The Metropolitan Transportation Authority (MTA) is facing the worst financial crisis in its history, a roughly $10 billion hole dug by catastrophic losses in ridership and tax revenues.

With its capital program stalled and federal aid not yet arriving, the coronavirus appears to be derailing the MTA’s best-laid plans. Transit experts warn these momentary cuts in investment may have dramatic long-term consequences for the MTA and New York’s recovery.

On July 13, the Manhattan Institute’s Nicole Gelinas hosted a conversation with John (“Janno”) Lieber, the MTA’s Chief Development Officer and President of MTA Construction & Development on the state of the MTA’s infrastructure projects and the future of its long-term capital projects.

Event Transcript

Nicole Gelinas:

Good afternoon. Welcome to our Manhattan Institute web cast and podcast. I am Nicole Gelinas, a senior fellow at the Manhattan Institute.

We are here today with Janno Lieber. Janno Lieber is the Chief Development Officer of the Metropolitan Transportation Authority, the organization in charge of the region's transit service.

Janno is also the president of the MTA's construction and development arm and also in charge of real estate. Prior to that, Janno essentially rebuilt much of the World Trade Center Complex on behalf of Silverstein Properties.

Nicole Gelinas:

Welcome Janno, thank you for making some time to speak with us this afternoon.

Janno Lieber:

Great to be with you, Nicole.

Nicole Gelinas:

The MTA has by no means halted work on its construction projects during this pandemic. As of the end of May, you actually completed two thirds of the projects that you planned to complete on the New York City transit side, which is the subways and buses, and MTA-wide, you've completed three fourths of the projects you had planned to complete so far this year.

Nicole Gelinas:

Can you tell us, first of all, how are were keeping your MTA workforce and your contractor workforce safe during the pandemic?

Janno Lieber:

Thanks Nicole. And thank you to the Manhattan Institute for sponsoring this.

Janno Lieber:

It's an incredibly challenging period, but also exciting for those of us who are passionate about New York City and the MTA.

Janno Lieber:

What we did after the COVID crisis began is that we, first of all, we had 90% of our MTA workforce, we shifted them to telecommuting very quickly. Then we started communicating, I think, effectively with the construction world about one: How to manage incidents where there are either positive COVID cases or exposure. We gave them very clear public health information about how to manage those situations. We established a contractor hotline. We distributed PPE when it was in short supply to both our workforce and also contractors as a backup.

Janno Lieber:

Then we began to actually participate remotely in running projects. We did inspections by GoPro. We actually did the factory inspections done on specific equipment remotely as well. We were able to keep work going. Credit to the construction workforce. They kept showing up.

Janno Lieber:

We never had more than 10% of our 500 projects down at any one time. Now we have all but one of those roughly 500 projects up and running. We actually have more construction workers working now than before COVID. We're very proud of how we managed through and hopefully took advantage of the COVID situation and get some work done.

Nicole Gelinas:

Yeah. On that note, you've actually accelerated work on several major projects. Can you tell us what those projects are and how you were able to accelerate work on them?

Janno Lieber:

Well, the key in The subway system in particular, less so in the bus system, but in the subway system and the commuter rail system, the key is getting access to the system. You frequently have to do shutdowns if you're working on the track. The COVID crisis gave us, because there were less riders in the system, a chance to extend our outages, or to do more frequent outages on some of the weekends, because there were so few people riding. As a result of that, we were actually able to accelerate some work, as you mentioned. The governor cited our work in one of his press conferences in early June as a success story. We the L Train Project, which everybody had predicted was going to be such a disaster, we brought it in six months early compared to what it had been projected to take.

Janno Lieber:

Obviously, we're delivering for the public, because that's one of the busiest lines in all of the system. We are getting a lot of the big infrastructure work that requires getting onto the track, whether it's the ceilings and the girders, the structure, the signal system, the track. We're getting onto the track more often because of the lower ridership and the greater frequency of shutdowns, including the overnight shut down that was done in order to clean all the trains between 01:00 and 05:00 AM. We've got a ton of work going on that's actually being accelerated.

Nicole Gelinas:

Do you think, Janno, that when this crisis is hopefully over soon, some of these techniques you can bring into the normal post-pandemic world, like doing inspections by GoPro, and hopefully saving some money? Getting more regular track and system access so you're not trying to do work and having the workers have to get out of the way of the trains going by, and so forth?

