Health, Social and Community Services

Can the City’s Investment in Electronic Medical Records Net Health and Cost Benefits?

Posted by Jenna Libersky, February 11, 2010

As they wrangle over health care reform in Washington, one of the tools that policymakers count on to lower costs while improving medical outcomes is expanding the use of electronic health records. But well before national health reform took center stage, New York City embraced this technological tool.

For several years now, New York City’s Department of Health and Mental Hygiene has had its own initiative underway to help medical practices, particularly in under-served communities, integrate electronic records into their operations. The Bloomberg Administration clearly values the initiative: it added city dollars in the Preliminary Budget to offset state and federal cuts in Medicaid funds previously expected for the program at a time when other health services are facing the budget axe.

In 2007, as part of its Primary Care Information Project, the health department designed and began offering an electronic health record system to city physicians who care for the neediest patients. To qualify for the software and training package offered by the city, providers must have a client base made up of at least 10 percent Medicaid-enrolled or uninsured patients. Doctors must also be willing to bear the costs of hardware, installation, Internet connectivity, productivity loss during implementation, and a $4,000 fee to a fund that rewards providers for quality improvement. The fund offers on average $10,000 per physician for every patient with well-controlled cardiovascular risks and gives higher bonuses for Medicaid-enrolled or uninsured patients with health issues such as diabetes and heart disease.

The project’s budget for 2009 included $4.8 million in city funds and $13.5 million in state, federal, and private funds. One-quarter of the budget covered personnel costs, one-quarter covered supplies and equipment, and the remaining half was paid toward license fees for the software developer, eClinicalWorks, to support each provider that uses the technology. So far, over 1,600 providers have signed up.

The city’s role in this initiative is unusual, especially since many of the doctors derive significant income from private payers. The technology is more commonly used by large for-profit medical providers. But the city is targeting its efforts to smaller and less specialized practices.

Unlike standard electronic health records for which the purpose is simply to improve clerical efficiency, the city’s product has an additional goal: to improve public health by tracking health trends across all providers who participate in the system. Using the combined data from small practices can help health officials identify trends and potential risks to public health.

The health department’s system can also help individual patients by reminding doctors to monitor blood pressure and cholesterol, discourage smoking and alcohol use, offer vaccinations, and screen for depression, cancer, and sexually transmitted diseases. Practice-wide quality indicators and measures of indiviual patients’ progress are shared with the health department, and other participating physicians (with personally identifying information removed), and with the patients themselves.

The health department hopes the system will yield cost savings for the health system as a whole, as patients are less likely to need costly interventions to manage chronic conditions. But it is too soon to tell yet if the city’s investment in the system will actually result in savings. Academic research suggests that compared to paper records, electronic health records lower medical chart filing and transcription costs, increase revenue through more accurate billing, reduce the number of drugs and diagnostic tests prescribed, and prevent costly mistakes in administering drugs. One recent study showed net losses to providers within the first year of adoption but benefits that rose sharply in the years following, totalling $86,000 in net benefits per provider over five years.

Given the potential for savings, the city would expect a return on its investment. However, the direct effect of the new system on the city’s bill for health care—$5.5 billion for Medicaid and $3.5 billion for employee and retiree health benefits in 2010—is largely unknown. While electronic records can help doctors directly by lowering their administrative costs, a reduction in the city’s health care tab will depend on a couple of key factors. One factor will be the share of patients covered by plans that provide a flat fee to doctors for patient care. The other factor will be the degree to which private insurers and Medicaid managed care companies translate lower costs of care for doctors receiving a flat fee—mostly due to electronic records leading to fewer tests and procedures—to lower premiums paid by the city.

For the city cost savings from the health record initiative remain somewhat speculative. But, like other investments it has made (think calorie labeling and transfat bans), the city expects to see clear health benefits for its efforts.

