Fix the institutions
that are failing us
Most of the public institutions that govern
the region were established in a different era.
Because of this legacy, the regions 782 muni-
cipalities are responsible for critical decisions
about land use, property taxes, and schools
despite this structure increasing costs, inducing
sprawl, and exacerbating inequality. Our transit
system, for example, is technologically outdated
and cannot keep pace with a growing ridership,
as the institutions that oversee the subways,
trains, and buses are not empowered to properly
invest in and upgrade infrastructure. When faced
with new challenges such as climate change, pub-
lic institutions are slow to take action, and do so
piecemeal and without adequate funding.
Solving such daunting problems will require pub-
lic officials and citizens to reassess fundamental
assumptions about public institutions. Empow-
ered to serve the region and its residents, these
bodies can and should be reformed to accelerate
progress toward solving todays major challenges
of affordability, infrastructure investment, and
climate change resilience.
40 Regional Plan Association|The Fourth Regional Plan
Recommendations
Transform the way we govern and
pay for transportation / 41
1. Reduce the cost of building rail transit / 42
2. Restructure the Port Authority to function
as a regional infrastructure bank / 45
3. Create a Subway Reconstruction
Public Benefit Corporation / 49
4. Modernize transit systems outside New York City / 53
5. Charge drivers to enter Manhattan, price highways,
and transition to vehicle-miles tolling / 56
Create new institutions and funding
to tackle climate change / 60
6. Reduce greenhouse gas emissions with a cap-and-
trade market modeled after Californias program / 61
7. Establish a Regional Coastal Commission / 65
8. Institute climate Adaptation Trust
Funds in all three states / 69
Change fundamental inequities in
how we govern land use / 71
9. Reduce reliance on local property taxes / 72
10. Create regional school districts and services / 76
11. Make New York City property taxes fair / 80
12. Make the planning and development process
more inclusive, predictable, and efficient / 84
Make technology policy a core part
of governments business / 88
13. Increase participation in local government / 89
14. Expand affordable internet access across the region / 92
15. Create a Regional Census to support better
use of data for public purposes / 96
Transform the way
we govern and pay
for transportation
The regions network of buses, commuter rail lines, and subways has not kept
up with the tremendous growth in demand for living and working in dense,
walkable communities that depend on public transportation. Despite limited
new investments, on the whole, service has gotten worse. Delays and disrup-
tions are rising, debt is increasing, maintenance and repairs are pushed off,
and major capacity-expansion proposals are over budget and behind sched-
uleor simply not on the table at all. Meanwhile, our roads and highways,
many of which are in deteriorating condition, are constantly congested.

The institutional and funding structures we have today are not capable of
delivering an efficient transportation network, and should be reformed.
Reducing the cost of building new projects is essential to improving the
transportation network. Decision-making and regulatory and labor prac-
tices should be updated to deliver projects faster and cheaper. Agencies and
authorities need to be restructured to improve accountability and prioritize
service delivery and accountability. Congestion should be managed far more
effectively by charging drivers in the regions Central Business District, and
ultimately, on other highways and roads.

