New York Gov. Kathy Hochul's announcement of providing $54 million for the Metropolitan Transportation Authority (MTA) to proceed with the $182 million Relocation of Underground Utilities Contract as part of the $7.7 billion Second Avenue Subway Phase 2 project failed to identify the source for the $128 million balance to fully fund this contract. This contract only represents one percent of the total $7.7 billion project cost.
Albany N.Y., providing the MTA with $54 million dollars to advance the $7.7 billion Second Avenue Subway Phase 2 project is a drop in the bucket. The balance of missing $4.25 billion MTA local share is needed for the real work. This includes major contracts for tunneling, construction of three stations, including escalators and ADA required elevators, track, power, signal and tunnel lighting contracts.
As of Aug. 1, it has been eight months since MTA Chairman Janno Lieber announced suspension of this project. This now has resulted in a seven-month delay for project progression. Hochul placed implementation of congestion pricing, which was supposed to raise $15 billion toward the MTA $51 billion 2020 - 2024 Five Year Capital Plan on pause.
This will sooner or later have adverse consequences on preserving $3.4 billion in Federal Transit Administration (FTA) funding / $4.3 billion local MTA share promised from congestion pricing as part of the FTA/MTA $7.7 billion Capital Investment Grant (CIG) Full Funding Grant Agreement (FFGA) to finance Second Avenue Subway Phase 2.
MTA previously accepted the terms and conditions within the FTA FFGA grant offer. This included a legal commitment that the $4.3 billion in local share was real, secure and in place. FTA caps its funding at $3.4 billion based upon the MTA's commitment of a secure $4.3 billion local share. MTA's local share was based upon implementation of congestion pricing.
Month after month of continuing to place the project officially on hold and failure to proceed with advancing the project will eventually result in FTA de obligating its $3.4 billion in funding and closing out the grant. MTA would lose $3.4 billion in discretionary federal funding.
Never in MTA history has the the agency lost FTA funding due to reneging on providing its legally required matching local share in any approved FTA grant. Lieber would be the first MTA chairman to do so and would have egg on his face.
Lieber said that he will take Hochul at her word, when she promised to restore the $15 billion she placed on pause from the transit agency’s $51 billion 2020 - 2024 Five Year Capital Plan due to her pause of congestion pricing is wishful thinking on his part. Hochul continues to not provide the financial source for her missing $15 billion. Hochul has said the issue of state funding to meet this $15 billion shortfall will not be dealt with until the next state budget is adopted on April 1, 2025 - nine months from now.
Hochul has said she would also be looking for billions in additional federal funding to make up for this $15 billion shortfall. The MTA will receive $1.8 billion in annual formula grants, including winning several national competitive discretionary grant program allocations from the FTA for federal fiscal year 2024 (Oct. 1, 2023 – Sept. 30, 2024), The Federal Highway Administration has funding under several programs, including Congestion Mitigation Air Quality (CMAQ), Surface Transportation Program (STP) and others which can be transferred to FTA to finance MTA capital projects.
Other than these sources, there are no other FTA pot of gold to cover the missing $15 billion in previously anticipated congestion pricing revenue. Gov. Hochul and her staff who advise her and ghost write her speeches have little understanding of how Washington funding for the MTA works.
When it comes to MTA financing, Gov. Hochul reminds me of the old cartoon character Wimpy. He was fond off saying, "I'll gladly pay you on Tuesday for a hamburger today," or in this case, $15 billion worth of MTA capital transportation projects, including the $7.7 billion Second Avenue Subway, tommorow.