Education, Transportation

The Cost of Students’ Free Ride

Posted by Alan Treffeisen, January 11, 2010

The uproar over the Metropolitan Transportation Authority’s plan to discontinue free MetroCards for students boils down to a couple of key questions: How much do the free rides really cost the MTA, and if they are to be provided, how to cover that cost? As is often the case, the answers are more complicated than the questions.

Around 450,000 school children in New York City use MetroCards that allow them to make three bus or subway trips, each with a free transfer, every school day. Roughly 58,000 students use MetroCards that permit three half-fare bus trips, each with a free transfer. The fare cards are distributed according to a student’s grade and distance of school from their home.

From 1995 up until this year, the city and state each contributed $45 million toward the cost of student MetroCards, with the MTA absorbing any costs above $90 million. Inflation has eroded the value of that $90 million by about 40 percent.

This three-way financing arrangement began when then-Mayor Rudy Giuliani suspended a $128 million per year city subsidy for the transit passes in October 1994. (The state had been reimbursing the city for $69 million of that amount, so the actual cost to the city had been $59 million.) While New York City has continued to contribute $45 million a year, New York State has now cut its contribution from $45 million to just $6 million, leaving the MTA to shoulder the rest of the student fare cost. Citing its own financial difficulties, the MTA says it can no longer afford to do so and wants students to pay half fare on subways and buses next school year and full fare in the school year that begins in September 2011.

But how much do those free MetroCards really cost the MTA? Back when Mayor Giuliani derailed the old subsidy arrangement, the MTA estimated the annual cost to be $135 million—with the city, state, and transportation authority splitting the bill evenly.

If the city and state payments had kept up with inflation they would now be around $72 million each. If the payments had increased in line with the MTA’s estimate of how much it costs to provide the students with MetroCards, they would have risen even more. The MTA currently pegs the cost of student MetroCards at over $250 million, meaning that a one-third share would be more than $83 million.

There are different ways one could calculate the school fare program. One way would be to compare the reimbursement that the MTA currently receives for the program with the revenue that it would receive if students (or the city and state on their behalf) paid the regular transit fare. This foregone revenue can be thought of as the cost to the MTA under the current arrangement, and appears to be how the transportation authority derives its estimate. Of course, if students or their families were responsible for paying the full fare, some would switch to schools within walking distance, or look for alternate modes of transportation.

Many economists would take a different approach, one that looks at the marginal cost of providing transit service to school children. In other words, what additional cost does the MTA incur by providing the service? Mayor Giuliani said in 1994 that there was no additional cost for transporting school children, since the trains would be running anyway. Untrue, responded the MTA, saying that it runs extra buses and trains, particularly during the morning commute, specifically to accommodate the additional passengers.

Regardless of how the cost is calculated, there’s also the question of who’s going to pay for it. Though the state and MTA have shared the cost of free- and reduced-cost student fares with the city in the past, some sections of state law appear to legally exempt the state and MTA from much of the responsibility.

Under state education law cities such as Buffalo and Rochester can be reimbursed by the state for up to 90 percent of the cost for the transit passes they provide to students. But this same law excludes cities with a population of more than 1 million—and there’s only one—from eligibility for the reimbursement. State law also makes it clear that education funds cannot be used to reimburse New York City for payments to the MTA for transportation costs.

State public authorities law, which covers the MTA, appears to put the legal onus for covering the cost of free or reduced fare passes on the city. The law says that if a Mayor requests a lower fare for some riders, it’s up to the city to pay for it. Of course, that wouldn’t prohibit the state and MTA from continuing to help out for the good of the city’s students.

Parks

Mayor’s Schoolyards-to-Playgrounds Plan Takes a Hit

Posted by Patryk Drozdzik and Doug Turetsky with map by Ana Champeny, December 16, 2009

Mayor Michael Bloomberg’s PlaNYC, introduced with much fanfare on Earth Day 2007, included 127 policy initiatives to make the city a greener, healthier, more energy-efficient place. One of PlanNYC’s signature initiatives was the idea to increase the availability of open space in the city by turning 290 city schoolyards into public playgrounds by keeping them open after school, on weekends and during school breaks. While the schoolyard-to-playground plan received considerable attention when first announced, its subsequent scaling back has garnered less notice.

