Testimony
of
Richard T. Anderson, President
New York Building Congress
Before
New York City Council
Executive Budget Hearings

June 8, 2006

The New York Building Congress believes the 2007 Executive Budget and Four-Year Capital Plan are positive steps forward in meeting the infrastructure needs of New York City’s growing population and economy. We support this impressive and important fiscal plan for New York City, but we have serious concerns about the City’s capital planning process and the limited financial resources available for funding infrastructure maintenance and improvements.

The Building Congress is a proponent of “building for growth,” not simply pursuing “a state of good repair.” Building New York City for the future is critical to maintaining the City’s competitive position in the global marketplace and enhancing the City’s quality of life.

As detailed in the recent Building Congress report, Electricity Outlook, New York City’s population is projected to grow to 8.4 million by 2010, a gain of over 400,000 since 2002, and to reach over 9.3 million by 2025. Total jobs in New York City are expected to reach 4.46 million in 2010, a gain of 315,000 jobs, or 7.6 percent, since 2002. By 2025, total employment levels are forecast to reach over five million, for a total gain of 887,300 jobs, a 21 percent increase over employment levels in 2002. Accommodating this level of growth requires substantial infrastructure investment, far beyond the current capital program.

In its soon-to-be-released 2007 Construction Outlook report, the Building Congress forecasts that New York City construction spending in 2006 will be as high as $21.4 billion, up from $18.4 billion in 2005. In 2007-08, spending of roughly $22 billion per year is forecast. The City’s capital program accounts for approximately one-third of that spending, a record level, but not sufficient for a rapidly-growing world capital.

The Building Congress supports the Mayor’s Executive Budget aimed at facilitating capital investment and improving the long-term financial health of New York City, including:

• providing $1 billion for capital projects normally paid for by borrowing;
• placing $2 billion in a trust fund for retiree health care costs; and
• using $500 million to pay down long term debt.

Nonetheless, New York City can and should do more in planning for its future. The Building Congress urges the City Council, working with the Mayor, to take two more steps forward; first, establish a more thorough and formal evaluation procedure for capital needs assessment. The current Ten-Year Capital Strategy, Four-Year Capital Plan and Annual Executive Budget process should move beyond an extrapolation of agency capital requests to dynamic planning and priority setting. The City Council should have a committee directly responsible for working on this process with the Office of Management and Budget and the Department of City Planning.

Second, New York City should create new approaches to infrastructure financing. These include dedicated taxes and user fees, such as those successfully employed by the New York City Municipal Water Finance Authority, or perhaps through value-capture techniques. Given the scale and scope of capital projects planned or underway in the City, current levels of capital investment are insufficient for keeping existing infrastructure in a state of good repair, let alone for addressing the City’s needs for future growth.

Members of the Building Congress, who are leaders of the City’s design, construction and real estate industry, are well acquainted with the infrastructure needs of New York City and are frequently involved with many aspects of capital programming and budgeting. We are prepared to assist the City Council with investigating comprehensive financing and planning strategies that will produce short-term and long-term benefits for the City. We encourage the Council to follow through on the recommendations we have made here today and help ensure that the new era of building and prosperity in New York City will continue.