federal funding of the project. The Regional Plan Association (RPA), a long-time proponent of the line, points out that the partnership report leaves out of its calculation certain benefits from Second Avenue such as environmental benefits of attracting auto users to transit and social equity considerations such as the Second Avenue subway's potential to spur economic activity in Harlem. The partnership report is thus not a complete cost/benefit analysis.

RPA also points out the "network" benefits of the Second Avenue subway. The concept of network benefits is that building one line adds to the overall subway system in ways that have impacts throughout the city. Ironically, some of the higher-ranked projects need the Second Avenue subway to be viable. For example, adding LIRR passengers to Grand Central will put additional strain on the Lexington Avenue subway line unless the Second Avenue is built. Likewise, extending the #7 will create additional demands on the Lex and Grand Central Terminal. The partnership report agrees that a full network analysis should be conducted and might yield different results than the report's project-specific analysis.

The biggest difference of opinion between the Partnership for New York City and Regional Plan Association lies in how each side values transportation and economic development benefits. The partnership report estimates that the benefit of Second Avenue in reduced travel time, reduced crowding and fewer transfers totals $0.97 billion annually. Taking into account the assumption that the line will not open for another 17 years, the report calculates the transportation benefits of Second Avenue over the next 50 years as only $8.4 billion, using a net present value methodology that discounts the value of future benefits and costs.

By contrast, the Regional Plan Association assumes that the line can be built in 12 years rather than 17 years. The association also calculates a somewhat higher annual transportation benefit of $1.26 billion instead of $0.97 billion. Transportation benefits thus total $12.8 billion over the next 50 years rather than $8.4 billion.

Using a higher assumption for the amount of office, retail and medical space that would be spurred by the Second Avenue subway, the association estimates $23.1 billion in economic development impacts compared with $12.6 billion in the partnership report.

Clearly, all of these calculations are highly sensitive to the assumptions used to calculate economic development and transportation benefits. Both the Partnership for New York City and the Regional Plan Association acknowledge that more work needs to be done to make the analysis more reliable.

Even though the numbers are somewhat rough, the staggering size of potential economic development from the #7 extension underscores the possible viability of new methods of financing development on the Far West Side. Daniel Doctoroff, deputy mayor for economic development and rebuilding, is leading the city's efforts to develop the Far West Side into a mixed use office and residential neighborhood and to prime this "Hudson Yards" development plan with a new football stadium that would help attract the Jets and the 2012 Olympics. According to the Daily News, Doctoroff believes that the project could conceivably be financed based on the incremental tax revenue from the development. The city is now seeking bids from investment banks to help finance $2 billion in development, some of which would go to the #7 extension.

The theory on the Far West Side is, in simple terms, build it, they will come, and the tax revenues from the development will pay for the project. If the theory holds for the Far West Side, tax increment financing might also be applied to other transit projects.

The final and most fundamental question raised by the report concerns the city's potential for economic growth and the role of transportation, office and housing development in bringing about the growth. Economic development experts have long viewed additional housing and transit capacity as prerequisites for long-term job growth in Manhattan. The fundamental question is not so much whether these are necessary prerequisites, but whether they are sufficient conditions for growth. Now that New York is the safest big city in the country - crime having been a major deterrent to growth a decade ago -- will better transportation accessibility and additional housing spur large increases in jobs and population?

The Partnership for New York City report highlights the importance of this question but is far from providing the definitive answer.

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.






















Staten Island Ferry Crash Remains A Puzzle

One very simple question lies at the heart of the investigations into the October 15 crash of the Andrew J. Barberi ferry into a Staten Island pier, which killed 10 people and injured dozens of others: Why didn’t the vessel slow down as it approached the pier? National Transportation Safety Board investigators have found that the ferry was moving at nearly its top speed when it hit the pier. Investigators have also concluded that the ferry had no mechanical problems and have found no illegal drugs, no alcohol and no prescription drugs in the pilot’s blood.

The ferry’s pilot, Richard J. Smith, suggested in a brief statement immediately after the crash that he had lost consciousness. The captain, Michael J. Gansas said on the same day that he was in the pilothouse of the ferry and tried to stop the ferry from slamming into the pier. This initial story quickly fell apart, thanks to eye witnesses, but thus far, neither Smith or Gansas have been talking.