The Fourth Regional Plan 41

Fix the institutions that are failing usTransform the way we govern and pay for transportation
1. Reduce the cost of
building rail transit
Rail transit projects cost more and take longer
to build in the New York region than any-
where else in the world. For transit riders as
well as taxpayers, that means higher costs,
less reliable service, and a system that fails to
reach many areas or provide affordable and
frequent connections. Without a world-class
transit system, access to jobs, workers, and
services becomes limited and efforts to estab-
lish sustainable and energy-efficient land use
are weakened. To build the next generation of
transportation and other infrastructure the
region needs, we must reform the entire pro-
cess of building new infrastructurefrom how
political leaders set priorities to procurement
practices and labor work rules.
42 Regional Plan Association|The Fourth Regional Plan
Equity
Medium
Health
Medium
Prosperity
High
Sustainability
High
Photo: MTA / Patrick J. Cashin
The way we build large-scale
transit infrastructure is too
expensive and takes too long.
The huge cost of new transit infrastructure will make it
nearly impossible to expand and modernize the regions
overcrowded subways and commuter rails, undermining
economic growth and failing to serve outlying communities.
Other global cities are pressing their advantages, attracting
new business, and building important economically driven
infrastructure.
These extraordinarily high costs are not the fault of any sin-
gle institution or individual. They reflect decades of planning
and building practices, such as complicated site logistics,
counterproductive regulations, complex codes, institutional
inefficiencies, bonding requirements, and outdated labor
practices.
As the high costs contributing to the slow pace of proj-
ect delivery increase and project schedules are continu-
ally stretched, public confidence in government to deliver
improvements erodes. Budgets are surpassed, deadlines are
missed, and the responsible agencies struggle to complete
projects.
Cost overruns and long completion times are particularly
onerous when building subways and other rail transit. East
Side Access (ESA), for example, cost over $519 million per
mile for tunneling and track, compared to $107 million per
track mile for Londons new Crossrail project. With subways
and commuter rails already over capacity, and the population
expected to grow by four million people and two million jobs
by 2040, costs and delays will only add to the frustrations of
riders. And completing critical projects such as the Gateway
tunnels connecting New York and New Jersey, and extend-
ing the Second Avenue Subway (SAS), will be more difficult.
Every aspect of the project-delivery process contributes
to high costs and delays. Based on detailed analysis of the
MTAs three megaprojects#7 Line Extension, Second
Avenue Subway, and East Side Accesshigh costs were
driven by the political processes that govern construction,
agency management and practices, and labor work rules that
determine how projects are staffed and built.
Politics and public processes lead to inaccurate bud-
gets and timelines, lengthy environmental reviews that
undervalue the economic and environmental costs of
project delays, and planning decisions that engage com-
munity and business stakeholders too late in the process.
Institutional practices include limited constructability
assessments and excessive customization, fractured con-
struction management, and an overly complex procure-
ment process.
Labor practices include out-of-date work rules that
lead to excessive staffing and unproductive work time,
requirements to use operations workforce on construc-
tion projects, and limited training capacity that is wors-
ened by an uneven pipeline of projects that interrupts the
flow of steady of work.
The entire process of budgeting,
designing, bidding, and building
transportation megaprojects
needs to be reformed.
While the following recommendations pertain specifically to
building new rail transit, many are applicable to other types
of infrastructure construction.
Achieving these reforms will be difficult, requiring strong
political leadership, good-faith labor-management negotia-
tions, and a willingness to re-examine long-standing proce-
dures and practices that have outlived their original purpose.
The most critical actions include the following:
Make constructability a top priority of a rationalized
environmental review system. The environmental review
often results in project scopes or mitigation that greatly
increase construction costs, such as when access to
construction sites is limited to locations and times that
extend the time it takes to complete the project. While
these restrictions are based on legitimate concerns, the
costs of mitigation on project timelines and benefits
should be weighed against community and environ-
mental impacts; and international best practices should
influence reforms that make environmental review
simpler and more transparent. Federal, state, and local
environmental reviews should include an independent
analysis to evaluate the potential costs and disruption
to surrounding communities against the costs, both
financial and environmental, of the most cost-effective
construction plan. Costs to the project should be given
equal weight to disruption and other non-project costs.
Engage the public early in sustained, substantive discus-
sion. Environmental review is not a public-engagement
strategy, and is limited to public hearings on techni-
cal documents conducted well after projects have been
largely selected and designed. To get broad acceptance of
system improvements, the MTA must engage the public
with greater frequency, clarity, and transparency. The
MTAs extensive outreach to stakeholders, as part of the
planned 15-month L-train outage, is taking place years
before the start of constructionan approach the agency
should replicate. Another best practice adopted by the
MTA is the early opening of local community outreach
and education centers, like the Second Avenue Subway
Community Information Center recently opened on 125th
Street and Park Avenue. These effective new efforts must
be supported and expanded.
Adopt Londons project delivery model. Every megapro-
ject should have a temporary organization with a focused
mission of meeting project schedules. This Special Pur-
pose Delivery Vehicle (SPDV) could be modeled on the
London Undergrounds complex Elizabeth Line project,
which was delivered on time and on budget. The SPDV
would enable construction professionals more authority
and accountability to control budgets, such as by giving
them the ability to require supplemental funding from
any agency that proposes any costly changes.
Regional Plan Association|The Fourth Regional Plan 43
 Maximize the land-use development potential of trans-
portation investments. Future megaprojects should
incorporate land-use and zoning changes to capture the
value created through development opportunities, while
working with local communities to protect residents
from displacement (link to Comm-1). New York did
this as part of the #7 Line extension, in which the city
prepared a former industrial area to be redeveloped into
a mixed-use commercial center. ESA and SAS, whose
economic impacts are more diffuse, could have lever-
aged redevelopment opportunities at new or existing
stations to help pay for the project while at the same time
addressing the regions housing and job needs.
larger capital program with a steady pipeline of projects that
could maintain or increase construction-industry employ-
ment.
Paying for it
Implementing these reforms would sharply reduce the costs
of new rail projects, and could change government rules
or industry practices that ultimately reduce costs for other
infrastructure projects as well. Some upfront and ongoing
administrative costs would be needed to introduce new man-
agement and labor processes.

Mandate design-build for all new rail lines and exten-

sions. The MTA should replace its traditional multistep
procurement process, which is primarily useful for
targeted improvements on existing infrastructure, with
this increasingly accepted practice. Design-build allows
greater creativity, which can lead to budget savings by
mixing design and contractor teams, allowing for better
and closer collaboration from the outset, and eliminating
the need to reconcile designs later. Contractors are able
to evaluate the constructability of designs as drawings
are produced, offering suggestions on cost savings based
on their experience in the field.

Rethink labor practices and work rules. We should adopt

the best practices other cities have demonstrated in
maintaining employment and wages while delivering
projects faster and at lower costs. Many project managers
and contractors say work rules are a major factor driv-
ing inefficiency and higher costs. Reforming how work
shifts are defined, along with overtime pay and staffing of
tunnel-boring machines, could result in significant costs
savings. And even wider savings could be achieved by
examining the rules embedded in collective bargaining
agreements.

