Towers & Transit: Real Estate Projects Should Help Pay for Transportation Improvements

The Wall Street Journal article PATH Strains Under Housing Boom examines an important issue: the interplay between transit capacity and real estate development, with a focus on PATH ridership growth as neighborhoods in Jersey City and Hoboken served by the subway connecting NY & NJ continue to experience strong growth.

7 Extension - 34 St Hudson Yards exterior

The 7 Train extension to Hudson Yards was funded by New York City using bonds backed by future tax revenues from the new Hudson Yards neighborhood.

Port Authority chairman John Degnan noted that the agency is looking to the cities served by PATH, and the real estate developers who build new projects in close proximity to PATH stations, to help fund capacity upgrades.

Mr. Degnan said the Port Authority planned to seek capital contributions from cities and developers that benefit from projects that increase the PATH’s capacity and expand the system. That would mark a shift in how the Port Authority pays for PATH improvements.

This approach is being used in cities around the world – Hong Kong is often cited as a model – as well as in New York. Former New York City Mayor Michael Bloomberg’s administration issued bonds backed by future tax revenues from a special district to expand the New York City Subway to the new Hudson Yards neighborhood taking shape on Mahanttan’s far west side.

More recently, SL Green, the city’s largest commercial landlord, agreed to fund $200 million in subway upgrades in exchange for approval to build a 1,500 foot tower next to Grand Central Terminal.

The response from local elected officials quoted in the article is concerning. It doesn’t serve residents of the region well when mayors readily punt responsibility to the Port Authority simply because it has been an easy target for criticism in recent years. One official even called the situation, “a brewing crisis” but let’s be clear: the rising crime and hollowing out of urban centers that reached its peak in the 1980s and early 1990s was a crisis. The need for cities and transit agencies to work together to fund transit infrastructure that supports urban cores that are once again growing is not a crisis. It’s an opportunity that demands committed leadership.

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