The second puzzle about the accident involves where Gansas should have been during docking. City officials say that standard operating procedures require the captain to be in the pilothouse. Yet the New York Post reports that 10 former or current ferry workers said that the city notified them of this requirement for the first time on November 3, two weeks after the crash. The Post reports that city officials were unable to prove that employees had been notified of the rule prior to October 15. Ferry workers said that it was standard practice for the pilot and captain to be at opposite ends of the boat, with one handling dockings on the Staten Island side and the other handling Manhattan dockings. According to the workers, “ferry bosses” were well aware of that practice. Gansas’ lawyers are now hinting that their defense will claim that captains were never required to be in the pilot house during docking.

A third puzzle about the crash is why city officials are acting so surprised about the accident. City transportation officials point out that the Staten Island ferry has experienced “no major accidents” in its 98-year history. Yet the ferry’s history of minor accidents and near misses suggest that it was only a matter of time. Two hundred passengers were injured in 1978 when the ferry crashed into a seawall, and a December 1992 accident injured no one but caused $120,000 in damage to the vessel. More importantly, the New York Times reports that Coast Guard investigations concluded that mistakes or acts of negligence contributed to these and other accidents. Coast Guard recommendations were never implemented, however, a fact noted by subsequent Coast Guard investigations. In fact, after a September 1998 accident that injured two passengers, the Coast Guard recommended that two crew members be present in the pilot house to watch for potential problems as the ferry approached the terminal. Had that recommendation been put in effect, the October 15 accident might never have occurred.

A fourth puzzle thus is why the Coast Guard safety recommendations were not implemented. The Times reports that ferry operations vary widely from one captain to another. Each ferry is run as a virtual fiefdom of the captain. The Times concluded that “tradition and habit often trump formal procedure” on the ferries. The New York Observer adds another factor – patronage. The Observer reports that ferry workers were protected so long by politicians that workers did not even bother to hide the fact that many do not live in the city, as required by city policy. This context may help explain the lack of follow-through on the Coast Guard’s simple recommendations for corrective action.

A fifth and perhaps the most important question is whether the city will now fix the ferry. One would like to see the city identify the systematic problems with ferry procedures, training and supervision that contributed to this and previous accidents. Indeed, city transportation officials say they are exploring whether new safety procedures need to be developed.

But the city’s initial actions give the appearance that the city is focused on assigning blame to individual workers. Questioned about whether workers had received the standard operating procedures, a spokesman for the City Transportation Department said simply, “The captain is ultimately in charge of the ship.” As to the rest of the crew, the city required all ferry workers to sign an acknowledgement that they recently received the standard operating procedures. The city is also taking steps to ensure that ferry workers live in the city after press reports that Gansas actually lived in Haslet, New Jersey. These steps rather beg the issue of whether the crew is properly trained and supervised.

Ferry safety will apparently require not only clearer procedures, better training and more vigilant supervision, but given comments by a former senior ferry worker quoted in the Times, also a better understanding of what safety requires. This former official said he would put Staten Island ferry officers “up against anyone at Cunard or anywhere else. They’re stone-cold professionals.” But this same former official said that having a second officer assist in docking “would be redundant and necessary only if someone is gong to have a heart attack or some type of episode.”

Yes, well, exactly. Even on the cute little Staten Island ferry, redundancy could be a very important part of safe operations.

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.









East River Bridge Tolls

The mayor's shifting positions on East River bridge tolls illustrates the tension between the conclusions of Mayor Michael Bloomberg's analytical mind and the consequences of his political education.

Two years ago, Bloomberg's mayoral platform was sympathetic to bridge tolls. Once inaugurated as mayor, Bloomberg included East River bridge tolls in budget plans which assumed that "congestion pricing" would generate $100 million to $800 million annually.

That was the high-water mark of the mayor's support for this controversial concept. After Bloomberg closed the budget gap this spring with a heavy reliance on tax increases, his public opinion poll ratings dropped sharply. Facing growing unpopularity both citywide and particularly among Brooklyn and Queens residents who would pay the bulk of any East River bridge tolls, Bloomberg backed away from his toll plans. He dropped tolls from City Hall's budget plans and his spokesman said on July 9 that "the plan to toll the East River bridges is off the table."

