Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The MTA runs New York City subways, buses, and commuter
Speaker 2: trains that six million people rely on each weekday, and
Speaker 2: on Monday, board members approved close to a two billion
Speaker 2: dollar contract to expand the Second Avenue subway line into
Speaker 2: East Harlem. Jpitzel is the CFO of the MTA. She's
Speaker 2: charged with quite the task, which I think is fair
Speaker 2: to say many would find unenviable, charting a sustainable path
Speaker 2: through one of the agency's most financially trying periods in
Speaker 2: its six decade history. She joins us here in the
Speaker 2: Bloomberg Business Week studio. Jay, Welcome, how are you.
Speaker 3: I'm good, how are you? Tim?
Speaker 4: Thank you for having me.
Speaker 2: Yeah, thanks so much for joining us. I want to
Speaker 2: start with the numbers and just ridership here. Weekday subway
Speaker 2: ridership is still twenty five percent below pre COVID levels
Speaker 2: in your modeling, does that ever come back to where
Speaker 2: it was?
Speaker 3: I you know, we have a financial plan that's a
Speaker 3: five year period, and originally we were projecting that we
Speaker 3: would see our subway ridership up to ninety percent, but
Speaker 3: a couple of years ago we revised that because we
Speaker 3: weren't seeing that, but we're hopeful we see an eighty
Speaker 3: percent by twenty twenty nine ridership.
Speaker 4: Recovery for subways.
Speaker 3: But on the railroads, we're seeing that recovery even higher.
Speaker 3: Today we see eighty five percent ridership recovery on our railroads,
Speaker 3: which is amazing, something that we thought was going to
Speaker 3: be slower our railroad customers than our subway customers originally
Speaker 3: coming out of pre pandemic.
Speaker 2: So is there a way to tap into that growth financially,
Speaker 2: perhaps with higher prices for those commuters rather than here
Speaker 2: in the city for subway and bus riders.
Speaker 3: So you know, what we have is very small, predictable
Speaker 3: far increases that help balance the financial plan, and so
Speaker 3: we don't want to burden one rider or over another.
Speaker 3: It's really about distance space and commuters, and so we
Speaker 3: keep that equitable.
Speaker 4: You know that we do two.
Speaker 3: Percent fare increase every other you know, every other year,
Speaker 3: and that keeps our financial plan and balance.
Speaker 5: How do you plan to get that number, I think
Speaker 5: you said eighty percent ridership? How do you bring people
Speaker 5: back into the subways?
Speaker 3: We bring writers back by providing reliable on time performance. Right,
Speaker 3: our service matters to customers and delivering the service that
Speaker 3: we promise and schedule is something.
Speaker 4: That we strive for. But also safety.
Speaker 3: Our customers need to feel safe safe, and our customers
Speaker 3: feel that right. We've had the lowest safety you know
Speaker 3: numbers or crime numbers in July, and so our customers
Speaker 3: are telling us.
Speaker 4: That by taking the subway, but also.
Speaker 3: Our customer surveys right tell us that customers are satisfied
Speaker 3: with the service that we're providing.
Speaker 2: The MTA phases it combined one point one billion dollar
Speaker 2: deficit over three years starting in twenty twenty seven. It
Speaker 2: already owes close to fifty billion dollars. It needs to
Speaker 2: spend sixty eight billion dollars more for vital improvements. There's
Speaker 2: some federal aid that's up in the air. The Trump
Speaker 2: administration is trying to roll back congestion pricing. What's the
Speaker 2: backup plan if the aid EVE operates and the President
Speaker 2: is successful in rolling back congestion pricing.
Speaker 3: You know, Tim, I would be remiss if I didn't
Speaker 3: mention that. Back in twenty twenty three, we were the
Speaker 3: first transit agency to solve our fiscal cliff thanks to
Speaker 3: Governor Holcal, chairliber and the legislature, we were able to
Speaker 3: come out of a deficit unlike any other transit agency today.
