Wall St.Journal 27Feb2020

THE WALL STREET JOURNAL. ** Thursday, February 27, 2020 |A10A

bridges and tunnels, began a

program of biennial fare and

toll increases a decade ago.

The authority designs the

hikes to raise fare and toll rev-

enue by about 4% every two

years. The next increase is

scheduled for 2021.

During the last fare in-

crease, in 2019, the authority

kept the base subway and bus

fare at $2.75, but eliminated

the 5% bonus on MetroCard

purchases of at least $5.

and raised monthly Metro-

Cards to $127 from $121.

Monthly fares on the com-

muter railroads, which cost

hundreds of dollars, went up by

3.85%, up to a maximum of $15.

Mr. Schwartz, speaking at

Wednesday’s meeting, said the

agency owes it to riders to

demonstrate that it has ex-

plored other means of raising

revenue without automatically

increasing fares. At an MTA

meeting earlier this week, he

cited the millions of tourists

who visit New York City and

wondered whether the state

could implement a surcharge

on Airbnb Inc. rentals that

could be used to freeze fares.

A spokeswoman for the

home-sharing company said

Airbnb would welcome the

ability to collect and remit

taxes to the state.

Danny Pearlstein, a spokes-

man for advocacy group Riders

Alliance, said in an interview

that mass transit must be afford-

able. “I think it’s important that

the governor looks for money for

the MTA everywhere,” he said.

MTA Chairman Patrick Foye

said after Wednesday’s meet-

ing it was premature to dis-

cuss what, if any, changes the

MTA could make to its fare

structures. He said the forma-

tion of a group to reconsider

fares is a good idea.

Neal Zuckerman, an MTA

board member who represents

Putnam County, has told Mr.

Schwartz that he would like to

join a fares-focused working

group. In an interview, Mr.

Zuckerman said he would like to

see the commuter railroads con-

sider implementing a flat fare

like the one used on the subway

and bus systems. Because of the

MTA’s current distance-based

fares on commuter rail, some

riders who live farther out pay

several hundred dollars more

for a monthly ticket.

The MTA chief financial offi-

cer told board members the au-

thority can balance its budget

this year if it cuts its 70,000-

plus workforce by 1,900 posi-

tions by the end of December.

New York’s subway, bus and

commuter rail fares shouldn’t

automatically increase every

two years, according to an in-

fluential member of the Met-

ropolitan Transportation Au-

thority’s board.

Lawrence Schwartz, an ally

of Gov. Andrew Cuomo, said at

a board meeting Wednesday

that he plans to form a work-

ing group to explore alterna-

tive ways of raising revenue.

The MTA, which runs New

York City’s subway and buses,

Long Island Rail Road and

Metro-North Railroad and nine

BYPAULBERGER

MTA Board Member Questions Fare Increases

New York City Mayor Bill
de Blasio called on the federal
government Wednesday to ex-
pand the testing for coronavi-
rus to travelers beyond China,
saying an increased vigilance
is needed to stop the spread of
the disease.
There haven’t been any
confirmed cases of coronavi-
rus in New York, but health of-
ficials have been on “high
alert” since January.
The federal Centers for Dis-
ease Control and Prevention
said Tuesday that it expects a
wider spread of the virus
throughout the U.S. and is pre-
paring for a potential pandemic.
During a news conference
on the city’s preparedness, Mr.
de Blasio said the federal gov-
ernment should expand the
protocol to test travelers from
any country that has seen a
surge in cases, including Hong
Kong, Iran, Italy, Japan, Singa-
pore, South Korea, Taiwan and
Thailand.
Roughly 19,000 passengers
who have traveled in China
within 14 days have been
screened at John F. Kennedy
International Airport since
Jan. 17, according to John
Bilich, chief security officer
for the Port Authority of New
York and New Jersey, which
runs the airport.
Both New York City and
state officials asked the fed-
eral government to allow their
labs to join with the CDC in
testing for the virus.

“We don’t have the authori-
zation to do the test here, we
have to rely on the CDC,” said
Oxiris Barbot, the city’s health
commissioner.
The city initially received
permission to run the test, but
there are issues concerning the
final step of the process, Dr. Bar-
bot said. The testing process has
been in a “silo,” the mayor said.
At a separate news confer-
ence, Gov. Andrew Cuomo said
he is seeking an emergency ap-
propriation of an additional
$40 million for the state’s De-
partment of Health to use for
equipment and personnel. He
deferred to the federal govern-
ment as to whether more trav-
elers should be tested.
Across New York, 27 people
have been tested for coronavi-
rus, state officials said
Wednesday. Almost all of those
patients were deemed not to be
infected, with one test pending.
Still, Messrs. Cuomo and de
Blasio have said that a patient
with coronavirus likely could ap-
pear in New York given the large
number of international arrivals.
“We’re preparing, but this
situation is not a situation that
should cause undue fear among
people,” Mr. Cuomo said. “Yes,
it is a serious illness, has a
higher mortality rate than the
flu, etcetera, but not like Ebola.”
The city has distributed 1.
million protective face masks,
mostly to health-care profes-
sions. Officials have requested
300,000 additional masks, and
have asked the federal govern-
ment to step in to expedite the
production of masks.
“We have the greatest pub-
lic-health capacity anywhere
in this country, and we’re us-
ing it,” Mr. de Blasio said.