The political realities and their consequences were clear. But as Bloomberg continues to think about the logic behind tolls, he does not completely shun the idea of at least someday tolling the bridges. The day after his spokesman said they were "off the table," Bloomberg clarified that "there is no current plan" to toll the bridges while also declaring that "we should consider all options down the road." In explaining his reasoning, Bloomberg focused on the practical problem that tolls could not be implemented in time to help the fiscal year 2004 or 2005 budgets.

The issue has not gone away. Two new reports on bridge tolls were released in late September and early October. The NYPIRG Straphangers Campaign and Transportation Alternatives, transportation advocacy groups, released a 58-page study (that I prepared) laying out the advantages of East River bridge tolls and issues that need further study. The Independent Budget Office released a report that assesses the potential revenues from both East River and Harlem River tolls, who would pay the tolls (mostly city residents) and the impact of possible exemptions.

Bridge toll advocates point out that "there is no such thing as a free bridge." The East River bridges cost taxpayers several hundred million dollars a year to maintain and operate, and $1.62 billion over the past 10 years to rebuild. These costs are paid by all city taxpayers whether or not they use the bridges. By contrast, motorists who use the Metropolitan Transportation Authority's tunnels and bridges to enter Manhattan pay a $3.50 toll. Likewise, subway and bus riders who use transit to cross the East River - which accounts for most of the trips crossing that body of water - pay the $2 transit fare. Only motorists on the city's four East River spans can cross for free.

Fairness would thus argue in favor of bridge users as well as others paying a toll or fare. East River tolls would raise somewhat over $500 million a year for city coffers and $100 million for the MTA, as some drivers switch to MTA crossings once the city bridges are also tolled. Harlem River tolls would generate $190 million a year in revenues. Toll revenues would cover the cost of maintaining, repairing and rebuilding the bridges, thus providing relief to the city budget. Some of the revenue could be used for other transportation improvements, including improved express bus or other transit services for Brooklyn and Queens residents who currently face lengthy transit rides into Manhattan.

Another argument for tolls involves traffic congestion. The free city-owned bridges have attracted a growing number of motorists who want to avoid paying the MTA tolls. The Brooklyn Bridge is the most affected. Traffic studies have shown that one-third of motorists entering Manhattan via the Brooklyn Bridge literally drive past the Brooklyn Battery Tunnel to avoid the tunnel toll. Overall, tolls would reduce traffic on the bridges by about 25 percent, and reduce traffic in Downtown Brooklyn and Long Island City by up to 14 percent.

Opponents of bridge tolls believe that they would divide the city, be bad for business and be unfair to Queens and Brooklyn residents. Brooklyn Borough President Marty Markowitz, quoted in the Daily News, said that tolls would be a "tremendous economic burden on the businesses and residents of Brooklyn, many of whom are forced to drive because they have no other public transportation options." The head of the Brooklyn Academy of Music also opposes tolls, which she believes would discourage Manhattan residents from coming to BAM.

Councilmember John Lui, who represents Flushing, Queens and is chairman of the City Council Transportation Committee, wants to see improvements in subway and ferry services before tolls are considered. Quoted in the Queens Chronicle, Liu said, "you would be inhibiting people from Queens and Brooklyn from transportation into Manhattan, which is just not acceptable."

How the public feels about tolls depends on how they are asked. A Quinnipiac University poll in February 2003 found that 63 percent of New Yorkers thought tolls were a "bad idea." Yet asked in a July 2002 poll to choose among various ways to balance the city budget, 40 percent choose tolls over options of increasing taxes or increasing subway and bus fares.

Given the opposition, bridge tolls are unlikely to advance before the mayoral election in 2005. In the mayor's latest comment, he said, "Nothing should ever be totally taken off the table, but to do tolling on the bridges would require a lengthy environmental impact statement, it would require state legislation, it would be a long time before that could be implemented. Some of the effect of reducing traffic and that sort of thing would be ... a good idea, but I think, if you really look at it, it's not a short-term solution to our problems."

Thus, although still not entirely closing the door to tolls, Bloomberg's short-term focus on re-election means that he would rather talk about reducing taxes than talk any more about bridge tolls.

Bruce Schaller is Principal of Schaller Consulting, which provides research and analysis to government, business and non-profit groups seeking to identify and meet customer needs in the transportation sector. He is also a Visiting Scholar at the Center for Transportation Policy and Management at New York University.

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