Underlying the Mayor’s schoolyard initiative were a combination of need and common sense. The need for more open space in the city is apparent to many New Yorkers, continuing a debate that has roiled the city since at least the 1800s over how much land should be developed and how much preserved for parks and playgrounds.

Recent figures compiled by the Trust for Public Land show that by some key measures, New York City lags well behind other cities in the availability of parks and playgrounds. New York has 4.6 acres of parkland per 1,000 residents, well below the median of 6.8 acres among 13 densely populated cities. New York’s 1.2 park playgrounds per 10,000 residents are little more than half the 2.1 median among the 76 large cities surveyed on this measure by the trust.

Because of stats like these, the Mayor wanted to make more play and open space available so that every New Yorker lived within a 10 minute walk of a park or playground. And that is where the common sense comes in. The Mayor realized that schoolyards across the city were an underused resource, frequently locked when needed most. The Bloomberg Administration reckoned that 69 schoolyards required nothing more than a school custodian to turn a key in order to help meet the goal. And by the summer of 2007, 69 were in fact opened—at a cost of $50,000 per school to pay custodians as reported by the New York Post—in neighborhoods ranging from Brownsville in Brooklyn to Belmont in the Bronx. Click here for a map of schoolyards that have already opened along with other locations that were proposed for the program all the proposed locations and their current status.

More than 200 schoolyards that the Mayor also wanted to open needed more than just additional funds for custodians. These schoolyards needed investments ranging from the installation of play equipment to pavement repairs and new fencing. In April 2007 the Mayor budgeted $96.4 million in capital funds for the necessary fixes. Since then the capital budget for the plan has steadily shrunk and as of the latest capital plan now totals $71.1million, a 26 percent cut.

With the shrinking funds has come the elimination of two dozen schoolyards from the initiative. According to information provided by the parks department, 24 schoolyards have been cut, bringing the total down to 266. Nine of the 81 schoolyards initially proposed for Queen have been canceled, including in neighborhoods such as Jackson Heights, Hollis, and Rosedale. Brooklyn has eight canceled schoolyard projects among the 104 originally proposed, including two in Borough Park, and seven have been axed in the Bronx among the 57 originally planned, including two in Morris Heights. (It should be noted that three other schoolyards have already been opened in Borough Park, and one in Morris Heights.) In contrast, none of the 20 projects initially planned for Manhattan have been canceled or any of the 28 targeted for Staten Island.

So far, the Bloomberg Administration has actually committed $30.2 million in capital dollars for the schoolyards-to-playgrounds effort and plans to commit an additional $40.9 million this fiscal year. A total of 96 schoolyards are now open under the initiative. But many of the schoolyards yet to be finished under the plan require the most work. If fiscal pressure on the city continues to mount, fewer schoolyard-to-playground conversions may result.

Seniors, Social and Community Services

Program Changes Become Roadblocks to Meals and Other Senior Services

Posted by Nashla Salas, November 19, 2009

When the Bloomberg Administration started reorganizing services for older adults about a year and half ago, it began with two fundamental programs funded by the Department for the Aging: case management and home-delivered meals. The agency realigned its case management system for evaluating and coordinating services for seniors, which resulted in a new route for how the city’s seniors apply for home-delivered meals and other services.

But seniors soon encountered speed bumps along the new route as they sought to receive meals. Rather than having more choices as designers of the new system promised in terms of meals, including frozen meals and frequency of delivery, seniors faced delays.

Under the new plan, seniors could no longer just contact a local senior services agency that provides home-delivered meals and apply for their assistance. The coordination of all in-home senior services is now centralized under a new case management system. While there were case managers before, neighborhood senior centers also often provided service coordination.

