NEW YORK—New York City’s subway system is the backbone of one of the largest economic hubs in the world. But it is old, and the entity that manages it is struggling to keep it in good condition—all while providing transportation to more than 5 million people every day.
The Metropolitan Transportation Authority’s debt has risen beyond $32 billion and money from four fare increases in five years has barely covered rising costs—such as paying off debt interest—let alone improving service or paying off the debt principal.
Money and investments are the main topics of discussion for future planning: where to get money and where to put it into use—expansion or upgrading the existing system.
The sheer scale of the subway system in New York (5.3 million riders per day; 468 stations) makes it difficult to compare to the much smaller ones in the United States, such as San Francisco, Washington, D.C., and Chicago.
Rather, systems in international hubs such as London, Hong Kong, Madrid, Seoul, and Sao Paulo are more comparable for insight into funding, fares, and expansion. New York, London, and Hong Kong, are all raising fares in 2013.
This is an article exploring the differences and similarities of New York’s subway system against the international ones.
Falling Behind
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New York’s system, like those in London, Paris, Berlin, and Madrid, was built around the turn of the 20th century. Unlike all other systems examined for this piece, the New York City mass transit system operates 24 hours a day, 7 days a week.
It is also unique for its use of express tracks to speed some commutes—foresight the early planners had.
The extensive mesh of 660 miles of in-service track and equipment uses different technologies, which presents its own set of challenges.
Signals on the MTA system date back decades—51 percent are more than 40 years old. Putting in signals that allow for upgrades, such as faster trains, has been a slow process.
For decades after its subway system was built, New York City ignored upgrading it, according to Yoo Kwang-Kiun, professor at the College of Railroad Science at Seoul’s Korea National University of Transportation.
“Even if the typical life cycle of transit systems is 40 years, New York failed to upgrade its system during this period,” he said in a phone interview. “Only recently is it upgrading its system.”
MTA’s New York City Transit, in charge of the subway system, began rebuilding “its seriously neglected infrastructure” in the early ‘80s, said Kevin O’Connell, former chief transportation officer for transit’s department of subways in a 2005 City Council meeting, according to a transcript.
But, modern signaling equipment, which enables more trains to run per hour and more precise real-time train location, has been fully implemented only on the pilot L line thus far.
On the other hand, the systems in Hong Kong, Seoul, and Sao Paulo were constructed in the 1970s, enabling newer technology at the outset and easier upgrades.
Automation
Major systems outside New York City have been embracing automation because of increased safety benefits and cuts in labor costs. Some automated trains have one or no conductors, relying on computers to do the work.
Meanwhile, two train conductors are currently used on most trains in New York.
Some elected officials, as well as the Transport Workers Union Local 100, have protested any moves toward automation in New York, saying among other problems eliminating conductor positions puts passengers in danger during emergencies. Others, such as state Sen. Daniel Squadron, have backed moves toward more automation, but not full automation.
The International Association of Public Transport, based in Belgium, is in favor of more automation, as are experts The Epoch Times spoke to.
“Having fully automated systems makes operations more flexible and cheaper,” said Friedmann Kunst, with the Senate Department for Urban Development and the Environment of Berlin, in a phone interview. Automation is much easier, however, when building new systems or lines than converting old ones, he added.
‘Impending Crisis’
Upgrades cost money, and the MTA is facing mounting debt while falling behind on its current infrastructure. Repairs get pushed back, and those that are done are funded with borrowed money.
“We’ve got literally hundreds of billions of dollars in capital needs and we have no idea how we’re going to fund it,” said William Henderson, executive director of the Permanent Citizens Advisory Committee to the MTA. “The only easy source is bonding. You’ve got $32 billion in bonds out already.”
Capital needs are maintenance projects and bonding is a form of borrowing money.
In London, fares have been raised for three years straight. They are raised principally to pay for expansion, including a recent round of investments into two rail lines in particular, according to Sir Peter Hall, professor of planning and regeneration at the Bartlett School of Planning, University College London.
“They will have to keep raising them ... in order to pay for that investment,” he said in a phone interview. Hall, a huge critic of the system in the past, says, “The investment is already paying off.”
Not so in New York, where money from fare and toll increases—above inflation—only cover rising operating costs. Costs for the current expansions have shot above original projections.
Meanwhile, the MTA is borrowing more—$8.4 billion for its current capital program, according to a report from the state comptroller. Debt payments could rise to $3.3 billion by 2018, the report said.
“There isn’t a feeling that there’s an impending crisis, but there is,” said Jeffrey Zupan, senior fellow of transportation at the Regional Plan Association, one of the oldest analysis and planning organizations in the United States.
“There are so many hidden parts to the system that are old and in need of replacement and upgrade, and it’s not easy to make that case in the political arena that we’re in now,” Zupan added.
Transit advocates often say that many lawmakers are quick to criticize the MTA but don’t help come up with ways for the entity get up to speed.
