Fixed asset tax revenue of the Metropolitan Area Transportation Bureau reduced to almost half last year.
The amount collected from these taxes last year was $741 million, down 41% from $1.4 billion in 2022. MTA officials attribute the decline to a decline in commercial sales and mortgage transactions. High interest rates have discouraged traders, and remote work has reduced the value of offices by billions (perhaps trillions).
At a surface level, this seems like a perfect example of the urban catastrophe loop that Columbia Business School's Stein van Neuerburg predicted would occur in New York City in 2022, before recently softening his claims. hear. If you peel back a few layers, things might not be so dire, but it's still far from ideal.
The MTA expected at least $600 million in tax revenue to fall, so all but $16 million of the reduction was incorporated into the budget. The state Legislature passed a relief package in early 2023 to increase fares to make up for the expected shortfall. Without that funding, the agency would have had to cut back on services. In fact, it ended last year in the black and should remain in the black for the next five years.
Even if relief measures are taken, there are concerns that losses will be more than $600 million. How do we know this? The MTA admitted it – in a way.
“This is a fundamental and existential threat to our ability to provide first-class public transportation and make it better, more frequent and more reliable,” said CEO Janno Lieber. said at a recent MTA board meeting. But Lieber wasn't talking about tax revenue. He was talking about fare evasion that cost his agency $690 million in 2022.
A day after Lieber's statement, State Auditor Thomas DiNapoli predicted the MTA would need $43 billion in repairs over the next five years. These repairs have become especially urgent in the wake of a spate of traffic accidents resulting in derailments, signal failures, delays and highly publicized crimes.
As a result, the MTA's customer satisfaction ratings have declined and will worsen if the situation does not improve. Transportation issues may not be the main reason for poor office attendance, but they certainly don't help.
So, is this an ongoing urban doom loop? necessarily. One of the reasons Van Neuerburg retracted his dire predictions for New York is because the city's economy is diversifying and people want to live here for work as well as play. Even if everyone complains about the subway, it's all true.
The financial health of transit agencies is intricately tied to the economic vitality of a region and, as seen here, the strength of a city's real estate. The drop in revenue, especially his $600 million drop, is a cause for concern.
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What we think: Kushner Companies has sold another portfolio of East Village apartment complexes, the third such sale in the past three months. Is the low occupancy rate pushing up sales? Or is something else at play? Send a note to david.westenhaver@therealdeal.com.
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closing time
Residential: The most expensive home to close on Friday was a $5 million condominium at 233 West 75th Street on the Upper West Side.
commercial: The day's most expensive commercial sale was $51 million for undeveloped land at 2731 West 12th Street in Brooklyn. National Grid listed the property in 2020.
newcomer to the market
The most expensive home to hit the market Friday was a condo at 215 East 19th Street in Gramercy Park, priced at $11 million. Douglas Elliman has a list.
leveling the earth
The largest new building application of the day was a 253,000-square-foot, 14-story mixed-use building at 1051 Whitlock Avenue in the Bronx. RYTY Home Builders submitted the permit application.
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What we learned: The United States added 353,000 jobs in January, showing the strength of the economy. However, this positive data can have a negative impact. The increase in employment reduces fears of a recession, allowing the Fed to postpone its planned interest rate cuts.
Elsewhere in New York
— Jeff Sutton recently sold 717 Fifth Avenue to Gucci owner Kering for $963 million. The deal was the latest in a series of wins for Sutton. But it could pose a problem for one of the building's neighbors, Trump Tower, where Gucci is the largest retail tenant. Cranes We have revealed the problems facing the iconic tower mall.
— Just days after reaching an agreement to keep its two New York offices, WeWork has added nine more leases to its rejection pile. commercial observer I will report. Three of our offices are in New York. 75 Rockefeller Plaza for RXR, 214 West 29th Street for Walter & Samuels, and 115 West 18th Street for Wasserstein Enterprises.
— A two-story Borough Park home collapsed Friday, killing a construction worker on the scene.according to gothamist, the Brooklyn facility had been issued a partial stop-work order in December because the necessary permits for the work were not posted. The Department of Buildings is investigating the cause of the collapse.
