Unexpected MTA surplus has officials spending
BY JOSHUA ROBIN
STAFF WRITER
July 28, 2005
The MTA will end this year with a $833-million surplus, allowing it to avert service cuts and develop the West Side rail yards by itself, instead of selling the site to the Jets, officials said.
Despite the higher-than-anticipated windfall, the MTA does not plan to reverse expected fare hikes in 2007 and 2009, which are aimed at stanching deficits beginning in two years.
Still, the money would halt cuts the Metropolitan Transportation Authority considered as recently as last year, when it projected a $539-million deficit. The MTA warned then that it would slash 10 percent of subway service, cut 33 bus lines and scrap service on three Long Island Rail Road lines.
The surplus also will fund increased cleaning, additional subway and LIRR service, and an expanded security program, with more police overtime and additional personnel trained in evacuations stationed on platforms.
"Good news," Gene Russianoff of the Straphangers Campaign called the figures, which are due to taxes from a booming real estate market, savings from low interest rates and new state fees.
"A year ago at this time, we were talking about severe cuts and now they're going to have a cleaning initiative," he said.
At $833 million, the surplus is 11 times higher than the MTA predicted in February, leaving some to wonder whether the agency hadn't previously underplayed its finances.
But officials said mortgage taxes alone brought in $365 million more in subsidies than predicted.
"The real estate market, particularly in New York, is extraordinary," said Jonathan L. Mechanic, chairman of the real estate department at the law firm Fried Frank.
Seizing the market's heat, the MTA also moved Wednesday to sell off two prized rail yards -- on the West Side and in Downtown Brooklyn.
At the latter site, board members voted to negotiate strictly with the Forest City Ratner Cos., which seeks to build a Nets basketball arena and high-rise buildings there. The MTA's move, intended to draw more money, means for now the end of a rival bid from Extell Development Co.
MTA Executive Director Katherine Lapp suggested board members consider using surplus money for a platform over the West Side yard.
The move was seen as a death knell to the Jets' plans to convert the rail yards into their home field. The 13-acre parcel would instead be turned into the MTA's new headquarters, with the rest developed for businesses and apartments.
With new offices along the Hudson River, the MTA would then sell its Madison Avenue headquarters.
"This is a once-in-a-lifetime opportunity," Lapp said. A decision isn't expected until December.
The Jets gained development rights to the West Side parcel in March, but three months later state legislators shot down the team's financing. The team, which has until Aug. 31 to decide if it still wants the site, is looking for alternatives to the state funding, officials said.
"I would imagine that will be the last word, I hope, you will hear from me about the Jets and the West Side yard," said MTA Chairman Peter Kalikow.
Lapp said there were other things to do with the surplus, like paying down unfunded pension liabilities.
But she appeared to clearly favor developing the West Side site, saying it could fetch "several billion" dollars for projects like the Second Avenue Subway and LIRR connection to Grand Central Terminal.
Mayor Michael Bloomberg, once a fierce champion of the Jets' bid, was noncommittal. "Nobody's going to build anything on the West Side without the city being part of it," he said.
While transit advocates praised the idea, Gifford Miller, the City Council Speaker and a Democratic mayoral candidate, said the MTA "should put first things first, making the trains run on time, not building a new headquarters."
One thing the MTA is not considering for its surplus is more security. While recent bombings have prompted tighter measures, here using the money for counterterrorism would "be taking the federal government off the hook," Lapp said.
Staff writer Glenn Thrush contributed to this story.
