How To Upgrade NY’s Infrastructure: Value Capture Can Put Money Where It’s Needed

Arpit Gupta
By Arpit Gupta
If the federal government wants to do stupid, they can do stupid,” declared Gov. Cuomo last month, in a rebuff of the White House that was reminiscent of the Trump years. At issue was the Gateway Program, an $11.6 billion project to repair and upgrade the train tunnels under the Hudson, which recently received federal approval and high-profile endorsements from Transportation Secretary Pete Buttigieg and Sen. Chuck Schumer.

Cuomo has questioned the cost efficiency of the plan to replace the tracks entirely. He says there’s a more efficient way to fix the tunnels — fixing them while they remain in use, much as the L train was fixed, rather than boring brand-new tunnels before fixing the old ones. He cited “other pressing infrastructure needs” that require state funding, including “East Side Access, Second Ave. subway, congestion pricing and infrastructure in our upstate cities.”

The dispute highlighted a challenge that the city, the state and the federal government are all confronting: how to complete infrastructure projects with constrained budgets and limited funding options. Whatever Cuomo ends up prioritizing, City Hall and Albany should consider funding through value capture, a financing tool that pays for critical infrastructure investments by harnessing the increases in property value they create. The feds, who are about to outlay hundreds of billions on infrastructure, should get wise too.

Read the full New York Daily News article.

Arpit Gupta is Assistant Professor of Finance.