State Funding
More state funding is often cited as an attractive way for more funding (the MTA is basically a state agency; it receives subsidies from the state and the governor appoints the MTA’s chairman and CEO).
“It’s very hard, because the dollars are so big,” he said. “My group doesn’t think the subways are adequately subsidized by the state. The state says, ”Well, we give you $4.5 billion in annual tax subsidies,' and I can’t deny that in absolute terms that’s a lot, particularly in an era where the economy is as weak as it is here now. So a lot of our battle’s in the trenches.”
The MTA spent $116.7 billion in 2011 dollars on capital repairs since 1982, when five-year capital programs began, according to a report by the Permanent Citizen’s Advisory Committee to the MTA. Still, “we’re being left in the dust,” with no real expansion since 1940, said Russianoff.
For comparison, Transport for London received $5.5 billion in general and capital grants in 2011, as well as $11.5 billion to substantially expand its network. Yet Tokyo Metro, one of two operators in Tokyo, received only 4.1 billion yen ($47 million) in 2011, according to its press office.
Frustration over searching for but not realizing new streams of revenue was evident at the MTA’s last board meeting in December, where members voted for fare and toll increases because, many said, they were left with no choice. The increases are part of a package first introduced in 2009 under an agreement with then Gov. David Paterson.
“We’ve had three years to look at the package—unfortunately stakeholders have not been able to come up with a new sustainable [funding] mechanism,” said one board member, Mitchell Pally, at the meeting.
Next ... Is Raising Fares Standard?
Is Raising Fares Standard?
Riders on the New York mass transit system are facing a fare raise this March—the fourth in five years. A 30-day unlimited pass will increase from $104 to $112 and the single fare from $2.50 to $2.75.
The estimated $450 million reaped annually from the just-approved increases will all go toward rising costs that the MTA say are non-discretionary, or uncontrollable, which include pensions, debt service, and paratransit.
The “spend more, get less” trend for system operators is happening globally.
Labor and energy costs have been rising faster than inflation, yet labor productivity was falling for 75 percent of North American and European Metros, according to research from the Imperial College London.
Most system operators are ending up with less money from fares, usually due to inflation if fares are increased, or fare increases that are not high enough or frequent enough.
Consequently, cost recovery from fare income is falling for 70 percent of metros, “increasing the burden on governments and taxpayers to fund the necessary reinvestments and enhancements in the existing metro,” write the researchers.
Tokyo Metro’s fares have only increased three times since 1984, according to its press office. Lisa Shikama, with the metro’s International Affairs, said in an email that the company has introduced new technology and cut costs, such as installing automatic fare gates throughout the network.
A common argument when setting fare levels, write the researchers, is that higher government subsidy will keep fares low and encourage people to take the subway instead of driving. Other research indicates, however, that more people ride subway systems after expansion and added service.
Different Forms of Pricing
The majority of the mass transit systems that turn a profit use distance or zone-based pricing, where the rider pays more depending on the distance traveled.
But an MTA spokesperson said officials haven’t considered pricing the New York subway system differently. The system now has a flat pricing structure, where one can travel whatever distance on a set fare.
“The best systems have flexible pricing: they price by time of day, they price by distance, and they have various packages, various types of passes, and it is very easy to use those passes and use the system,” said Genevieve Giuliano, professor at University of Southern California’s Sol Price School of Public Policy.
Peak pricing forces riders to pay more during the two daily rush hour periods, which also addresses overcrowding. Some passengers, hypothetically, then switch their commute times outside of the rush hour periods to avoid the peak charge.
Congestion Pricing
London, often seen as the most direct counterpart to New York, introduced automobile congestion pricing in 2003, after a political realignment gave the mayor power over the city’s transit system. Automobile drivers are charged for entering the core of the city between 7 a.m. and 6 p.m. All profits go toward improving public transit.
The scheme in London has worked well overall, reducing traffic flow in the Central Zone by about 17 percent, according to a report by Dave Wetzel, former chair of Transport for London. But state approval for congestion pricing has proven hard to get in New York City.
Wetzel said London’s congestion pricing proved that “a controversial radical policy” can be successfully implemented. But as a method of raising public funds, he said, “it leaves a lot to be desired.”
The pricing in London at one point only recovered about 60 percent of its costs—a major reason why congestion pricing won’t work well in New York City, said Frederick Salvucci, senior lecturer at MIT’s Department of Civil and Environmental Engineering. Congestion pricing was passed by the city in 2008, but was ultimately shot down by the state.
Salvucci suggests taxing some parking garages as a new form of revenue, a concept only requiring local, not state, approval.
“I'd say every parking space within a certain zone has to pay so much a year for its existence, and if you don’t want to pay for it, knock down the parking lot and put a building in,” said Salvucci. Aerial photography could be used to document all the spaces, while inspectors could check the garages.
