The governor is getting behind tax increment financing for transit.
Note today’s article, an important reference article for our February 8 infrastructure meeting.
The NYT article, The Subway Is Next Door. Should New Yorkers Pay Extra for That? — https://www.nytimes.com/2018/01/29/nyregion/subway-real-estate-nyc.html?ref=todayspaper — suggests that folks should pay more real estate tax for the convenience of being near a subway station. Chances are that they already do pay more.
Your real estate tax assessment has two parts: land value and building value. The land value reflects the location of the property and a site near transit or a park or other amenities is worth more than one that is not. The building value reflects the size, use, and quality of the building and a large apartment building is worth more than a one story store. Also, a building with higher rents (perhaps because it is close to transit) has higher value. If the City’s appraisers have been doing their jobs These increases are already reflected in the assessments, and thus the real estate taxes, for buildings on the Upper East Side now served by the recently opened Second Avenue subway.
Tax increment financing does not involve an increase in real estate taxes above what occurs naturally. It does, however, allocate the tax revenue differently. In the case of capturing some of the value caused by a transit improvement some of the tax revenue would go to the MTA rather than the City. A logical approach would be to allocate the taxes from the increment of increase in the land portion of the assessment when the subway improvement is built to the MTA because it is caused by the transit improvement. The increase in the building portion of the assessment would continue to go to the City to pay for the municipal services being provided, particularly for larger buildings that are likely to be developed.
For how this might apply to East Side Access and the area near Grand Central see A Better Path for East Midtown, pages12 – 13, including footnotes 13 & 14: http://cityclubny.org/wp-content/uploads/2015/12/Better_Path17.pdf
Who should object? Not property owners or their tenants who pay the same increase in taxes but have some of it invested in their front yard. Not the MTA or its riders who enjoy better facilities and service. Perhaps the City which only receives part of the increase.
But please do not characterize tax increment financing as an increase in taxes.
As you correctly point out, property owners who live near transit already pay increased taxes because the value of their property is higher due to the convenience of their location. Tax allocation funding sounds nice but allocating a portion of property taxes to the MTA IS like throwing good money after bad. The MTA seems intent on spending hundreds of millions of $$ on technologies that do little to improve the comfort or efficiency of the service.
It is time that the MTA is held accountable for what it does spend before we give it any more.
The Institute for Rational Urban Mobility has long supported vision42 – a proposal for a river-to-river auto-free light rail boulevard and landscaped open space on 42nd Street in Manhattan. IRUM has commissioned a number of technical studies quantifying the benefits and costs of this proposal. A recent update of the fiscal consequences of implementing this proposal was completed by the well-respected firm Urbanomics and is posted on the http://www.vision42.org website. This study found that a $4.5 billion increase in property values in the corridor served by this light rail line would be brought on by the implementation of this project. There are many other benefits and costs also identified on the study. In this case, the substantial density of development in this corridor, and the unique characteristics of light rail for enhancing short distance travel compared to walking, produced this gain, for a 2.5 mile project that is estimated to cost about $600 million to construct. Capturing only a small fraction of this gain, to pay for this project, would still leave substantial benefits for others to enjoy, as described in the report.
Today’s (27 March 2018) Crain’s has three pieces on funding the MTA:
The Manhattan Institute proposes a fee on additional density in transit growth zones http://www.crainsnewyork.com/article/20180327/REAL_ESTATE/180329895/think-tank-proposes-new-way-to-fund-mta-through-real-estate#utm_medium=email&utm_source=cnyb-realestate&utm_campaign=cnyb-realestate-20180327
The report is at: https://www.manhattan-institute.org/sites/default/files/IB-AA-0318.pdf
The governor proposes value capture to allocate a portion of the real estate taxes in areas near transit to the MTA http://www.crainsnewyork.com/article/20180327/BLOGS01/180329898/new-mta-real-estate-tax-is-a-terrible-idea#utm_medium=email&utm_source=cnyb-realestate&utm_campaign=cnyb-realestate-20180327
His proposal is rather more aggressive on behalf of the MTA than the tax increment financing protocol outlined in an earlier comment in this chain.
And Crain’s encourages the governor to focus on congestion pricing http://www.crainsnewyork.com/article/20180327/OPINION/180329915/to-fund-the-mta-cuomo-should-keep-his-eye-on-the-roads#utm_medium=email&utm_source=cnyb-realestate&utm_campaign=cnyb-realestate-20180327
Do you like any of these and, if so, why?
Your email address will not be published. Required fields are marked *
Save my name, email, and website in this browser for the next time I comment.
Notify me of follow-up comments by email.
Notify me of new posts by email.
The City Club of New York
249 West 34th Street, #402
New York, New York 10001