Speaker 3: You've heard SEPTA's facing deep cuts Chicago, but we were
Speaker 3: the first to say we need state, federal and local aid,
Speaker 3: and we got our state federal funding for us. We
Speaker 3: also as the MTA contributing to our solving our deficit. Right,
Speaker 3: the MTA contributes five hundred million to operating efficiencies, and
Speaker 3: those deficits that we have in twenty seven and twenty
Speaker 3: eight and twenty nine are very small compared to our
Speaker 3: operating budget, and we are committed to doing our part
Speaker 3: in saving money to help ensure that we can balance
Speaker 3: our budget in the out years.
Speaker 5: We were talking a little bit about the base fares
Speaker 5: of subways increasing regularly. I'm wondering if there is there
Speaker 5: a set area within the MTA that that revenue goes toward.
Speaker 5: Because the base fare for a subway in New York
Speaker 5: City it's expected to increase to three dollars in January.
Speaker 3: Correct, So our fares help our operating budget, right, So
Speaker 3: they seventy percent of MTA's cost our labor and fringe,
Speaker 3: and so that pays for seventy thousand employees and then
Speaker 3: the small fraction is for the non labor contract, so
Speaker 3: every fair contributes to operating cost.
Speaker 2: On our side, let's talk about fares and fair evasion.
Speaker 2: Usually when we talk fair evasion, I think of people
Speaker 2: jumping over subway turnstyles, and I know there have been
Speaker 2: some mitigation efforts in place. But I took the bus
Speaker 2: to LaGuardia on Thursday. It was a great experience. But
Speaker 2: when I got on the sp Bs and Queens, I
Speaker 2: got on it was like an articulated bus, so you know,
Speaker 2: it was a long one. I got off and on
Speaker 2: in the back and out of like more than half
Speaker 2: a dozen people, I think I was the only one
Speaker 2: who paid, And I was thinking to myself, I didn't
Speaker 2: know it was optional to pay to get on the bus.
Speaker 1: What are the numbers there?
Speaker 3: So it's not optional right to pay the fair. We
Speaker 3: are encouraging every customer to pay our pay their fair share.
Speaker 2: To but there's no enforcement on the bus.
Speaker 3: So there's a couple of things that we're doing for
Speaker 3: fair evasion. And our chair has been tackling this first
Speaker 3: when he became chair. So on the subways you've heard
Speaker 3: of us talking about we're doing fins, sleeves, gate guards
Speaker 3: enforcing the exit gate, which is the fair you know,
Speaker 3: evasion highway. And so we've made great strides on the subways.
Speaker 3: We've reduced fair evasion in over a year by thirty percent.
Speaker 3: We've dropped that rate from a high of fourteen percent
Speaker 3: to nine point eight percent, So we know those efforts
Speaker 3: are working. On the buses, it's a little bit more difficult,
Speaker 3: but we're also working there.
Speaker 4: We've decreased fair.
Speaker 3: Invasion on our buses as well in the last year
Speaker 3: from fifty percent to forty four percent because all the
Speaker 3: tactics the President of New York City Transit is employing.
Speaker 4: We have eagle teams that are looking, you know.
Speaker 3: On different bus routes to make sure that they are
Speaker 3: enforcing the pay your fare right.
Speaker 4: Our bus operators.
Speaker 3: Do their due diligence, but really our eagle teams are
Speaker 3: enforcement out there riding different routes and making sure customers
Speaker 3: fair pay their fare or they're getting a summons or
Speaker 3: they're getting off the bus. And that's how we're working.
Speaker 4: How does that work?
Speaker 5: Because I heard of a friend who was on a
Speaker 5: bus and someone had come around and like scanned their
Speaker 5: phone to see if they had paid the fare. Is
Speaker 5: that how it works explained to us.
Speaker 3: So right now what we are doing is if you're
Speaker 3: boarding the bus, you have to pay, because there's two
Speaker 3: different ways you can pay right today is the Metro
Speaker 3: card and the OMNI, and when we go to full
Speaker 3: OMNI next year, there's going to be proof of payment.