Janno Lieber:

Absolutely. Nicole, you make a good point. Because we've been so aggressive about getting work done, we've developed a stronger partnership with the people who operate the subway system and the commuter railroad system, so that in future maybe they will be inclined to give us more opportunities to get work done. I think you're absolutely right. We are breaking a new path, and it's going to be the basis for future outages.

Janno Lieber:

We're also making sure that when we are on the tracks, we get much, much work done with what you call piggybacking. If you're working in one area and there needs to be work accomplished in another area of the same line or at a station that's just down the line, if you're shut down, you might as well do it all at once. On the Long Island Railroad Third Track Project, for example, just this weekend, we shut down the entire Long Island Railroad Mainline for a weekend. Not only did we push in a brand new undergrate crossing, a pre-built, pre-cast undergrate crossing in a single weekend, but we had 30 different activities going on up and down the line. All of them were done on time, and it was a tremendously productive weekend. That's how we like to work.

Nicole Gelinas:

How long would it take you to do that? How many weekends would it take you to do that if you didn't have that type of access?

Janno Lieber:

I don't know, it's hard to ... You'd have to sit down and string it out, and imagine the least productive approach, which I'm not inclined to do. But it's fair to say that the technology we used just for that one push of a brand new bridge, which was built in advance in a parking lot next to the tracks, and then rolled in inch by inch over the weekend, if we weren't using that approach, if we were using traditional construction methods, it would take weeks and weeks and weeks to build a new bridge of that kind, to excavate down, and all of that time, that tracks would have to be out of service. We got something accomplished in a weekend that used to take many weeks.

Nicole Gelinas:

Okay.

Nicole Gelinas:

The good news is that when the white collar commuters do start coming back to work, hopefully they will see the benefits of some of these projects being done before schedule and on budget, and having an easier commute.

Nicole Gelinas:

Before we get to some of the difficulties that you're experiencing, I do want to remind our audience that we'll take some questions in the last 10 minutes. If you have a question for Janno, please type it into the chat box and we will get to your questions.

Nicole Gelinas:

Now, even as you're able to get these projects done on an accelerated schedule, you have a different issue, which is the financial issue. Can you tell us about the financial situation that the MTA is facing? What has the MTA done to address that on the capital construction [inaudible 00:00:12:46]? How is that going to effect your ability to do these projects after the end of this year?

Janno Lieber:

It's an important question, and it's a very current question because the Congress is coming back into session. The Senate is coming back into session next week, and literally between then and when they go into recess in August, the question of whether mass transit will receive any additional COVID emergency relief funds is on the table. Literally, it's an existential question for the MTA.

Janno Lieber:

Here's where we are: Since the beginning of COVID, because we've been running the trains, and the buses, and the commuter railroads for essential workers, albeit for a while at a slightly reduced schedule, but really running the whole system. We were losing literally close to $800 million a month. That's both from fare box revenue and the loss, tolls, and other non-fare revenue we received. The result is what Pat Foye, our chairman, called a fore-alarm fire economically for the MTA. The MTA has a huge budget deficit from all of that lost revenue and lost non-fare revenue. We are counting on the Federal government to step up, to help us get to the end of the year so we can support the recovery of the New York regional economy, which amounts to roughly 10% of the national economy. We need roughly $4 billion out of the Congress for just this year.

Janno Lieber:

Then, together with other transit agencies, we're trying to solve the 2021 issue. Makes no sense to create uncertainty, and have to stop work, and have to deal with reducing service or fares, or whatever else will have to be done, layoffs or otherwise. Much better to address this problem just as we are addressing the needs in the financial system and the small business community nationally through Federal emergency relief. It is literally an issue the next few weeks, and it is a crisis that we need to address.

Nicole Gelinas:

There's no assurance that ridership is going to be back to 2019 [inaudible 00:15:02] by next year, or frankly, even a couple of years after that. This should be a long-term solution.

Nicole Gelinas:

Now, what happens if you don't get this money, for example? Is the MTA able to borrow money in the bond markets right now, in terms of new money, not just refinancing existing debt?

Janno Lieber:

Yeah, I think we've now had five downgradings since the COVID crisis began. The MTA used to be a gold standard credit. We had $40-plus billion of issuance that was in the marketplace. We had a very, very strong credit history, and a lot of confidence from investors. We've had five downgrades. Now we are borrowing at a full 300 basis points higher, a full three percentage points higher than we used to. That means obviously much more burden on the operating budget, which shoulders the burden of any interest on borrowing. It constrains our ability to provide service and to hopefully do capital work.