The old case management system served approximately 14,000 clients. The new system, which carved the city into 23 service areas with organizations contracted to evaluate needs and coordinate services for seniors, was expected to add about 4,000 new clients during a transition period from April 2008 to June 2008.

But seniors taking the new case management route to home-delivered meals and other services soon encountered roadblocks: many of the new case managers had more cases then they could handle, especially in some service areas. Depending upon the area, case managers were handling caseloads ranging anywhere from 47 clients to 106 clients.

The unexpectedly high caseloads meant that efforts to complete client needs evaluations fell behind schedule. Since seniors needed to complete a caseworker evaluation before they could get home delivered meals, the backlog among some casework providers prevented some clients from receiving meals and other services.

Recognizing the problem, Department for the Aging Commissioner Lilliam Barrios-Paoli told the City Council in late September that in an effort to reduce backlogs and caseload ratios by enabling providers to hire additional staff, start-up funding was extended past the original transition period and the provider contracts for the service areas were modified based on community need. As a result of the contract changes, five providers had their funding increase, two had a decrease, and the maximum number of clients served by any case manager fell to 88.

So seniors would not be forced to wait for long periods before receiving their meals, the Department for the Aging also temporarily waived requirements that caseworkers complete their evaluations before services could begin. Providers of home-delivered meals could start bringing meals to seniors based on the presumption that they qualify. Seniors are then referred to a case management program within 120 days so eligibility can be confirmed and the need for any other services assessed.

The initiative to overhaul the case management and home-delivered meals programs arose from projections of an increasing senior population. Demographers project that New Yorkers 60 and over will make up one fifth of the city’s population by 2030, outnumbering school-aged children. To ensure the city has the capacity to meet the needs of this increasing population, the Mayor began an overhaul of the Department for the Aging’s case management, home-delivered meal, and senior center programs.

The plan to turn senior centers into “Healthy Aging Centers” and address Bloomberg Administration concerns that roughly 40 percent of the city’s more than 320 centers are underused provoked the most controversy and was put on hold. Given the difficult introduction of the changes to case management and home-delivered meals, the plan for senior centers may remain on hold a while longer.

Capital Budget, Education, Environment, Federal and State Aid, Parks

City’s Capital Plan Grows: More Projects, Some More Spending

Posted by Ana M. Ventura, November 9, 2009

A number of fiscal mavens have voiced concerns in recent months that the city’s capital budget is too big and unaffordable. These concerns have not escaped the notice of Mayor Bloomberg, who has sought to reduce the amount the city spends on debt service—the interest and principal the city pays to borrow money for capital projects such as building schools, fixing roads, and buying fire trucks—by scaling back the city’s 10-year capital plan.

So it may come as a surprise to many observers that the city’s latest Adopted Capital Commitment Plan, which covers four years, has grown by hundreds of projects and millions of dollars. The Adopted Capital Commitment Plan, released in September, presents information on how much the city has appropriated in the current fiscal year and next three years for capital projects and a timeline for committing those project funds. This latest plan adds $708 million (adjusted for capital funds made available in 2009 but now pushed into the new plan) and nearly 700 capital projects, compared to the prior plan released in conjunction with the Mayor’s Executive Budget last spring. As in past years, the largest shares of capital funding go to school and environmental projects.

The city’s four-year capital plan allocates $38.4 billion for projects. Included in the plan total is $1.5 billion allocated at the request of the City Council and $680 million by the Borough Presidents. Roughly 80 percent of the funding comes from the city, with the remaining $7.8 billion coming from federal, state, and private grants.

These funds support nearly 7,400 projects (including school projects that are itemized separately in the city’s financial management system). The Adopted Capital Commitment Plan includes 941 new capital projects and drops 244 projects that were part of the prior plan. The new projects include 390 sponsored by the City Council and 108 sponsored by the Borough Presidents. Out of all the new projects certain types were among those most commonly added: there are 123 new citywide equipment purchases and 101 new parks and recreational facilities projects.

