Plan To Hike Taxes Near Big Subway Projects A Power Grab: City

NEW YORK, NY — Top aides to Mayor Bill de Blasio on Tuesday slammed Gov. Andrew Cuomo's plan to create special property-tax districts near big subway projects, saying it would empower state-appointed officials to single-handedly hike city taxes.

Legislation in Cuomo's 2019 budget plan would give the Metropolitan Transportation Authority the power to create "transportation improvement subdistricts" in areas where property values would increase because of transit projects, such as the Second Avenue Subway.

Under the proposal, the MTA could collect new property taxes in those districts to fund projects worth $100 million or more in what's known as a "value capture" program. The boundaries of a district could stretch up to a mile from the project's location.

But the city would have no say in where those districts go, giving the Cuomo-controlled MTA "unprecedented" power to fund its projects with local property tax dollars, said Dean Fuleihan, Mayor Bill de Blasio's top deputy.

"For the MTA to unilaterally have the authority in New York City and nobody else … that is not the way it’s supposed to be done," Fuleihan told reporters on a conference call Tuesday. "This cannot be a mandate from the state."

De Blasio's aides decried the prospect of city property owners paying for huge cost overruns on the East Side Access project to put a Long Island Rail Road terminal at Grand Central Station, which they say mostly benefits Long Island commuters anyway.

Value capture isn't a new concept to the city. Then-Mayor Michael Bloomberg used it to pay for the 34th Street-Hudson Yards station, which opened in 2015. But that plan required approval from the City Council because the city borrowed the money to finance the station, not the MTA.

In 2015, city officials contemplated including up to $600 million from value capture schemes in its $2.5 billion contribution to the MTA's capital program, according to news reports from the time. The program is funded mostly with MTA borrowing.

Cuomo also wants to force the city to fully fund the New York City Transit Authority's "capital needs," which add up to $16.7 billion in that MTA plan. That branch of the MTA operates the subways, buses, Staten Island Railway and Access-A-Ride service.

Cuomo's proposal would let the state chip in if there's an emergency. But de Blasio's administration says the city has no legal obligation to contribute more than $5 million to the capital budget under a 1953 state law, despite the MTA's insistence otherwise.

"The governor’s proposal for legislative action is a tacit admission of what we’ve been saying all the while," Corporation Counsel Zachary Carter, de Blasio's top lawyer, said.

The debate over transit funding is the latest chapter in the ongoing feud between de Blasio and Cuomo, both Democrats. But it's a consequential one — the MTA is trying to give the struggling subway system a stable future while planning billions of dollars worth of infrastructure projects across the region.

MTA Chairman Joe Lhota and President Pat Foye rejected the de Blasio administration's arguments on their own hastily arranged conference call. Lhota planned a response upon learning of the de Blasio administration's airing of grievances just after leaving a City Hall meeting with Council Speaker Corey Johnson (D-Greenwich Village).

Foye said the city would have input in the creation of the special districts through the MTA Board and the Capital Program Review Board, a four-member panel that must approve every big MTA project.

De Blasio's appointee to the Capital Program Review Board has veto power over any capital projects for which the MTA might create transportation districts, also known as "value capture" districts, Foye said. And the MTA Board — composed mostly of Cuomo appointees — would have to approve plans for any transportation district, he said.

"There’s a consensus and unanimity (on the MTA Board) that value capture is something that’s got to be pursued more aggressively than it has in the past," Foye said.

Cuomo's legislation, though, does not require the Capital Program Review Board to directly approve plans for transportation districts. It also would allow the MTA to create districts around projects already underway, such as East Side Access and the Second Avenue Subway.

Lhota repeated his argument that a 1981 law that rescued the MTA from fiscal crisis was always meant to eventually shift New York City Transit's capital budget to the city. Cuomo's legislation is meant to "codify" that, he said.

"If there’s a difference of opinion as to what it says were it says the City of New York is responsible for the capital program, now we're going to put it in even simpler language than that," Lhota said.

(Lead image: Commuters and shops are seen near the 86th Street station on the Second Avenue Subway line in January 2017. Photo by Yana Paskova/Getty Images)