It’s been less than two months since Governor Cuomo’s Fix NYC panel unveiled a congestion pricing plan that would help fund dire upgrades to the state-controlled subway system, but instead of leaning into that proposal, Cuomo has decided to throw his support behind a different means of accruing capital.
Draft legislation obtained by Politico shows that the Cuomo administration is working on a value capture plan that would tax building owners whose properties increase in value as a result of being near transit. Those funds would then be funneled back into infrastructure improvements.
This isn’t the first time the Cuomo administration has brought up value capture; it also appeared in a preliminary plan from the state in January. The draft legislation that is being proposed now has been lightly tweaked, but is “effectively the same thing,” says Dean Fuleihan, New York City’s first deputy mayor.
The practice has been used before by the city—to fund the 7 train extension towards Hudson Yards, for example—but would have a markedly different impact on the city if controlled by the state.
“It is [the] unprecedented taking of the city tax base … without the local government participating in the decision,” Fuleihan told Politico. In a forthcoming report from New York University’s Rudin Center for Transportation Policy and Management by Eric Kober entitled “Uses and Abuses of Value Capture for Transit,” Kober writes that the first, similar iteration of the proposal “diverts New York City’s largest and most stable tax source in a manner that could affect the City’s fiscal stability.”
Property tax generates nearly one-third of the revenue supporting the city’s budget, the report notes. If the state were to divert those funds, the city would have to bridge the lost revenue either by making service cuts or taxing more heavily elsewhere.
The current draft of the proposal would allow the MTA to collect property tax revenue from areas that it claims are supported by transit improvements up to a mile away. That figure—a mile might as well be ten in New York—has some critics of the plan bristling.
As it’s etched out now, the plan would create a transportation improvement district in the area surrounding the completed portion of the Second Avenue Subway, as well as its hypothetical (read: unfunded) extension into Harlem and downtown.
“Transportation Improvement Districts should not include completed projects,” Carol Kellermann, president of the Citizens Budget Commission, commented to Politico. Kellermann also suggests that the districts should not extend more than a quarter mile from the site.
“Going forward, the city would of course have a say in the creation of these districts and will end up with more tax revenue than if the MTA hadn’t funded these projects in the first place,” a Cuomo spokesperson said.