NEW YORK CITY-Construction spending citywide, which peaked at $31.1 billion in 2007 and fell as the downturn took hold, will rise again next year and bump back up to $28.6 billion in 2012. That’s if the Metropolitan Transportation Authority’s capital projects program 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 through 2011.

Assuming that the funding comes through, the MTA’s projected $4.1-billion increase in construction spending for ’12 represents 14% of all spending forecast for that year, the Building Congress says in its “NYC Construction Outlook 2010-2012” report. For that reason, said Anderson, president of the Building Congress, priority number one for all stakeholders is securing additional funding for the transit agency’s capital plan.

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

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

Currently, government-sponsored capital projects account for 62% of all construction spending citywide, the highest level since 1996. The Building Congress would like to see that level of spending maintained, especially as residential and other private-sector construction remains depressed.

While helping to ensure that the MTA increases its spending, the Building Congress wants the city to maintain its present levels despite an increasing debt burden. Finding the means to do so may entail looking outside traditional funding sources, but in a presentation at the Building Congress event, the president of the New York City Economic Development Corp. made it clear that it’s a priority for the Bloomberg administration.

One reason is global competition, said Seth Pinsky, EDC president. Cities such as Mumbai and Shanghai have emerged as international financial centers, threatening to usurp a leadership role which New York City once was able to take for granted. At the same time, the infrastructure investment made by emerging nations has often surpassed what we’ve seen domestically.

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

That doesn’t just apply to overseas cities. Pinsky noted that the city is spending $300 million to replace the Brooklyn-Staten Island Water Siphon, a backup water tunnel between the two boroughs. The reason: without the tunnel being replaced, the Army Corps of Engineers would not be able to blast a deeper channel to accommodate the larger ships that will potentially come through the Panama Canal after it’s enlarged. That would give the edge to other East Coast ports.

Another reason to make such investment now, Pinsky said, is to be better prepared for the eventual upturn in the market. He cited the extension of the Number 7 subway line to Manhattan’s Far West Side as an example. By the time that project is completed in 2013, Pinsky said, the economy will probably have rebounded to the point of supporting the massive Hudson Yards redevelopment. In prior downturns, the infrastructure improvements that would have accelerated the entitlement process for major projects never got made, meaning that some of those projects missed the market by the time they came on line.

Instant Insights /

Builders Want Government to Keep on Spending

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