Speaker 3: And so what you can do is European style proof
Speaker 3: of payment for customers is you can tap their phones
Speaker 3: or credit cards the method of payment to see if
Speaker 3: they pay their fare and if they didn't pay their fare.
Speaker 3: That's something that we will work with on a summons
Speaker 3: or you know, you need to pay your fare for
Speaker 3: our customer, and so that's something that's coming. We're really
Speaker 3: excited about that for OMNI and proof of payment, but
Speaker 3: right now there's two different methods and so we're working
Speaker 3: on different ways to combat fair evasion.
Speaker 2: I want to talk a little bit about proposals from
Speaker 2: mayoral candidates or in Mumdani. For example, it's proposal to
Speaker 2: make all New York City buses free. What do you
Speaker 2: think of that and does it create a sort of
Speaker 2: a two tiered mass transit system where people who ride
Speaker 2: buses don't pay for it, but then people who ride
Speaker 2: the subway do and then kind of offset like people
Speaker 2: not necessarily taking the right mode of transit for their destination.
Speaker 3: So we've heard the maurial candidates proposal for a fair
Speaker 3: free buses. What I'd like to emphasize again is fairbox
Speaker 3: revenue is important to the operations of the MTA. It's
Speaker 3: twenty six percent of our revenue, and buses is about
Speaker 3: a billion dollars in the out years of revenue for
Speaker 3: the MTA bus for the MTA, excuse me, and that's
Speaker 3: important to us, and so we want to make sure
Speaker 3: revenues equal service. And that is something that's hypothetical right now,
Speaker 3: but we rely on fairbox revenue.
Speaker 2: So you said a billion dollars in revenue is what
Speaker 2: it brings in. Mom Donnie estimates that's about seven hundred
Speaker 2: and fifty million dollars annually to make buses free. Is
Speaker 2: that an accurate assessment on his part.
Speaker 3: I think there's pieces that he's he's looking at just
Speaker 3: the New York City Transit bus fair We have MTA
Speaker 3: bus that we also run that the city contributes to,
Speaker 3: and that is also fairbox revenue for buses.
Speaker 2: So what would take away that revenue from the MTA
Speaker 2: due to the authorities finances or would it just be
Speaker 2: I mean, look again, it's a proposal, you said, it's
Speaker 2: something that you know is not a plan yet. But
Speaker 2: to be fair, he is by far the favored candidate,
Speaker 2: and there are a lot of questions about what power
Speaker 2: he has to actually follow through with a campaign promise
Speaker 2: such as this. But this is certainly a central part
Speaker 2: of his campaign, so you got to be looking at
Speaker 2: it closely.
Speaker 3: We are looking at it. But one thing that I
Speaker 3: would like to emphasize right right now in New York City,
Speaker 3: fares are affordable. We make transit and buses the most
Speaker 3: affordable at two dollars and ninety cents, and it's affordable
Speaker 3: with fairfares, reduce fair for our customers. But you know,
Speaker 3: it is something that we will look into as the
Speaker 3: mayoral candidate has proposed.
Speaker 5: What about mitigating climate issues that affect particularly the subway stations.
Speaker 5: You go online, you see videos of flooding in station,
Speaker 5: trying to.
Speaker 1: Get home and on a rainy day.
Speaker 5: Right and water in the subway station. Do you guys have,
Speaker 5: at least as part of the upcoming capital plan, a
Speaker 5: plan in place to update the infrastructure.
Speaker 3: A couple of points on that right, A couple of
Speaker 3: the issues that arise in the subway systems are not
Speaker 3: the MTA's fault. New York City right contributes to the
Speaker 3: flooding issues that we face in the subways, whether it's
Speaker 3: through dep manholes, the sewage. So that is one aspect
Speaker 3: of the flooding that you see on the New York
Speaker 3: City Transit. But our historic capital plan that sixty eight
Speaker 3: point four billion dollars does have climate resiliency of hardening
Speaker 3: the system in certain stations in proposed And therefore.
Speaker 2: Let's talk a little bit about congestion pricing. Not as
Speaker 2: hot of a topic as it was a few months ago,
Speaker 2: it seems like it's died down a little bit in
Speaker 2: your view.