Outcomes
Greater productivity and more efficient decision-making
and management would result in faster and better project
delivery, and allow the MTA to accelerate the construction of
megaprojects. The impact of these reforms would depend on
how quickly and successfully they are implemented. Deliv-
ering projects on time, on budget, and at lower costs should
also boost public confidence and result in increased capital
funding for infrastructure. Reforms could help implement a

44 Regional Plan Association|The Fourth Regional Plan

Fix the institutions that are failing usTransform the way we govern and pay for transportation
2. Restructure the Port
Authority to function as a
regional infrastructure bank
The Port Authority of New York and New
Jersey has been a valuable financier and
developer of critical infrastructure. In recent
years, however, its operations and credibility
have suffered from political interference and
the inability to finance projects from which it
cannot capture value, such as PATH improve-
ments and the new Gateway Tunnel. To realize
the Port Authoritys potential and preserve
its important mission, the entity must be
reformed to increase accountability, given the
ability to capture value from all of its invest-
ments, and separate operations from its histor-
ically clear mission of financing and delivering
new infrastructure. This would enable the
Port Authority to become the regions infra-
structure bank, with assets operated by dif-
ferent management structures that deliver the
best performance and value.
Equity
Medium
Health
No Impact
Prosperity
High
Sustainability
Medium
Photo: Roman Babakin
Political maneuvering, mission
creep, and inefficient operations
have hurt the Port Authority.
The Port Authority is a classic conglomerate. The primary
advantage of such a structure is allow profitable assets, such
as the airports and Hudson River crossings, to cross-subsi-
dize important, but money-losing, operations such as PATH
and the Port Authority Bus Terminal. The structure also
allows the Port Authority to plan, operate, and coordinate
key elements of its transportation infrastructure.
Unfortunately, there are also significant disadvantages.
Senior management, for example, with so much under its
purview, is unable to undertake the kind of in-depth strate-
gic planning that each asset requires. The Port Authoritys
current structure shields many underperforming assets
from scrutiny. Rather than incentivizing creativity and bold
actions, the multiple management layers of the Port Author-
ity result in indecisiveness and inaction. The structure of
the Port Authority as a two-state organization also makes it
susceptible to abuse and political interference.
As a result, many capital projects become too expensive and
are delayed, disruptions rise, debt increases, and crucial
maintenance and repairs are deferred. The Port Authority
Regional Plan Association|The Fourth Regional Plan 45
is unable to meet the growing infrastructure needs of the
region at a time when our aging infrastructure requires mod-
ernization and new capacity for regional growth.
The Port Authority faces many challenges, including:
Political interference: Overt political interference and
scandal in recent years have undermined the organiza-
tion. The authoritys current structure depends on the
governors of New York and New Jersey to serve as the
key points of political accountability and serve the public
interest. They have the power to appoint commission-
ers and veto board actions. Gubernatorial authority and
accountability, however, cannot excuse overt political
interference and diversion of Port Authority resources
to serve narrow political ends. A governance structure
intended to safeguard the interests of both states has
instead produced internal division and a lack of mana-
gerial accountability. The governors and legislatures of
New York and New Jersey should agree on a series of
transformational reforms that minimize the potential
for political interference through greater transparency
and accountability in decision-making and gubernatorial
involvement.
Financial capacity: The combination of the extraordi-
nary cost of rebuilding Lower Manhattan after 9/11, and
a growing list of projects that user fees will not be able
to cover has turned the Port Authority into an unwieldy
conglomerate of disparate entities and weakened its
once-strong financial position. Major investments criti-
cal to long-term success of the regionincluding the
Gateway project, increased capacity at JFK and Newark
airports, a renovated bus terminal, and increased PATH
capacityare unlikely to be completed because the
authoritys cash flow and projections cannot sustain the
anticipated debt service. To address the situation, the
Port Authority will require new revenue sources, such as
value capture, to supplement its user fees.
Cross-subsidization: The practice of cross-subsidization
between the authoritys different business units without
sufficient transparency has, over time, masked inefficien-
cies and inhibited much-needed investments. These
inefficiencies in operations, including public security,
seaports, and mass transit, have survived because the
enormous profits generated by the airports and Hudson
River crossings could be used to cover ongoing deficits.
While transit operations will always require subsi-
dies, the current structure has allowed costs to grow
unchecked and thereby stymied innovation, such as con-
tracting for services or merging with other public entities
46 Regional Plan Association|The Fourth Regional Plan
that could achieve economies of scale. The Port Author-
ity should be restructured to act like an infrastructure
bank, providing financing to critical initiatives, while
also allowing innovative management and operations to
flourish within its operating divisions.
A regional infrastructure bank
would support independent
entities to promote efficiency and
transparency, improve service,
and generate new investments.
Delivering services more efficiently and investing in the next
generation of infrastructure projects will require fundamen-
tal structural change to how the Port Authority is organized
and governed.
There needs to be more separation between operating the
system and financing long-term capital improvements. The
Port Authoritys line agencies would benefit from a clearer
mandate to provide the best possible service, with long-term
investments planned, financed, and delivered by separate
entities. Planning and investing in large capital projects,
such as new tunnels or airport runways, requires a different
set of competencies and authority than maintaining good
day-to-day service and efficient operations. Large capital
projects have economic, fiscal, and environmental impacts
that extend well beyond the users of a particular facility and
require a different set of political, planning, and financial
expertise to execute.
Operating agencies need greater financial and performance
accountability. The Port Authoritys consolidated bond
structure obscures how businesses are cross-subsidized and
reduces incentives for efficient service delivery and capital