Janno Lieber:

It is literally having a huge impact on our overall financing. You make a good point, which is the Federal Government so far has expressed a willingness to help us to support the credit for taking out existing financings, but not to do new borrowings. We are subject to the fact that the market does not right now have a lot of confidence in us. That's why the Federal intervention that I mentioned before is so important. We need to be in that next COVID Emergency Relief Bill. It benefits the whole economy. It's not an investment in any one class of individuals. It's an investment in our entire economy's recovery.

Nicole Gelinas:

Right, I saw a [inaudible 00:16:54] report at Reinvent Albany about how the MTA sources many of its capital products and services, not just from Downstate and Upstate New York, but from around the country, including in a Red State districts around the country.

Nicole Gelinas:

Before I get into a couple of other potential revenue streams, I'll ask a question from the audience. We have a question from Kyle Wilkins. He's wondering what is the status of East Side access? How will the MTA manage crowding on the Lexington Avenue Line post-opening of the Long Island Railroad Terminal below Grand Central?

Janno Lieber:

It's a good question. East Side access is a justifiably much malign project because it has been so long in development, literally like 20 years it's been going on. It will have a huge benefit for the region. It will bring people from the 3 million plus residential areas of Long Island into the center of East Midtown, which is the center of our business district and our job center. Huge benefit in terms of time savings, in terms of support for economic development in East Midtown, which has been zoned up because we want to concentrate growth there, it has great transportation access and more. It allows us also to bring Metro North over time into Penn Station, which was full up, up to now. There's a benefit of East Side access for Metro North commuters as well. People who live in the Northern suburbs.

Janno Lieber:

Will having a brand new eight-track railroad train terminal in Grand Central impact on the Lexington Avenue Line? The study so far says that the line can accept that additional service, because, in part, we're distributing things more rationally with Metro North going also to the East Side as well.

Janno Lieber:

One of the goals of our current capital program, which is now threatened because of the COVID crisis financial impacts, is to actually re-signal the Lexington Avenue Line, our busiest subway line, which carries as many people as the next three largest mass transit systems in America combined every day. We want to re signal that line so we can increase capacity, more frequent service, more reliable service, and deal with growth as it comes to East Midtown.

Nicole Gelinas:

Right. Re-signaling also allows you to run more trains more closely together, and so if in a few years, we are still dealing with social distancing issues, that alleviates that in some ways.

Nicole Gelinas:

Do you think that the MTA can finish East Side access by late 2022 or early 2023?

Janno Lieber:

Yes.

Nicole Gelinas:

Good. Fair enough.

Janno Lieber:

This is a project that really needs to be finished. The history of pushing things out is one that I've rejected. When I came in and looked at East Side access a couple of years ago, I said, "This is a screwed up project." I actually moved to change a lot of things, but I doubled down on the schedule, end of '22, as you said, and we're driving to that day right now.

Nicole Gelinas:

Okay. I have another audience question from Cliff [Schaumberg 00:20:20]: "What are the prospects for elimination of arbitrary union work rules?"

Janno Lieber:

Obviously everybody has their own opinion about what's arbitrary. I think that there's no question that the railroad environment in general, because it's been around so long, and the unionization, and the tradition of different trades being separated, and work rules, has some antiquated work rules. I'm not involved the collective bargaining agreements, but there's no question that there's plenty of opportunity for modernizing work rules to make sure that we can get more work done, which benefits everybody. Making workers more productive is going to benefit them in the long run, because the system will be able to support a solid workforce.

Janno Lieber:

That said, we can't talk about our union MTA workforce without recognizing their heroic service during the COVID period. They showed up. They allowed us to keep the system going so that other essential workers could go to hospitals, and pharmacies, and grocery stores and so on. It is appropriate to recognize how heroic that was and how much all of us in New York owe them.

Nicole Gelinas:

Yes, absolutely. I did want to acknowledge and appreciate the heroic efforts that the workforce has gone through over the past four months, and also the terrible death toll that the TWU workforce, in particular, has suffered with 132 MTA workers having passed away from this crisis.

Nicole Gelinas:

Thinking about other prospects for revenue, apart from the Federal Government, what are the prospects of congestion pricing happening anytime soon? Was supposed to start just five months from now. I know Chairman Foye said that's highly unlikely. Any idea of the time frame and how much revenue it bring in this environment?

