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Trends in the Region


STATE COMPTROLLER PUTS PRICE TAG ON NEW YORK MTA'S REPAIR NEEDS: $43 BILLION

By   Chip Barnett
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February 05, 2024, 8:00 a.m. EST 7 Min Read
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Repair needs for the New York Metropolitan Transportation Authority MTA will
cost at least $43 billion over the next several years, according to a new report
issued by state comptroller Thomas DiNapoli.



DiNapoli said the estimates by his office of the 2025 to 2029 period don't
include any new priorities to address accessibility, resiliency or
sustainability.



"The list of repairs and upgrades needed in our regional transit systems can
seem endless, but funds are limited," DiNapoli said in a statement announcing
the report. "As the MTA prepares its next capital plan and sets priorities for
work, it should remain focused on riders' experience by improving safety,
reliability and frequency of service."

The first R211T subway car, with its open gangway design, went into service on
NYC's C line on Thursday.
Marc A. Hermann/N.Y. MTA

DiNapoli criticized the state-run transportation agency for failing to include
projected costs associated with needed system repairs in its 2023 20-Year Needs
Assessment, as it had in previous assessments.



The comptroller's office based its own estimate on the MTA's 2013 data, adjusted
for inflation.

The absence of costs makes it difficult to determine how much investment is
needed when capital funds are limited, the comptroller's report said.

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The report also said:


 * Signal problems were responsible for 25% of major incidents delaying trains
   in 2022 and 2023.
 * About 7% of subway signals have been modernized with 24% being constructed or
   to be built this year and 69% still using an older system.
 * The needs assessment projects the MTA will have to buy more than 3,900 subway
   cars over the next 20 years to replace existing cars at an estimated cost by
   the comptroller's office of $15 billion.
 * According to the assessment, 73% of the subway rail car maintenance building
   structures and 69% of the roofs at maintenance-of-way support shops are in
   poor or marginal condition.
 * According to the assessment, 100% of the Grand Central Terminal train shed's
   structural supports and roof slab, drainage system and HVAC system are in
   poor or marginal condition and all of the platforms that the MTA's Long
   Island Rail Road is responsible for maintaining at Penn Station are in poor
   or marginal condition and have received minimal capital funding in recent
   years.

Since 2012, the MTA has sold almost $41 billion of bonds, with the most issuance
occurring in 2012 when it offered $6.7 billion and the least in 2022 when it
sold $378 million.

In October, Fitch Ratings upgraded the MTA's  transportation revenue bonds to A
from A-minus and assigned a stable outlook to the bonds.

The upgrade "reflects a material improvement in the MTA's fiscal outlook, which
was largely driven by New York State increasing the maximum rate of the payroll
mobility tax," Fitch said. "This resulted in a substantial increase in recurring
revenues for the operating budget."

Fitch said the mobility tax increase will help the MTA's financial standing in
future years.

S&P Global Ratings also raised the MTA's long-term and underlying rating and the
rating on the TRBs to A-minus from BBB-plus in October, also citing the increase
in the PMT. It has a positive outlook on the bonds.

In September, Moody's Investors Service revised its outlook on the TRBs to
positive from stable "based on the significant increase in state tax support
that will offset the post-COVID ridership losses and structurally balance
projected budget gaps." At the same time, Moody's affirmed the A3 rating on the
MTA's $20.6 billion of outstanding TRBs.

The MTA's TRBs are also rated AA by Kroll Bond Rating Agency, which has a stable
outlook.

TRBs are backed by a gross lien on the MTA's operating revenues, which include
fares received from the MTA's subway and bus systems operated by New York City
Transit and the Manhattan and Bronx Surface Transit Operating Authority and the
commuter railroads operated by Long Island and Metro-North railroads. TRBs are
also backed by a gross lien on operating subsidies from the state and the city
and surplus funds from the MTA's bridges and tunnels operations.

Historically, TRBs have been the MTA's workhorse, but MTA has not been in the
market with that credit since a $700 million sale in 2021.

It has gone to market with bonds backed by the payroll mobility tax, which carry
AA-plus ratings.

The MTA is a public benefit corporation of the state created in 1965. It is
responsible for establishing a unified mass transportation policy for its
coverage area, which includes New York City and Duchess, Nassau, Orange, Putnam,
Rockland, Suffolk and Westchester counties. In addition, the MTA's Metro-North
Railroad serves Fairfield and New Haven counties in Connecticut, with that
state's financial support.