construction. The different business units at the Port Author-
ity, which are the by-product of a century of growth rather
than any strategic plan, should be organized into distinct
corporate entities with facilities that have tight operating
synergies. These entities need to have clear fiscal responsi-
bility to deliver the best service at the lowest cost, including
incentive structures to drive innovation and efficiency, and
be held accountable for their performance. These separate
units should have expert-led governing boards that regularly
hold open meetings and are required to report periodically to
the public and elected officials on their operations, finances,
and plans. This would allow both affected stakeholders and
the media greater access to information and decision-making
surrounding each of those operations.
Allowing private investors to have a stake in operations, and
potentially capital investments, would help balance politi-
cal decision-making with financial objectives. There may be
good reasons for the Port Authoritys business operations
to make investments that will never yield a positive return.
But these decisions must be weighed against the needs of
the rest of the system, with a clear analysis of the full costs
and benefits. The Port Authority has succeeded in recent
years in delivering critical infrastructure projects through
public-private partnerships, such as the Goethals Bridge
and a future LaGuardia Airport. Leveraging the private
sector through the use of well-structured partnerships
could encourage innovation, discipline, and risk-transfer
in the delivery of the agencys capital projects, as well as
management of the agencys assets. This approach could
be expanded to other business units. Having public-private
partnerships manage some of the Ports assets, such as the
PATH or seaport, would introduce financial incentives to
decision-making to balance against other goals. There are
different ways of structuring private-sector partnerships
that should be carefully explored. While each operat-
ing entity may require a different approach to achieve the
greatest efficiency, these reforms could be achieved without
violating existing bond covenants or changing the entitys
governing legislation.
Enact and implement reform recommendations.
The Port Authority would be run by a chief executive, with
a clearly defined role, who ultimately answers to the Board
of Commissioners. New York and New Jersey governments
must concur on a series of transformational reforms that
minimize the potential for political interference through
greater transparency concerning Port Authority decision-
making, public and legal accountability, and gubernatorial
oversight for their own actions relative to the Port Authority.
Much of the groundwork for essential reform has already
been laid by the Special Panel on the Future of the Port
Authority, which issued recommendations in 2014. Among
other internal reforms, the Special Panel proposed creating
a single CEO position, hired and directed by the Board of
Commissioners, replacing the current chair and vice chair
with two co-chairs (recommended to the board by the gov-
ernors of each state), and establishing an Office of the Chair
comprising the co-chairs and CEO to function as the senior
operating committee of the Authority. The Special Panels
proposals would better maintain the political indepen-
dence of the Authoritys executives and afford them greater
autonomy from undue political influence. The Authoritys
professional managers should be empoweredand also be
held accountableto deliver projects and provide services to
the best of their abilities.
Lawmakers in each state have also proposed additional
reforms to improve transparency and accountability to the
public. Even as the CEO and managers are afforded more
autonomy in making decisions, they should also be held
accountable through clear, uniform legal obligations to
provide detailed information to the public, provide protec-
tions to whistleblowers, and be subjected to uniform judicial
review in the courts of either state.
The governors and legislators of New York and New Jersey
should convene to reconcile these reforms and develop and
pass identical comprehensive reform legislation to guide
the governance of the Authority. These reforms should be
enacted into law so they are long lasting, judicially enforce-
able, and cannot be discarded or disregarded by gubernato-
rial or board fiat. These steps will be necessary to re-balance
the Port Authority and properly shield it from inappropriate
political pressure.
Allow the Port Authority to capture
more of the value it creates.
As outlined in other sections of this plan, the Port Authority
will be required to finance major public capital investments
over the next generation, including a new commuter rail
tunnel under the Hudson River, runways at JFK and Newark
airports, and a new bus terminal in New York City. The Port
Authority may also be asked to assume financial, design,
and/or operational responsibilities for coastal resiliency
measures needed to protect authority assets and the entire
port region from rising sea levels and more severe storms.
Even if the Port Authority succeeds in generating more effi-
ciencies from current operations, such as the PATH system
and bus terminal, it cannot finance these investments from
the profits generated by the Hudson River crossings and
airports.
The investments that are made will generate enormous
growth and productivity that can be used to acquire addi-
tional funding. Consideration should be given to capturing
some of the real estate value created by the PATH system and
Gateway tunnel; charging motorists to access the airports;
or redeveloping and monetizing underutilized real estate
assets. The World Trade Center and certain other Port
Authority real estate holdings are not core to its mission as
builder and manager of transportation facilities, but they do
represent valuable sources of long-term revenue. The Port
Authority should determine how to redeploy its real estate
holdings in a way that maximizes their long-term value, and
therefore the entitys financing capacity, while minimizing
the effort to manage them. This could involve engaging in
joint ventures, handing off assets to real estate investment
trusts, or divesting them through an IPO.
Regional Plan Association|The Fourth Regional Plan 47
Create independent corporate entities for operating
and maintaining the Port Authoritys assets.
The Port Authority should change the relationship between
its central functions and operating assets. These should be
reconstituted as independently managed units with manage-
ment devolved down to the asset level, reporting on both
the operational and financial performance in a clear and
transparent way.
Operating entities could apply for financing, and the board
and management would evaluate requests based on finan-
cial and service criteria, as well as other public interests,
including community, health, economic, and environmen-
tal impacts. The bank could also initiate planning for large
projects, and establish single-purpose entities to design and
build them, as it has done for the Gateway project.