As opposed to congestion pricing, there’s a lot less moving parts, and “you get a much higher yield,” said Salvucci.
Another potential road pricing change that could garner revenue: adding a charge for solo drivers who want to use HOV lanes.
Expanding the System
The MTA is in the midst of $15 billion in expansion projects to extend the subway’s reach and help meet growing passenger demand, largely on the East Side with the first phase of the Second Avenue Subway (SAS).
But future expansion should be put off, says Alan Pisarski, a transportation writer and consultant.
“They have to really consider deferring any expansion of the system until they’ve taken good care of what they’ve got,” he said.
Moreover, projects running over original time and funding projections (projects in New York have ballooned in both areas) weaken public support for expansion.
Many other large subway systems worldwide are expanding, most more rapidly than New York. London just completed its newest line (technically part of its Overground system) and has more expansion underway that will add more than 10 percent to its network capacity. The French-based RATP Group, which manages subway systems across the world, including Paris, just finished a new line on the budding Sao Paulo system; and Hong Kong has massive expansions planned, including into China.
Some expansions are getting criticized as much as New York’s, though. Juan Carlos Guzman Zamorano, president of Association of Friends of the Metro de Madrid, said that expanding a subway network is one of the best practices for entities that run the systems, but the Madrid metro’s recent expansions are underused while the system as a whole “has suffered a serious decline” in passenger numbers.
Expansion plans for outside Manhattan, principally the Triboro RX route, developed by the Regional Plan Association, which would extend New York’s system in Brooklyn and Queens among other areas, have never come to fruition.
Next ... Lessons From Asia
Lessons From Asia
Hong Kong’s MTR, which is similar to New York’s MTA, has been using real estate development as a major revenue source. The entity expands the system by developing land around where new lines and stations are being built, capturing rising land value by selling property at higher prices after the services are built. The MTR also negotiates a share of future property-development profits and/or co-ownership of the developments.
But this value capture system comes from elements including exclusive land grants to the MTR’s corporation by the government, and “a well-experienced and efficiently managed company,” according to a commissioned report by researchers at Hong Kong’s Polytechnic University.
New York City has spurred the 7-line extension to the West Side through tax-increment financing, or issuing $3 billion in bonds against future property tax growth. The MTA also received $1 billion to lease its land for 99 years to developers.
In Hong Kong, though, the government owns all the land, only granting 50-year leases to private individuals or companies, according to a working paper from Robert Cervero, an expert in sustainable transportation policy and planning. That’s a unique situation, which leads Cervero to stop short of recommending the capture method for European or American systems.
Systems in Hong Kong, Tokyo, and Seoul are all closely aligned with the government, though Tokyo and Hong Kong are partially privatized and generate profits.
The MTR Corporation generated $2.2 billion revenue in 2011, including $799 million for transport operations in Hong Kong. The corporation also has a hand in transport systems around the world, including a 50 percent share in London Overground.
In London, the new Crossrail service, a 73-mile route due 2018, will add $8.9 billion in value to real estate along the route through 2021, according to commercial property consultancy firm GVC.
Tokyo’s private railways, including Tokyo Metro, have been capturing land value, with land around new lines and stations and already completed stations, according to another working paper from Cervero.
The high density in Hong Kong and Tokyo’s urban areas contribute heavily to their success, says Dr. Kunst in Berlin, echoing Cervero. The density in Asian cities are much higher than in European cities, even London or Paris.
“Such a high population density makes it extremely expensive and difficult to own a car—people are practically forced to use public transport,” he said. “In European cities we have more freedom regarding the choice of mode of transport.”
As a country, Hong Kong has one of the highest population densities (2,618 people per square mile) in the world, according to World Bank data; and its urban population is high, reaching more than 17,000 people per square mile in Kowloon.
New York City’s density is higher, at more than 27,000 people per square mile; however, in areas such as south Brooklyn or eastern Queens, many people use cars rather than taking the subway.
Operator Cooperation
Overall, system operators are learning from each other through membership organizations such as CoMET and NOVA, and direct contact.
An MTA official said recently that Hong Kong and London officials had reached out after Hurricane Sandy to see how New York’s system was recovering. MTA and MTR officials meet via video conference every month.
Cooperation between scientists, other experts, universities, and associations, has become increasingly important, said Klaus Watzlak, spokesperson for Berlin operator BVG. “The times when each enterprise with its own experts did its own thing, while producing innovative approaches, are definitely over.”
With reporting and research by Christian Watjen in San Francisco, Jo Yoon-deok in Seoul, Miwako Nishamura in Tokyo, Jane Gray and Debbie Mumford in London, Isabelle Chaigneau in Paris, Hanna Danysz in Granada, Almudena Ferrer in Madrid, Heike Soleinsky in Hamburg, Rosemarie Frühauf in Berlin, and Bruno Menezes in Rio de Janeiro.
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