Janno Lieber:

The governor persuaded the legislature to do something that they declined to do again and again in the past, which is to approve having a congestion pricing system, Central Business District tolling is the term of art, so that we can both have less traffic, so if you actually have to be in a vehicle above ground, other than a bus, you can move around, and deliveries can be made. It benefits, hopefully, our economy by making sure that people who really need to be driving around are the ones who are driving around. It also has the benefit, as you say, of providing according to our calculations, $15 billion for the MTA Capital Program. That's why it is so frustrating that since it was enacted over a year ago, we have started all ... There's a Federal approval that's needed because the Federal Government has funded a lot of our roadways, including the West Side Highway and so on.

Janno Lieber:

They have been sitting on their hands in terms of moving forward the process to get that approval. Giving us direction on what type of information is needed for the environmental approval. We've been doing the environmental studies, collecting the information, but so far, no response from the Feds, and that's holding the whole thing up.

Janno Lieber:

In answer to your core question, it is unlikely that we will have that approval in time for the money to start to flow, but we're ready as soon as we get the approval to put it into effect. We've literally hired the consultants, we've designed the systems, the cameras, and so on that are going to be implemented. We just can't move forward without the Trump Administration action.

Nicole Gelinas:

How long does it take to actually build it out? Say the Federal Government says this afternoon, "You're all set. You can go ahead. You don't need to do any environmental assessment." When can you get this up and running?

Janno Lieber:

It's actually pretty straight forward. I think it's roughly a year. I'll have to confirm that, but it's a fairly straightforward system, technologically, utilizing what you've seen on all our major bridges and other crossings. Basically a camera system where your account gets billed afterwards using that. It's not complicated, but it does need to be set in motion. The software needs to be created and put into effect. That's what takes a little time.

Nicole Gelinas:

It would be a year from when the feds give you the okay? Or-

Janno Lieber:

The environmental approvals.

Nicole Gelinas:

Right. We're looking at at least a year from now.

Janno Lieber:

At least. Yeah. In all probability, yes.

Nicole Gelinas:

Yeah. We obviously have an election in a couple of months, if things don't change, would the MTA think about going to court or think about taking of another step to get this going?

Janno Lieber:

It's probably premature for me to comment on that. Look, we really need that money, but the first step is what we need right now from the Federal Government is to be included in this next phase of COVID Emergency Relief. Because as much as we want the money that the Central Business District tolling will provide for the Capital Program, we have to keep the lights on. We have to pay the workforce. We have to run the trains, and the buses, and the commuter rails. That depends on our operating budget deficit being addressed by the Federal Government right now.

Nicole Gelinas:

Okay. I have a question from Dave Cologne, whom I'm sure you are familiar with. He notes that the Citizens' Budget Commission suggested that because of the MTAs money crunch, accessibility work, meaning work for handicapped, disabled individuals, could be slowed and extended beyond the current five-year period to focus instead on things like state of good repair. Is that a realistic scenario or are accessibility upgrades still a top priority?

Janno Lieber:

Well, first of all, accessibility upgrades are a top priority, and there are a lot of them that are included in our Acceleration Program that you referred to earlier, Nicole. Accessibility projects that are underway are getting a real priority from my team, and we're going to bring a few of them in early. We're also regressively moving to figure out ways to do them more efficiently. I'm doing a couple of elevators at the Floral Park Train Station that cost $3 million each. That's a small fraction of what the MTA has historically spent on accessibility projects.

Janno Lieber:

To Dave's broader question, we have not determined what the mix of cuts would be in the event of this financial emergency of us not getting money from the Feds. Everything, I'm sure it will be on the table, as it has to be. There's going to be a lot of pain. It will be affecting important things that we want to do, like ADA projects and light re-signaling, but the specific mix of projects that would be impacted, it's really premature to get into.

Janno Lieber:

We do have to do what's necessary to maintain the condition of the system. We don't do what happened after the financial crisis, which is to neglect to make basic state of good repair and investments, and then see service over the years decline, resulting in emergency in the summer of 2017. We're not going to go there again, but the most important thing is that the Feds got to step up.

Nicole Gelinas:

Right. And Philip Plotch talks about that in his book about the Second Avenue Subway, that that has been the mistake the MTA has made almost every generation, is to cut back on basic maintenance during a crisis, and then have that come back and haunt them a few years later.

Nicole Gelinas:

I'll ask one more question from the audience from Jeff [Kant 00:00:28:34]: "How do you see the future of grate crossing eliminations on both commuter railroads? Do you foresee the knowledge gained from the third track experience being put to use on further grate crossing eliminations in the future?"

