Funding crisis threatening expansion, warns NYBC.
The report, which lays out for the first time all public infrastructure spending in New York City, identified $15 billion in total spending in 2002 by a multitude of government agencies functioning in New York City. These include New York City ($6.3 billion), the Metropolitan Transportation Authority ($5.7 billion), the Port Authority of New York and New Jersey (more than $1 billion) and New York State agencies (more than $1 billion), as well as the federal government ($600 million in direct spending). According to the Building Congress report, a growing and potentially unsustainable proportion of infrastructure spending is supported through borrowing.
In FY 2002, the city, state, MTA and PA combined for $125 billion in outstanding debt, a number that is destined to grow.
New York City covers 95% of its capital budget by borrowing. The city's outstanding debt (including the Water Authority), which today stands at $60 billion, is scheduled to grow to $71.5 billion by the end of Fiscal Year 2007.
The MTA has increasingly turned to debt as well, due in large part to dwindling city and state contributions.
According to the New York State Comptroller, the state's contribution to MTA capital programs has dropped from 18 percent in the MTA's first two capital programs to zero in the current plan.
As a result, two-thirds of the current capital program (2000-2004) is financed through borrowing, or twice as much as the previous program.
"There is an obvious role and rationale for debt in the financing of long-lived assets," said Building Congress Chairman Frank J. Sciame. "But there are real constraints, including the ultimate constraint--the ability to pay while continuing to fund ongoing general budget obligations."
Added Building Congress President Richard T. Anderson, "To meet the needs of a growing economy, the city and the various entities that work within it will have to look beyond traditional debt financing. Without new dedicated funding sources, we have little chance of realizing some critical infrastructure plans, especially in the areas of mass transit and education."
In the report, the Building Congress illustrates a series of measures to reduce the City's reliance on debt:
Tolling the East River and Harlem River Bridges would yield $700 million annually, according to the Independent Budget Office.
A per-head residential building garbage fee could take the Department of Sanitation's $1 billion operation, plus the annual debt service for capital improvements, off the city's budget.
Public-private partnerships, especially in the areas of lease financing and combined-use facilities, could stretch the School Construction Authority's budget.
Fair and adequate federal transportation aid to New York is critical if big ticket transit expansion projects are to be realized.
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|Publication:||Real Estate Weekly|
|Date:||Jun 2, 2004|
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