By doing so, the Port Authority would create separate cor-
porate entities that receive a long-term franchise to operate
each division of the authoritys assetsairports, ports, bus
terminal, and PATHin return for a first call on revenues
sufficient to pay off the related debt. These operating entities
could then be organized in ways that would best serve each
entity. For example, the container ports subsidiary could
be operated by a for-profit entity; airports could remain
quasi-independent public agencies; the PATH train franchise
(which would include an ongoing subsidy rather than a pay-
ment obligation) could be operated by New Jersey Transit,
the MTA, or a private transit operator.
Outcomes
Designating independent operating entities and converting
the Port Authority into an infrastructure bank would have
two primary outcomes. By creating greater transparency
and independence in making capital allocation decisions, the
proposal would create incentives for more efficient, cus-
tomer-focused service for each of its operating subsidiaries.
It would also help ensure the most important and cost-effec-
tive projects are prioritized. Both of these outcomes should
increase public confidence in the authority, thus making it
easier to attract public and private capital.

Contracts between the Port Authority and the operating

entities would specify performance standards and the flow Paying for it
of funds between them. The Port Authority would establish
how much each subsidiary would contribute toward the Port Restructuring the Port Authority would require significant
Authoritys existing consolidated bond debt service and how legal and administrative expenses to negotiate financial
much Port Authority cross-subsidy (from landing fees, bridge structures that allocate revenues fairly while maintaining
and tunnel tolls, and real estate revenue) should under- bond ratings, complying with bond covenants, providing
write critical services that need it (PATH and bus terminal operational incentives, and winning political approval for a
operations). The operating entities would determine fares governance structure that provides greater independence.
and fees to meet contract provisions, but the Port Authority But over time, the cost of delivering operations and capital
could establish and enforce levels of service, asset conditions, projects would decrease due to the more efficient and effec-
labor standards, and other public interest conditions. Beyond tive structure.
these bond requirements and cross-subsidy agreements, the
operating assets would have incentives to provide services at
a competitive cost. They would control operating revenues
and determine how to spend them, creating incentives for
the operating assets to provide high-quality, cost-effective
service.

Create a regional infrastructure bank.

Under the structure proposed above, the management rela-
tionship between the Port Authority and its operating assets
would be diminished and the financial relationship between
the agency and these assets would change. In effect, the Port
Authority would function as a regional infrastructure bank,
collecting certain revenues from the operating units, paying
consolidated debt service, and distributing surplus revenues
back to the operating units or investing in new bi-state infra-
structure.

