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NEW YORK CITY-Gov. Eliot Spitzer, along with James Simpson, administrator for the Federal Transit Administration, revealed an agreement that guarantees $1.3 billion in federal funding for the construction of the first phase of the Second Avenue subway. The first phase of the subway project will run along Second Avenue north from 63rd Street to 105th Street, creating three ADA-accessible stations at 72nd, 86th and 96th streets.

According to Lt. Gov. David Paterson, mass transit is the linchpin of any economic design for the 21st century, so it is no surprise that real estate insiders are also bullish about the news. Eric Lewis, a managing director of Cushman & Wakefield’s hospitality and gaming group, tells GlobeSt.com that “upon completion, the Second Avenue subway should boost values significantly in the areas it will serve.”

Stuart Saft, partner at Dewey & LeBoeuf LLP agrees, telling GlobeSt.com that “the existence of the subway should dramatically increase the value of the real estate on First Avenue and York Avenue, which will have greater access to mass transportation.” Saft does note, however, that “it might adversely affect the value of the property which will house the subway stations along the new route.”

Saft continues that “it is surprising that the 96th Street station will be located between 93rd Street and 94th Street, even though 96th Street and above is likely to have the greatest growth over future decades. Patients and visitors to Metropolitan Hospital will have much further to walk to get to and from the subway.”

Ground was broken for the project in April, and construction is visibly under way on Second Avenue. Currently, crews are moving utility lines such as sewers, electrical and telephone lines on the West side of Second Avenue from 91st to 95th streets so that a tunnel boring machine can be moved into place to begin tunneling. During this portion of the project, four lanes of traffic will remain open for use. As this is completed in the next three months, traffic will be diverted to the other side of the avenue to repeat the utility relocation process on the other side.

The line is scheduled to open in 2014. Construction will continue with three additional phases that will extend the line first up to 125th Street, where it will connect with the 4, 5 and 6 subway lines and with MTA Metro-North Railroad, and then down to Hanover Square in the Financial District. After completion of the third and fourth phases, the line will carry two trains: the Q and the T, which will run the full length of Manhattan.

When completed, the full-length Second Avenue Subway is projected to carry 560,000 people per day. New York City’s entire subway now carries nearly 6.3 million passengers on a typical weekday.

“Today is truly a historic moment for New York,” notes Spitzer in a prepared statement. “For much of the 20th century, New York talked about building the Second Avenue Subway. Today, with the help of our partners in Washington and Albany, the shovels are already in the ground. This project will provide much-needed relief for straphangers on the crowded Lexington Avenue line and will allow us to expand North America’s largest public transportation system to meet anticipated population growth and the increased demand for transit service.”

Congressman Jerrold Nadler says that this project has been a necessity for decades. “We need to relieve overcrowding on the Lexington Ave line, provide better connections between residential and business areas, and reduce travel times.”

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