Speaker 1: Is it working?
Speaker 3: Congestion pricing is working. It is reducing traffic by eleven percent.
Speaker 4: What does that mean?
Speaker 3: Seventy thousand cars are off the road every single day.
Speaker 4: What else is it doing.
Speaker 3: It's moving our buses faster, it's moving people faster. We've
Speaker 3: seen a change in ridership, but also we've seen safety increases.
Speaker 4: There's a fourteen.
Speaker 3: Percent decline in pedestrian crashes. And on top of it all,
Speaker 3: it is bringing in the revenue that we had projected originally.
Speaker 2: It's being watched very closely, not just by proponents and
Speaker 2: opponents of it, but also by other cities that might
Speaker 2: want to put this into practice. Have you or has
Speaker 2: the MTA heard from other cities about congestion pricing, about
Speaker 2: the model and about questions about implementing it in their
Speaker 2: own cities.
Speaker 3: The MTA has heard from other cities and transit properties
Speaker 3: and engaged with them to have conversations about the process
Speaker 3: that New York implemented for the successful congestion pricing program
Speaker 3: that we're having, So they're looking at it at us
Speaker 3: as a model.
Speaker 5: We have to ask about the second Second Avenue subway
Speaker 5: expansion as well. Just walk us through some of the
Speaker 5: plans and the timeline here, because this has been something
Speaker 5: that's been in the work, something that any New Yorker
Speaker 5: who's lived in New York for.
Speaker 1: The last ford how many years, forty decades.
Speaker 3: Fifty yards fifty I think we've talked about that at
Speaker 3: our special board meeting on Monday.
Speaker 4: You know, the contract that our board just approved.
Speaker 3: Is almost one point nine billion dollar contract to start boring, right,
Speaker 3: what does that mean? It's starting the tunneling for the
Speaker 3: three stations that are vital to Second Avenue Subway Phase two.
Speaker 3: And we are committed to expanding Second Avenue Phase two
Speaker 3: here at the MTA, and we think it's going to
Speaker 3: be a great service to our customers. It's going to
Speaker 3: serve about one hundred thousand customers in addition to the
Speaker 3: two hundred thousand customers that's Second Avenue Subway Phase one
Speaker 3: serves today.
Speaker 5: Do you have a timeline or an expected timeline.
Speaker 3: I think the twenty thirty two was the service date
Speaker 3: that we have said publicly.
Speaker 2: It's a very like I said at the beginning, it's
Speaker 2: an enviable task that you have ahead of you. Some
Speaker 2: people would argue, I would imagine that you spend quite
Speaker 2: a bit of time studying other transit systems around the
Speaker 2: world's worked and what hasn't worked. If you could waive
Speaker 2: a magic wand here in New York City to overcome
Speaker 2: some of the barriers that the MTA has experienced, whether
Speaker 2: they're financial barriers, whether they're CAPEX barriers, what.
Speaker 1: Would those be like?
Speaker 2: What is the biggest obstacle to making the service even
Speaker 2: better here?
Speaker 3: So I think tim one thing that I would say
Speaker 3: is MTA is a leader and being the largest agency
Speaker 3: in North America, other agencies look to us. I think
Speaker 3: I said this before we led with the fiscal cliff,
Speaker 3: we lead with our capital program as well. We have
Speaker 3: started to do things differently since Janel Lieber took over
Speaker 3: for CND and now Jamie Torres Springer. We do design, build,
Speaker 3: we do faster, cheaper and better. But we're employing definitely
Speaker 3: different ways of doing capital programs as well as operating
Speaker 3: for us to be better.
Speaker 2: I want to go back to congestion pricing and some
Speaker 2: financial questions around at specifically about selling debt off of revenues?
Speaker 2: Do you have plans to sell debt off of revenues
Speaker 2: from congestion pricing?
Speaker 3: So, as you know, the congestion revenue is dedicated to
Speaker 3: the twenty to twenty four capital program. It is expected
Speaker 3: to generate fifteen billion for that program, and once we
Speaker 3: see a stable market in the revenues coming in.