MTA operations are performed through nine different agencies, including the
Triborough Bridge and Tunnel Authority. The TBTA surplus left over after paying
its own bills and debt service are transferred to MTA to subsidize subway, bus
and commuter rail operations in New York City and its environs.

On Thursday, the MTA rolled out its new R211T open gangway subway cars on the C
line, marking progress towards increasing security camera deployment throughout
the system.

"New train cars, additional security cameras and more reliable service will make
the subway system even better for decades to come," said Gov. Kathy Hochul, who
led an inaugural ride with MTA leadership on the line that runs between
Washington Heights and East New York.

The ride marked the first time an open gangway train has operated in the modern
history of subways in the United States, according to the MTA. Open gangways are
wide openings between cars without doors, allowing passengers to freely move
around the train. They have become the standard design for new subway trains
around the world in this century.

The open gangway R211Ts are part of a larger order of R211A conventional cars,
funded by the Federal Transit Administration, which includes money from the
Bipartisan Infrastructure Bill.

"The average age of MTA subway cars is 25 years old and our oldest subway car,
the R46, is nearly 50 years old," said MTA Chair and CEO Janno Lieber.

"As the 20-year needs assessment pointed out, the MTA needs to acquire thousands
of cars, they need to be the most innovative designs and be eligible for federal
funding. This pilot program will teach us if the open gangway design works for
New Yorkers," he said.

Continuous reinvestment in the system is required due to its age and the daily
usage of the system, said John Hallacy, founder of John Hallacy Consulting LLC.

"Although ridership is not at peak post-Covid, the planning must be done to
address the peak and allow for some growth. Some of the early new subway cars
that have been tested had to be reengineered to an extent to cope with the
punishing conditions of system operations," Hallacy told The Bond Buyer.

"The real challenge is timing the onboarding of new equipment and infrastructure
for when the financial side may handle the increased obligations even net of
federal aid that is available," he said.

"Over the longer haul, all of the improvements will be borne out. The pressure
point is always in the early years of a major overhaul because of the intensity
of the capital spending and determining what the new operational costs will be.
Hopefully, the latter will be improved and will support the fiscal strength of
the system," he said.

"Bringing down the mean distance between breakdowns has always been a primary
focus. New equipment will help with this data point," Hallacy added.

MTA Chair Janno Lieber, Gov. Kathy Hochul and NYC Transit President Richard
Davey take a ride in the first R211T car Thursday.
Marc A. Hermann/MTA

The new subway cars are part of the MTA's efforts to modernize its system.

The R211As have security cameras in each car, adding to the 1,000 cars that
already have them. The rest of the NYC Transit fleet is scheduled to have in-car
camera installations completed by next January. The in-car cameras are in
addition to the 15,000 cameras that are in the stations and on the platforms.

The R211s have 58-inch-wide door openings, which are eight inches wider than the
existing doors and are designed to speed up on and off boarding. The cars also
have more accessible seating, detailed digital displays and brighter lighting. 

"The R211A shifted the riding experience for riders with a disability, providing
wider doors as well as enhanced accessible seating options," said MTA Chief
Accessibility Officer Quemuel Arroyo. "The open gangway concept goes one step
further, allowing riders using a wheelchair or traveling with a stroller to for
the first time in modern times be able to navigate between train cars without
having to get off."


Chip Barnett
Reporter, The Bond Buyer
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For reprint and licensing requests for this article, click here.
Trends in the Region Metropolitan Transportation Authority New York Public
finance Infrastructure
TRENDING
 * Trends in the Region
   State comptroller puts price tag on New York MTA's repair needs: $43 billion
   
   Thomas DiNapoli criticised the agency for failing to include projected costs
   associated with needed system repairs in its 2023 20-Year Needs Assessment.
   
   By Chip Barnett
   2h ago
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   Jobs data snaps muni, UST momentum; New-issue calendar tops $7B
   
   Munis saw smaller losses, outperforming a UST sell-off after the employment
   report came in stronger than expected, leading analysts to suggest Federal
   Reserve rate cuts may come later than anticipated.
   
   By Lynne Funk
   February 2
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   Small-town Missouri hospital faces restructuring after default declared
   
   The bond trustee for the city of Nevada, Missouri-owned Nevada Regional
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   February 2


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