Janno Lieber:

It's a great question, thank you to the gentleman who posed it. The third track project is eliminating eight of the busiest grate crossings in all of the Long Island Railroad system. This includes the one where, a year ago in Westbury, a car tried to get across when the gates were down, and I think five people were killed in that one accident. These are incredibly dangerous grate crossings. People are sitting during the rush hour when there are trains going every minute or two, there are people sitting for half an hour at a time waiting in cars to get across, to take kids to school, or to get to work or whatever. It's incredibly unsafe. There's noise pollution like crazy, because both the trains and the cars are honking their horns out of frustration, and obviously air quality impacts and so on and so on.

Janno Lieber:

We are being really aggressive about knocking out these unsafe, huge-impact grate crossings. We're going to look for other opportunities in future capital programs. I can't say specifically, but we will definitely target the ones where there's the most volume, the most danger, and the most environmental and noise pollution impact.

Nicole Gelinas:

I'll give you a little bit of trivia that you may or may not know, Robert Moses in the '30s actually spearheaded the grate crossing program in Brooklyn and Queens, not really remembered as part of his history today, but that made him enormously popular among Brooklyn, Queens, and among the political class, because people have been advocating this for decades and decades.

Nicole Gelinas:

It's kind of a myth that we've only started doing things slowly. We've always had trouble getting big capital projects funded and executed, nothing new.

Nicole Gelinas:

In our last few minutes of the half hour you have kindly allotted us out of your busy day, Janno, you and I have known each other a long time now, going back to your days and rebuilding, what was Ground Zero, and what became the New World Trade Center. A lot of people back then said this was really going to harm the city's future long-term. What is your outlook today on dense cities that rely on transit, and what are they going to look like in five years, ten years?

Janno Lieber:

Look, it's the multi-billion dollar question for New York and for all of us who are passionate about New York. I believe, you and I both having lived through and watched the World Trade Center debate unfold, will remember that everybody said, nobody's going to want to go back to Downtown, forget about office buildings Downtown, forget about office workers, forget about tall office buildings. Lo and behold, Downtown was reborn as, not only a great office district, but maybe the greatest mixed-use area of the city. Out of terrible things can come good things if we think and don't give up on New York.

Janno Lieber:

I believe that this episode ... I think we're learning that we can actually manage epidemiology in dense urban environments. We're finding out that mask wearing, as it has in Asia, allows people to use mass transit and to get into and to operate effectively in cities. We're finding out that as more and more people do tele-work, what they really want is to be able to walk out the door and to be in a dynamic place where they can meet other people, and have recreation, and restaurants, and excitement right at their door, because they may not be getting that kind of community and connection in their workplace if they're working remotely. I actually think that what's going on in our economy is reinforcing a lot of things to make people want to be in New York, because it's dynamic and there's so much going on.

Janno Lieber:

But obviously, it'll take a little while to tell, just like the rebuilding of Downtown took a little while for people to start to believe that things would change for the better.

Nicole Gelinas:

I think you're right on many notes there. But as we've been talking about, a lot of the first step here comes down to funding for transit while the riders are not coming in in the numbers that they were coming in up until mid-March.

Janno Lieber:

Nicole, to your credit, you've been one of the most outspoken and astute observers of transit for a long time. The question is, should we look at transit as something which is different than other public services, that doesn't deserve, in effect, to be paid for in part out of operating subsidies. We've created a model where if transit is operating as a public service, as it did during the COVID crisis, but not carrying as many people, it collapses financially. That makes no sense. We want transit to be there for this kind of emergency, but we want it to be there to help build our economy and make it possible what we do in New York, which is to take a lot of people from all over the region and bring them together so they can create economic value with their brains, mostly, as opposed to in the old days with brawn. The mass transit system's the only way we can do that. We have to support it economically.

Janno Lieber:

There is no way to recreate a city of eight and a half million residents, and then an incoming army every morning of 4 million people into core Manhattan and back again, without a heavy mass transit system.

Nicole Gelinas:

Well thank you, Janno, for taking some time to speak with us this afternoon.

Again, I'm Nicole Gelinas with the Manhattan Institute. I've been speaking with Janno Lieber, the MTA's Chief Development Officer, and president of MTA Construction and Development.

Janno Lieber:

Thanks, Nicole.

communications@manhattan-institute.org