Speaker 4: We do plan to issue debt. We've talked about it.
Speaker 3: That's not sometime until twenty twenty six for US. Once
Speaker 3: we see a comfortable stream of revenue. We've projected five
Speaker 3: hundred million for the next three years and we want
Speaker 3: to make sure that we see that revenue and the
Speaker 3: markets are comfortable issuing that debt for us.
Speaker 2: You've talked about fare increases on MTA services, what about
Speaker 2: increases in congestion pricing?
Speaker 1: And what is the timeline for that?
Speaker 3: So, as the governor has said to us, right, it's
Speaker 3: the toll will continue to be nine dollars for three years,
Speaker 3: then it'll increase gradually to the next three years at
Speaker 3: twelve dollars, and then in the final the seventh year,
Speaker 3: it'll be a fifteen dollars. SI is a toll, So
Speaker 3: we've already had that phased in based on the schedule
Speaker 3: we approved.
Speaker 2: Can you just bring us I know there's litigation around
Speaker 2: this with the federal government and with the state, but
Speaker 2: can you just take us into conversations that you've had
Speaker 2: with counterparts at the Department of Transportation over the last
Speaker 2: few months about making sure that the MTA stays on
Speaker 2: a sustainable financial path.
Speaker 3: So I think you know what I would say is
Speaker 3: the federal government contributes two billion dollars to the MTA,
Speaker 3: and that's a revenue source that we rely on to
Speaker 3: keep the system in a state of good repair, and
Speaker 3: so we would continue to want that funding. You know,
Speaker 3: MTA moves forty percent of riders across North America but
Speaker 3: receives only a fraction of federal dollars from Washington. And
Speaker 3: so we continue to rely on the federal dollars that
Speaker 3: we get and it's important for us.
Speaker 1: But what's the backup plan if that evaporates.
Speaker 3: Yeah, we're confident, right that the MTA and the federal government,
Speaker 3: the federal judge that is designed, right, we we're confident
Speaker 3: that we would win that lawsuit. You know, Judge Lineman
Speaker 3: issued a positive finding for the MTA just a few
Speaker 3: months ago. And congestion pricing is, you know, continuing to
Speaker 3: operate and we're generating the funding.
Speaker 4: I imagine.
Speaker 5: You know, you get a lot of people who hear
Speaker 5: these numbers. Congestion pricing is on tractoris five hundred million.
Speaker 5: They say, wow, that sounds like a lot of money.
Speaker 5: Why are you know, why are the subways still the
Speaker 5: way that they are? Delays, crime on cleanliness? Help us
Speaker 5: just understand. I know that you said that a lot
Speaker 5: of those fares go towards paying workers, But a number
Speaker 5: like this, a number like five hundred million, what does
Speaker 5: it mean in the context for the broader MTA organization
Speaker 5: is that a lot of money.
Speaker 4: So I'll give you context.
Speaker 3: Our operating budget every every year is about twenty billion dollars, right,
Speaker 3: That is to on subways, buses, commuter rails and the
Speaker 3: services for six million commuters every day. But in order
Speaker 3: for us to keep that system running, you have to
Speaker 3: maintain it, right, and so sixty eight point four billion
Speaker 3: dollars a good majority of that funding is to keep
Speaker 3: it in a state of good repair. That means new railcars,
Speaker 3: new buses, new signal upgrades, track maintenance, and everything else
Speaker 3: that goes with operating a system that's so vast in size.
Speaker 3: So five hundred million dollars is just one stream of
Speaker 3: revenue that generates when we leverage it fifteen billion dollars
Speaker 3: to continue with the capital side of the world, but
Speaker 3: the operating side has different funding sources. But we're confident
Speaker 3: that we, you know, move six million customers every single day,
Speaker 3: and we're happy to do that safely.
Speaker 2: Jpittel, CFO of the Metropolitan Transit Authority, joining us here
Speaker 2: in the Bloomberg BusinessWeek studio