48 Regional Plan Association|The Fourth Regional Plan

Fix the institutions that are failing usTransform the way we govern and pay for transportation
3. Create a Subway Reconstruction
Public Benefit Corporation
New York Citys extensive subway system is
the lifeblood of its economy, but faces a dire
crisis. The systems infrastructure is aging
and unreliable and uses outdated technology.
By almost every metric, service is deteriorat-
ing. While some important improvements
have recently been made by the Metropolitan
Transit Authority (MTA), progress must be
radically accelerated to meet demand and
ensure that New York can compete for jobs
with other major cities. Bringing the subway
up to modern standards will need significantly
more funding. But it also requires the creation
of a new institution dedicated solely to fixing
the problems: a Subway Reconstruction Public
Benefit Corporation. This public entity would
have a focused mandate, streamlined author-
ity, and sufficient funding to rebuild the entire
subway system within 15 years.
Equity
High
Health
Medium
Prosperity
High
Sustainability
High
Photo: Leonard Zhukovsky
The MTA, with its current
financial and operational
structure, is not capable of
rebuilding the subway system.
The subway system may be the spine of the city, but it is also
its Achilles heel. Surging ridership and decades of underin-
vestment have taken their toll. According to the Independent
Budget Office, train delays have increased three-fold over the
past five yearsfrom roughly 20,000 delays a month to over
65,000due to overcrowding, signal failures, and other daily
disruptions. As the public has become increasingly aware,
delays lead to overcrowding, which causes further delays and
even more overcrowding. Failures and breakdowns cascade
and ripple throughout the system, compounding problems
and delaying riders. Stations are hot, loud, damp, and for the
most part, not ADA accessible. New Yorkers now talk openly
of a transit crisis that threatens the citys future.
The MTA is staffed by talented public servants, and has
achieved great things over the past generation. It should
be commended for repairing the subways in the 1980s and
1990s, restoring service quickly after Superstorm Sandy,
extending the 7 and Q lines, and adopting a modern train
control system on the L line. It recently announced plans
to move to a modern fare-collection system. But the pace of
these improvements has been too slow compared to the citys
Regional Plan Association|The Fourth Regional Plan 49
tremendous need for capacity expansion and moderniza-
tion. Demand is growing rapidly as the city adds jobs and
residents. Climate change is accelerating. And technology
is raising passengers expectations for customer service.
The MTA, as currently funded and structured, cannot keep
up. Unless we can find new ways to deliver improvements
and modernization, the subway system will continue to slip
further behind.
Fixing the subways and bringing them up to modern stan-
dards of speed, efficiency, and service must be the highest
transit priority for the region. And despite strong leadership
and dedicated staff, there are institutional reasons the MTA
will not be able to reconstruct the subways in a reasonable
amount of time. They include:
Competing demands: The MTA is an enormous legacy
institution responsible for funding and operating one of
the largest subway networks in the world; two commuter
railroads and the Staten Island Rail Road; local and
express buses; and nine bridges and tunnels. In addition
to operations, it is responsible for financing, design-
ing, and overseeing all capital improvements to these
properties. Although managing the subway system is
tremendously complex, particularly in this time of crisis,
it is just one of many competing priorities for the MTA
leadership.
Inefficient institutional practices: The MTA, like any
decades-old large corporate institution, has acquired
layers of regulations and competing organizational silos
within the bureaucracy. Some of the rules that make
the MTA less nimble at building megaprojects include
limited constructability assessments and excessive
customization, a fractured construction management
process, and an overly complex procurement process
that stifles innovation. Changing this structure has
proven extremely difficult because it is so embedded in
the legacy institutions that comprise the agency, and the
different divisions have competing agendas. The agency
in charge of rebuilding the subways needs to be first
among equals in the hierarchical structure, in order to
drive projects forward.
Anachronistic and overly burdensome regulations: Some
of the contracting, procurement and labor practices
required by the MTA are inefficient and out-of-date. Con-
tracting regulations actively stifle innovation and create
costly delays. Work rules that lead to excessive staffing
and unproductive work time, requirements to use the
operations workforce on construction projects, limited
training capacity, and project pipelines that contribute
50 Regional Plan Association|The Fourth Regional Plan
to labor shortages all increase project costs and delivery
times. With his recent declaration of a state of emergency
at the MTA, the governor recognized these challenges
and streamlined some operations to expedite contract-
ing and procurement, but these steps still need to be
expanded and institutionalized.
Unclear lines of responsibility and accountability: The
MTA has an opaque structure, with different divisions
going back to the legacy institutions that were merged
into a single authority in 1968, a board appointed by dif-
ferent political leaders representing different constituen-
cies, and complicated funding formulas that make it hard
to determine who is paying what. As a result, the riding
public does not know whom to credit for improvements,
or blame for failures. While most riders believe the
New York City mayor is in charge of subways and buses,
power in fact rests with the governor, who has a plural-
ity of appointees to the MTA board, chooses the MTAs
leadership, and controls most of the funding. Until these
responsibilities are clarified in the eyes of voters and
transit riders, there will always be confusion about who
is in charge.
