Letting local development corporations issue lots of debt for major projects like Hudson Yards could end up sticking the city with a hefty bill, a former chairman of the Metropolitan Transportation Authority warned City Council members today.
Dick Ravitch, who brought in billions in capital financing for the MTA in the 1980’s, cautioned that if the residential and commercial developments don’t bring in as much money as projected, the city might be stuck with the debt.
That’s what happened in the 1960’s and ’70s, sending the city into an abysmal fiscal insolvency, Mr. Ravitch told the city’s Infrastructure Task Force during a hearing examining how to prepare for a population projected to swell past 9 million by 2030. Mr. Ravitch sees some bad signs already: "The [bond] market is clearly very, very jittery about these obligations," he said.
The city should push to have its state-imposed debt limits raised, and consider targeted taxes to pay for subway and road projects, he recommended. In the meantime, the City Council should keep a closer watch over the bonds being issued, Mr. Ravitch said, or it might regret giving the projects the go-ahead in the first place.