NEW YORK CITY-Construction spending citywide, which peaked at$31.1 billion in 2007 and fell as the downturn took hold, will riseagain next year and bump back up to $28.6 billion in 2012. That’sif the Metropolitan Transportation Authority’s capital projectsprogram for fiscal ’12 is fully funded—a big "if" at the moment,the New York Building Congress’ Richard T. Anderson said Tuesday.The agency’s five-year capital program is only funded through2011.

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Assuming that the funding comes through, the MTA’s projected$4.1-billion increase in construction spending for ’12 represents14% of all spending forecast for that year, the Building Congresssays in its “NYC Construction Outlook 2010-2012” report. For thatreason, said Anderson, president of the Building Congress, prioritynumber one for all stakeholders is securing additional funding forthe transit agency’s capital plan.

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Without that increase, Anderson told a construction industryaudience at the New York Hilton, “it’s going to be a tough market.”Some 18,000 local construction jobs would disappear from theforecast for ’12.

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Among the means of securing an increase in MTA funding, says theBuilding Congress, are the long-delayed reauthorization of thefederal surface transportation program and adopting new sources ofdedicated revenue, such as congestion pricing or tolls on the EastRiver bridges. The Bloomberg administration’s congestion pricingplan died in the State Assembly in 2008.

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Currently, government-sponsored capital projects account for 62%of all construction spending citywide, the highest level since1996. The Building Congress would like to see that level ofspending maintained, especially as residential and otherprivate-sector construction remains depressed.

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While helping to ensure that the MTA increases its spending, theBuilding Congress wants the city to maintain its present levelsdespite an increasing debt burden. Finding the means to do so mayentail looking outside traditional funding sources, but in apresentation at the Building Congress event, the president of theNew York City Economic Development Corp. made it clear that it’s apriority for the Bloomberg administration.

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One reason is global competition, said Seth Pinsky, EDCpresident. Cities such as Mumbai and Shanghai have emerged asinternational financial centers, threatening to usurp a leadershiprole which New York City once was able to take for granted. At thesame time, the infrastructure investment made by emerging nationshas often surpassed what we’ve seen domestically.

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“Our competitors don’t have 1970s or 1980s infrastructure,”Pinsky said. “They have 21st century infrastructure.”

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That doesn’t just apply to overseas cities. Pinsky noted thatthe city is spending $300 million to replace the Brooklyn-StatenIsland Water Siphon, a backup water tunnel between the twoboroughs. The reason: without the tunnel being replaced, the ArmyCorps of Engineers would not be able to blast a deeper channel toaccommodate the larger ships that will potentially come through thePanama Canal after it’s enlarged. That would give the edge to otherEast Coast ports.

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Another reason to make such investment now, Pinsky said, is tobe better prepared for the eventual upturn in the market. He citedthe extension of the Number 7 subway line to Manhattan’s Far WestSide as an example. By the time that project is completed in 2013,Pinsky said, the economy will probably have rebounded to the pointof supporting the massive Hudson Yards redevelopment. In priordownturns, the infrastructure improvements that would haveaccelerated the entitlement process for major projects never gotmade, meaning that some of those projects missed the market by thetime they came on line.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.