Lack of funding: Nobody likes to raise taxes, fees, or
fares, and the current structure of the MTA and the
budgeting process incentivizes politicians to defer main-
tenance and increase debt rather than find additional
resources to pay for necessary maintenance, repairs, and
expansion. But the needs of the system are clear. The
MTA is $40 billion in debt, requiring 16 percent of its
$15.75 billion annual operating budget to be dedicated to
debt service. Its operating budget is increasingly unbal-
anced, with expenses growing 30 percent faster than
operating revenues due to rapidly escalating employee-
benefit costs and debt-service payments. Even as it must
find ways to reduce operating-cost increases and reduce
debt, the MTA needs additional dedicated resources of
several billion dollars a year. These funds could be gener-
ated by charging motorists to enter the regions central
business district and putting a price on greenhouse gas
emissions from the transportation section, among other
options.
Create a Subway Reconstruction
Public Benefit Corporation
responsible for overhauling the
subway system within 15 years.
To be on par with the subway systems of other major cities
around the world, we need to aggressively address the back-
log in critical infrastructure updates, modernize the signals
system, right-size our most congested stations, and increase
capacity in strategic locations. Reconstructing our subways
will entail a significant increase in capital expenses, and
require fundamental changes in how projects are designed,
approved, and built. The scale of these governance changes is
so significant, in fact, that a new quasi-governmental entity
should be created specifically for that purpose: the Subway
Reconstruction Public Benefit Corporation.
Give the Subway Reconstruction Public
Benefit Corporation a specific mandate.
A crisis demands undivided attention. A new Subway Recon-
struction Public Benefit Corporation should be created with
no other goal than to completely rebuild the subway system
within 15 years. Without other distractions such as buses,
commuter rail, roadways, and even operating the subway
network, the new entity can focus entirely on subway capital
construction. It can recruit leadership with specific exper-
tise in that area, and motivate a team to meet specific goals
within a specific timeframe.
The responsibilities of the Subway Reconstruction Pub-
lic Benefit Corporation would be to determine the level of
capital improvement required, determine how to balance
construction with ongoing operating needs, identify ways to
increase cost efficiencies in construction, secure the rev-
enues needed, issue and negotiate a Request for Proposals,
and oversee construction, enforcing performance measures
and penalties for delays.
Allow the Subway Reconstruction Public
Benefit Corporation more leeway to take a 21st
century approach to capital construction.
The specific structure and rules governing the Subway
Reconstruction Public Benefit Corporation should be deter-
mined by the New York State governor, in collaboration
with the New York City mayor and MTA leadership. Broadly
speaking, its institutional structure should be designed for
creative problem-solving, efficient decision-making, and
accountability.
The Subway Reconstruction Public Benefit Corporation must
be empowered to speed up the reconstruction process while
maintaining a strong commitment to worker safety and the
public interest. This may mean making it easier to engage in
public-private partnerships, authorizing design-build, and
revising some of the other rules and regulations that cur-
rently drive up the cost and timelines of projects built by the
MTA. Today, the MTA Capital Construction Company has
responsibility to deliver these projects, but it has not been
given the full authority, funding, or support to do soeven as
it has responsibility to deliver other capital projects.
Define clear lines of accountability.
Like New York Citys Economic Development Corpora-
tion (EDC), the new Subway Reconstruction Public Benefit
Corporation would not be a government agency, but rather
a public-benefit corporation, with a board of directors from
a range of public and private-sector fields. But like EDC, the
Subway Reconstruction entity would be controlled by the
governmentin this case, the governor of New York.
Within the Subway Reconstruction Public Benefit Corpo-
ration, accountability would be key. The decision-making
process should be transparentfrom what projects the new
entity would undertake to what mitigation measures would
be provided. Contract negotiations should identify and plan
for any potential construction issues and require the builders
to meet performance standards or else suffer penalties.
The Subway Reconstruction Public Benefit Corporation
would be required to report on its progress on a semi-annual
basis and provide justification whenever budgets or timelines
are not met, thus making sure the public interest is pro-
tected.
Provide the funding necessary.
Even with more efficient institutional practices and work
rules, rebuilding the subway system would still significantly
increase capital construction budgets. The Subway Recon-
struction Public Benefit Corporation would have access to a
significant portion of the existing MTA capital plan, but that
would be insufficient. Identifying and securing a diverse,
stable, and sizable dedicated revenue sourcessuch as a
carbon tax, congestion pricing, value capture, charging tolls
based on miles driven, and other taxes and feeswould be
essential to the success of this effort.
Regional Plan Association|The Fourth Regional Plan 51
Outcomes
This recommendation would end the continuous cycle of
runaway construction costs and delays on capital projects.
Within 15 years, the subways would be faster, more reli-
able, less crowded, and more efficient than they have been in
decades. A streamlined decision-making and construction
process would result in faster and better project delivery.
With modern signalling technology, stations with platform
screen doors for better safety and pedestrian circulation, and
modern communications, the subway system should be able
to increase its capacity significantly, and provide service to
more parts of the cityall at lower costs.

