New York City's infrastructure is crumbling in ways that have little to do with Hurricane Sandy or storm preparedness, according to a report released Tuesday that identified $47 billion in capital needs over the next four to five years simply for repair and replacement.
"If left unchecked, [vulnerabilities] could wreak as much havoc on the city's economy, competitiveness and quality of life as the next big storm," said New York think tank Center for an Urban Future, which called on Mayor Bill de Blasio, Gov. Andrew Cuomo and other government officials to make investing in city infrastructure a major priority.
According to the report, titled "
"It is clear that we must think out of the box, work together and consider every option at our disposal to meaningfully address the city's needs," said Chris Hamel, a managing director at RBC Capital Markets. "Although New York City has made a consistent ongoing effort to fund substantial infrastructure investment, it is evident that more remains to be done."
RBC Capital Markets and the Association for a Better New York sponsored the report.
"This funding gap includes only the replacement and repair of existing infrastructure — not new structures or increased capacity," said the author of the report, research associate Adam Forman. That figure excludes the Department of Environmental Protection, whose needs are also well into the tens of billions of dollars.
The report recommended refocusing capital spending on state-of-good-repair needs, a departure from the 12 years of Mayor Michael Bloomberg, who focused capital spending on new projects. Other proposed measures included the creation of an infrastructure bank and the politically volatile congestion pricing, including tolls over East River bridges.
It also called for design-build contracts and public-private partnerships, citing the "positive impact" of this approach on the cost of replacing the Tappan Zee Bridge. A 2011 law the state legislature passed at Cuomo's behest authorized a handful of state agencies to pursue design-build contracts is up for renewal at the end of the year. Forman favors extending the law to include municipalities.
"Sandy showed how badly the infrastructure of the city truly is. Not only were we not prepared but the storm exposed how deteriorated the existing infrastructure is," said disaster financing expert Alan Rubin, called the "hurricane czar" for helping design and underwrite the catastrophe fund in South Florida in 1992 after Hurricane Andrew hit, when he worked in Lehman Brothers' investment banking division.
"A hurricane or any other national disaster serves as nature's broom. It exposes the underside of weakness in people's infrastructure. You saw that in New York, where the infrastructure is old," Rubin said in an interview.
Rubin recommends a combination of creative financing to meet capital needs, such as resurrecting Build America Bonds and building upon catastrophe fund mechanisms such as the MTA's initiative last summer to issue a $200 million catastrophe bond to cover storm-surge risk.
"What you want to do is use the opportunity to multiply the potential for funding, something the MTA did with its parametric catastrophe fund," said Rubin.
Spokesman Kevin Ortiz said the MTA’s capital program for 2010 to 2014 alone will spur $44 billion in economic activity. “Due to unprecedented cost-cutting, we’ve set aside $370 million dollars a year to help finance our next capital program, but that only covers a small portion of our extensive capital needs,” he said, citing such major projects as the Second Avenue subway.
According to Forman, the city's core infrastructure is in better shape than in the 1980s when it closed the Williamsburg Bridge for fear of collapse, subway track fires were common and the Brooklyn Bridge, FDR Drive and West Side Highway all experienced structural failures. Yet today, roads, bridges, water mains, sewer systems and school and other public buildings are more than 50 years old, with many critical components susceptible to breaks and malfunctions.
"We're probably going to see more water mains that burst because of fatigue cracks," Sam Schwartz, a transportation engineer, former city traffic commissioner and "Gridlock Sam" newspaper columnist, said in the report.
Additionally, the report examines parks, schools, homeless shelters, City University of New York facilities, public hospitals, libraries, public housing and courthouses.
Significant state-of-good-repair needs, according to the report, exist at New York City Transit ($16.3 billion), New York City Housing Authority ($15.5 billion), Port Authority ($6.8 billion) and CUNY ($2.5 billion). State of good repair is a federal gauge for the condition of capital assets, including equipment, rolling stock, infrastructure, and facilities.
Among other findings, 30.4% of the city's roads are only in "poor" or "fair" condition, up from 15.7% in 2000; surface distress was clearly visible on 51% of the city's highways in 2012 compared with 38% in 2008; in 2007, Bloomberg's PlaNYC promised to replace 80 miles of aging water mains annually, but only averaged 27 miles annually; and similarly, the city installed an average of just 17 miles of new and reconstructed sewer lines annually between 2007 and 2013, down from 42 miles a year between 2000 and 2006.
Forman suggested de Blasio — whose initiatives since taking office in January have emphasized social-justice measures such as universal pre-kindergarten — make infrastructure investment pivotal to creating middle-income jobs.
He also called for more support from Albany and Washington and an end to diversion of money from "dedicated" funding streams, such as the raid on an MTA lockbox account to replenish the state's general fund and the Port Authority's allocation of money from LaGuardia and John F. Kennedy International airports to such units as the Port Authority Trans Hudson commuter train system.
Vice President Joseph Biden, speaking at an infrastructure conference in Philadelphia last month, likened LaGuardia to "some third world country." Cuomo announced plans for state officials to take over reconstruction at LaGuardia and JFK.
Rubin would restructure Port Authority from a bi-state agency to a bi-city one, with New York and Newark, N.J., running its airports, which include Liberty-Newark International.
"The Port Authority is not a very good structure for finance," he said. "It's a two-state kind of thing where the executive director belongs from here and the chairman belongs from there. I'd like to see the airports moved into a different kind of environment. It should be run by city officials, not state officials."
The report also called for new dedicated revenue sources to pay for infrastructure projects, such as the residential parking permit program that the New York Building Congress favors.
Another revenue possibility, said Forman, is waste-to-energy facilities, which according to the Building Congress and Citizens Budget Commission would reduce waste disposal costs and support sanitation operations with a dedicated revenue stream.
Fracking to pull oil and natural gas from the ground, should New York State legalize it, could also add tax revenue. Other revenue sources, said the report, could include a surface water management fee to incentive the capture of rainwater before it enters sewers.
