A leaked internal city memo shows the proposed Brooklyn-Queens streetcar is facing “serious financial challenges” and may not actually generate enough money to cover its costs.
The confidential memo, obtained and reviewed by Politico, shows the project’s financial model is one of the problems. The document was sent by “BQX Project Team” to Deputy Mayor Alicia Glen in February, according to the publication.
The proposed trolley line would connect Red Hook and Astoria along the East River waterfront. The de Blasio administration has said the streetcar’s positive impact on property values will produce between $2.4 billion and $3 billion in additional tax revenue over 40 years to pay for the system. The building costs is pegged at $2.5 billion, and the city also estimates it will cost $31.5 million each year to operate and maintain. That particular financing model is called as “Value Capture.”
The memo lists four “serious challenges,” according to the publication. One is that “Value Capture is not providing sufficient revenue to fund the entire project as originally stated.” That’s partially because it’s very costly to work on the water, gas and sewer mains that are on the potential path between Sunset Park and Astoria.
If it does turn out the project is not financially feasible, city officials will consider options, which include abandoning the project altogether, according to Politico. Though it’s not yet certain what the city will do, slowing down the project could also make the entire project even more expensive. It would, however, allow the for officials to do further analysis on the project’s real cost and value.
“There may be merit in undertaking additional study/review and options prior to the city making a final decision on the project,” according to the memo cited by Politico.
Critics of the project have complained the streetcar will benefit developers and have a negative impact on housing affordability.
A spokesperson for the city said the “numbers change constantly” and that the “project will improve transportation for hundreds of thousands of people, and we continue to work to move it forward.” [Politco] — Miriam Hall