In addition, this initiative would create a new model of tran-

sit governance. The Subway Reconstruction Public Benefit
Corporation could, in other words, become a pilot project
that informs the process for reforming the MTA itself.

Paying for it
Creating the Subway Reconstruction Public Benefit Corpora-
tion would require upfront legal and administrative costs,
while reconstructing the subways would need a significant
amount of funding. But in this transit-dependent region
where the system is so far over capacity, the long-term
return on investment on transit projects would be very high.
And the lessons learned from a new institutional structure
to address the MTAs most daunting challenges could be
a model for other agencies that would have far-reaching
impacts beyond the authority.

52 Regional Plan Association|The Fourth Regional Plan

Fix the institutions that are failing usTransform the way we govern and pay for transportation
4. Modernize transit systems
outside New York City
Outside of New York City, the tri-state region
has the three busiest commuter rail systems in
the country as well as bus systems that serve
millions of local, regional, and long-distance
trips. Funding for these transit systems has
not kept pace with growing demand, and in
some cases has been drastically cut. NJ Tran-
sit, Metro-North, and the Long Island Rail
Road all need to scale up their operations.
These agencies must carry out the specific
capital projects outlined in this report, become
more innovative and better funded, and coor-
dinate their policies. NJ Transits bus system,
along with systems like NICE Bus in Nassau
County, Bee-Line in Westchester, and Suffolk
Transit also need more resources to improve
service, adopt on-demand transit options, and
be prepared for autonomous vehicle technolo-
gies.
Equity
High
Health
Medium
Prosperity
High
Sustainability
High
Photo: Nancy Borowick
Public transportation outside
New York City is both hampered
by lack of funding and difficult
for riders to navigate.
The three railroads and dozens of public and private bus
companies that make up the public transportation system
outside of New York City all have certain challenges in com-
mon, while other issues are particularly acute for specific
entities.
Inadequate funding: All the transit systems need more
resources, and NJ Transits funding structure is the most
precarious. It is one of the largest systems in the country
without a designated funding stream, with state funding
to the agency subject to the uncertainty of annual budget
negotiations. This has resulted in a 90 percent reduction
in state aid for operations since 2005, forcing fare hikes
and raids of the agencys capital fund to cover operating
costs. Similar funding reductions for county bus systems
has also led to a downward spiral of declining service
and ridership. Nassau Countys NICE bus system has
seen a 20 percent reduction in funding, and a 71 percent
reduction in the countys support for the system since
2006.1
1 New Jersey For Transit, Stuck at the Station 15 Years of Declining Invest-
ment Has Harmed New Jerseys Ability to Deliver High-Quality Transit
Regional Plan Association|The Fourth Regional Plan 53
 Political interference: State reductions in funding and
political interference (especially at NJ Transit, which
is heavily dependent on annual appropriations) have
consumed agency officials and thwarted their attempts at
addressing the needs of the riding public.
Lack of investment: Failing systems and inadequate
infrastructure have led to increased delays, deadly
derailments, and safety hazards. Penn Station, the
western hemispheres busiest transit hub, is unpleasant
and overcrowded, despite recent efforts by the railroads
to make improvements. In Connecticut, parts of the the
New Haven Lineespecially many of its old bridges
are in a state of disrepair. For bus riders throughout the
region, funding cuts mean old buses, long waits, and
deteriorating service.
Few resources to address inequities in the transit
system: Lack of funding has made it increasingly dif-
ficult for transit providers to accommodate the needs of
low-income residents, who are particularly dependent
on transit. Fares have increased and services cut because
agencies have been unable to further subsidize rides or
provide a system that bases fares on customers ability to
pay.
Poor attention to customer service and accessibility:
Rail and bus systems have been slow to adopt technol-
ogy that would allow better service and coordinate
trips between agencies. Navigating the many services is
difficult. Many stations, particularly on the NJ Transit
network, still are not ADA accessible.
Service cuts and fewer bus riders accelerate a vicious cycle.
Nassau County ridership declined by 17 percent between
2006 and 2015, and Suffolk Transit reports ridership
declined by 20 percent between 2006 and 2016. NJ Tran-
sit rail and bus passengers are also responding to the poor
service and fleeing the struggling transit system. On the New
Haven Line and Long Island Rail Road, ridership remains
high, but poorly maintained tracks and old train cars limit
the ability of the lines to serve a growing population. The
new CT Fastrak bus rapid transit system between Hartford
and New Britain in Connecticut has drawn new riders, but
bus ridership in a number of urban centers, including New
Haven and Stamford, has started to drop after a period of
growth. New Haven saw an 8 percent drop and Stamford a 7
percent drop between 2012 and 2016.
Service, 2016
54 Regional Plan Association|The Fourth Regional Plan
Sound budgeting and better
governance will allow operators
to invest in infrastructure and
focus on their customers.
More resources are needed to help NJ Transit, LIRR, Metro
North, and bus transit operators improve service by doing
the following:
Adopt sound budgeting practices and rely less on debt.
Capital funds should no longer be diverted to cover oper-
ating deficits. The operating budget should be funded by
fare revenues and dedicated subsidies, taxes, and other
user fees. New Jersey should replicate this structure,
which is common for large public transportation systems
across the country, including the MTA.
Ensure revenues allocated to transportation purposes
are not reallocated to cover shortfalls in other areas of
state budgets. Dedicated revenues to state transporta-
tion funds must be protected from reallocation to other,
non-transportation-related purposes. In Connecticut,
a very small proportion of the States general sales tax
is allocated to fund transportation, but there is strong
political pressure to reallocate these funds to other
programs. New Jersey voters recently passed a referen-
dum that constitutionally dedicated gas tax revenue to
transportation projects. A similar constitutional lockbox
in Connecticut would protect state transportation funds
from being diverted for other purposes.
Provide more clarity and transparency about sources
of funding for capital investments. All agencies need
greater clarity about how money is spent, whether it is
from a legislative appropriation, a new fee/surcharge/
tax, or a grant from the federal government.
Evaluate new revenue sources such as revenue gener-
ated from development around stations along with other
forms of value capture, or a greater allocation to public
transportation from gas taxes or future vehicle miles
traveled fees.
Improve both capital and operating efficiencies. In addi-
tion to adopting strategies for reducing the cost of capital
projects, transit agencies and service providers should
look for greater operational efficiencies, such as negotiat-
ing for increased productivity in labor contracts in return
for higher wages and job stability.
 Provide transit equity to low-income, transit-dependent
communities. The many areas in the region that are
transit dependent should be given priority for enhance-
ments to the transit system, especially through improve-
ments to the bus network, network redesigns, and other
recommendations elsewhere in the plan
Offer discounted, needs-based fares for short trips on
commuter rail lines that run through neighborhoods with
many low- and medium-income households. This would
improve local mobility and encourage more riders to use
public transit for short trips.
Explore a unified management entity and promote
through-running service at Penn Station. As Penn Sta-
tion is expanded to the west (Moynihan Station) and
south (Gateway), and Metro-North service is provided
via Penn Access, a unified management entity, includ-
ing representation from all the commuter railroads and
Amtrak, should be explored to better integrate service
and amenities and promote through-running. Ultimately,
the system should be reconfigured to allow significantly
more through-running from New Jersey to Connecticut
and Long Island.

Emphasize customer satisfaction through integrated Outcomes

services. Public transportation agencies should do more
to connect with riders, involve them more in decision-
making, and make their services attractive and easy to
use. This will require using technology to accelerate the
transition to a flexible, unified fare collection system and
coordinating services that promote more intermodal
trips, including with private bus carriers. Ultimately,
as the system turns into an integrated regional rail and
bus system, fare structures could be organized by zones,
across all operators.
Investing in suburban transit would result in additional
transportation choices, more reliable and frequent service,
and better access to jobsespecially for transit-dependent
households. Better transit service should succeed in getting
people to choose transit over walking, which should lead to
lower greenhouse gas emissions and more active lifestyles.
Lastly, it would lead to less reliance on debt for future capital
investments.

Create better intermodal connections to provide better Paying for it

customer service. This could include adopting bike shar-
ing to reduce the need for parking around commuter rail Higher gas taxes and roadway tolls, as well as a motorist tax
stations, and promoting innovative parking-management based on the actual distance driven (vehicle miles traveled or
strategies that support on-demand services to replace VMT fee), would be key sources of revenue. New York would
surface parking. also use a portion of the sales tax, mortgage recording tax,
and other levies to fund public transportation. Real estate
Invest in infrastructure and improve service, espe- development could also provide a new funding mechanism in
cially in cities. Capital budgets should be expanded to certain attractive markets.
ensure the railroads and buses are able to provide safe
and convenient service that is competitive. Addition-
ally, Health Impact Assessments for transit investments
can help identify the most equitable projects and their
health benefits for socially vulnerable communities. This
includes both maintenance and new projects to provide
more capacity.

Plan for climate change. As Superstorm Sandy demon-

strated, much of the regions transit infrastructure is
located in low-lying areas that are prone to flooding,
including tunnels, rail yards, and rail lines, especially in
the Meadowlands and along the Hudson River. The three
transit agencies have started incorporating climate adap-
tation into their strategic and capital planning, but more
needs to be done to address the tremendous magnitude of
the challenge.

Regional Plan Association|The Fourth Regional Plan 55