BYKATIEHONAN
ANDJIMMYVIELKIND

New York

Gears Up

To F i g h t

Virus

‘We have the greatest

public-health

capacity anywhere

in this country.’

lated buildings fell by 81% in

Manhattan. In Queens, they

plunged 96%, from $979 mil-

lion in sales in 18 transactions

in the second half of 2018 to

$39 million in sales in seven

transactions in the same pe-

riod last year, the report said.

Behind the scenes, building

owners tell of dramatic cuts in

property prices, which are

down about 30% to 50% from

the peak a year or two ago,

with few buyers stepping up to

GREATER NEW YORK

rents. As a result, investors

looking for short-term turn-

arounds, after legally raising

rents, fled the market and

building values fell, landlords

and brokers said.

Until the new law passed,

landlords could make improve-

ments to rent-regulated apart-

ments to raise rents. When the

rent exceeded a certain thresh-

old on vacant apartments,

rents on those units were no

longer regulated. As soon as

the law took effect, permit ap-

plications from landlords for

renovations fell sharply.

A number of investment re-

ports have noted an overall de-

cline in residential investment

sales within months after the

law was passed and took effect

in June. The REBNY report is

an early effort to systemati-

cally track what is happening

to building values in rent-regu-

lated apartments since the law

took effect. It found that for

larger regulated build-

ings, those with 11 or more

apartments, the value of all

sales fell by 78% in the second

half of last year across the city

compared with the same period

in 2018. The number of trans-

actions declined from 231 to 88.

The total value of transac-

tions in these larger rent-regu-

bid. A provision of the new law

allows tenants to look back a

decade or more to challenge old

rent errors. It is driving away

some potential buyers worried

about assuming unknown fu-

ture liabilities, landlords say.

James Whelan, the presi-

dent of REBNY, said that the

decline in rent-regulated sales

since the new law passed re-

sulted in a $136 million drop

in city revenue from real-es-

tate transfer taxes.

“This new analysis is a

clear indication that new rent

laws will result in less tax rev-

enue for New York City and

state,” he said. “This report is

a sign that it will be increas-

ingly more difficult to pay for

vital government services.”

State Sen. Brad Hoylman, a

Manhattan Democrat who

sponsored the new law, said

policy makers should be moni-

toring the trends in the sales

of rental buildings. But he is

focused on what he said was

an 18% drop in evictions since

the law passed. “The human

cost of evictions is stagger-

ing,” he said, “contributing to

the homeless crisis we are

witnessing across the city.”

At the request of The Wall

Street Journal, Ariel Property

Advisors, a brokerage, consult-

ing and real-estate-services

company, provided data con-

firming the extreme findings

of the REBNY report. It looked

at buildings with more than 10

units, with at least half the

units in rent regulation. The

data showed that the value of

sales had plummeted 83% dur-

ing the second half of 2019

across the city compared with

the same period of 2018, while

transactions fell 65%.

Shimon Shkury, president of

Ariel Property Advisors, said

the law forces a change in buy-

ers’ business plans from “value

add,” in which they increase the

value of the building over three

to five years and then consider

selling, to looking for “cash re-

turn over a long-term horizon.”

Although there have been

several large deals in which

sale prices were significantly

below the asking prices, the

slowdown in sales mostly has

masked the effect of falling

values because so few proper-

ties sold, Mr. Shkury said.

Many long-term owners are

continuing to hold onto resi-

dential rental buildings, but

landlords say they have re-

duced their investments in

apartment improvements be-

cause there is no longer an in-

centive for them.

A new rent law that gives

New York City tenants greater

protection has triggered a

multibillion-dollar plunge in

the sale of regulated-rental

apartment buildings, accord-

ing to data collected by a

group representing landlords.

In its latest report on invest-

ment sales released Wednes-

day, the Real Estate Board of

New York for the first time

provided a breakout of data on

rent-regulated buildings. It

found that the number of

transactions for such buildings

fell by more than half since the

law took effect in June.

The value of sales for build-

ings with at least one rent-reg-

ulated apartment dropped by

more than $4.1 billion in the

second half of 2019 compared

with the same period the year

before, the report said.

The new law blocked land-

lords from removing apart-

ments from rent regulation in

most cases or rapidly raising

BYJOSHBARBANEL

Rent-Regulated Sales Plummet

The value of buildings

with at least one such

apartment dropped by

more than $4.1 billion

Total paid for rent-regulated

buildings with more than

10 apartments

Source: Real Estate Board of New York

Manhattan

Bronx

Brooklyn

Queens

$2.66 billion

0.

0.

0.

0.

0.

0.

0.

Second half 2018

Second half 2019

Victims of 1993 World Trade Center Bombing Remembered

SAD ANNIVERSARY: Roses were placed over the names of the victims of the World Trade Center bombing during a ceremony Wednesday at the 9/11 Memorial in

lower Manhattan. Six people were killed and more than 1,000 injured when a truck bomb exploded in an underground parking garage on Feb. 26, 1993.

JOHN MINCHILLO/ASSOCIATED PRESS

NY