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For Immediate Release

CITY PLANS FOR INFRASTRUCTURE EXPANSION IMPERILED BY LACK OF FUNDING AND COORDINATION, WARNS NEW YORK BUILDING CONGRESS

Coalition Advocates Dedicated Funding and a Larger Role for City Hall in Implementing $15 Billion Annual Capital Infrastructure Program

NEW YORK, May 21, 2004 – In its new report, The Capital Question: Financing New York City's Future Infrastructure , the New York Building Congress warns that lack of dedicated funding sources and inter-governmental coordination threatens to imperil the vast and growing infrastructure maintenance and expansion programs taking place in New York City.

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 with each successive capital budget.

New York City covers ninety-five percent 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 potential 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. These tolls could remove the entire cost of maintaining the bridges and streets from the City's budget.

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, which also will require an increased financial commitment from New York State.

Fair and adequate federal transportation aid to New York is critical if big ticket transit expansion projects are to be realized. A major push is needed to ensure that New York is not short-changed in the transportation funding bill now being debated in Washington, DC.

A second major issue raised in the report is the opportunity for greater coordination in the planning and implementation of the broad spectrum of infrastructure spending in New York City.

“There are a lot of players operating on the City's turf. These include the President of the United States, Congress, the Governors of New York and New Jersey, the Mayor of the City of New York, its five Borough Presidents, the New York State Legislature and the City Council,” notes Carol O'Cleireacain, an economist and former New York City Budget Director, who prepared the report as a consultant to the Building Congress. “Each entity affects the shape of the City's public infrastructure yet also has its own priorities and appears to act fairly independently of the others.”

The Building Congress report proposes that the infrastructure agenda in the City, to the maximum extent possible, should be the Mayor's agenda. To this end, the report recommends that:

The Mayor be able to create a forum to produce a program and plan, under his leadership, in which all capital spending agencies in the City are coordinated and represented. This would ensure that capital programs, which currently are project driven, are viewed in a context of the City's overall needs and with an eye toward maximizing the benefit of individual public investments.

That the Mayor assign responsibility for the achievement of the capital agenda to a Deputy Mayor for Infrastructure. It makes sense, the report indicates, for those duties to be part of the Deputy Mayor for Economic Development and Rebuilding's portfolio.

The Capital Question: Financing New York City's Future Infrastructure was prepared to highlight the need for an efficient way to determine the City's overall needs, to encourage coordination of capital investments and to help ensure New Yorkers get the most for their tax dollars. The report can be viewed in its entirety at www.buildingcongress.com.

The New York Building Congress is a non-partisan public policy coalition of business, labor, association and governmental organizations representing the design, construction and real estate interests of more than 250,000 individuals.