Nearly half of the plan’s total budget—$19.0 billion—is scheduled to be committed in fiscal year 2010. The rest of the funds are expected to be committed over the next three years: $6.9 billion in fiscal year 2011, $5.6 billion in fiscal year 2012, and $6.8 billion in fiscal year 2013. While the total for 2010 appears comparatively large, it is actually bulked up by previously authorized funds. Because some types of capital projects frequently fall behind schedule, the level of funds authorized by the Mayor’s budget office typically exceeds the expected commitments by about 35 percent.

Roughly $7.1 billion in capital funds were transferred, or rolled, from fiscal year 2009 into the new plan. Most capital funds rolled from a prior fiscal year tend to be allocated to the next year, as is the case under the new plan. But some of the funds rolled forward are also allocated to later years of the Capital Commitment Plan. Largely because of the funds rolled forward from 2009, the new plan is roughly 25 percent bigger than the prior $30.6 billion four-year plan.

But if you subtract the rollover funds, the latest plan still provides $708 million more (2.3 percent) than the prior plan. Almost all of this increase comes from additional city funding; about 1 percent of the $708 million comes from other sources.

Despite challenging economic times and recent actions by the Bloomberg Administration to curtail long-term city-funded capital spending, the city’s capital program continues to expand moderately.

Taxes

Win or Lose, the Yankees Are Going to Have to Pay in Philly

Posted by Bernard O’Brien, October 30, 2009

As the Yankees head to Philadelphia, players and coaches will have to give a little more than their best effort. And we don’t mean just playing harder on the field. We mean a small piece of their income.

Derek Jeter may recall that when he won his first World Series ring in 1996, a portion of his income as well as that of his Yankee teammates was subject to New York City tax regardless of whether they lived in the five boroughs. Visiting teams playing at Yankee Stadium also had to toss some cash into the city’s coffers. That’s because from 1971 until 1999, all noncity residents (including professional athletes) who derived income from working within the Big Apple owed what was commonly referred to as the New York City commuter tax. Players who live in the city are still subject to the local income tax on residents.

New York and Philadelphia are among a handful of U.S. cities that still levy a tax on wages earned from work (which includes playing professional sports) performed within its borders. But unlike New York City’s income tax, Philadelphia’s wage tax covers nonresidents, too. In other words, the Philadelphia Phillies’ players (and all visiting players coming to compete in Philadelphia) still see a portion of their not insignificant wages taxed by the City of Brotherly Love.

Philadelphia is hardly alone in taxing nonresident professional athletes. All states and the handful of cities with income tax systems that cover nonresidents take a piece of player earnings based on the number of days they work there.

Using information provided by the Philadelphia Revenue Department, we estimate that each game the Bronx Bombers play in Philadelphia during the upcoming World Series will result in the Yankees pitching in about $25,000 in Philadelphia wage taxes. If the series goes at least five games, the three games played in Citizens Bank Park mean the Yankee players will pony up roughly $75,000 for Philly’s revenue stream.

While players that live outside New York City won’t be on the hook for paying taxes to the city on income earned during games in the Bronx (they will owe New York State income tax), that doesn’t mean City Hall’s tax coffers will be bereft of a piece of the World Series action. We’ll take our share in other ways, such as a higher sales tax than in Philly. We just won’t get a hit off the players’ earnings.

Federal and State Aid, Social and Community Services

City’s Food Stamp Enrollment Surges

1 Comment

Posted by Paul Lopatto, October 22, 2009

Earlier this week it was widely reported that the number of homeless families had hit a record high in the city. Less noticed has been another record increase: As of August there were nearly 1.6 million New Yorkers on the food stamp rolls.

The rapid increase in food stamp enrollment began in early 2008, following years of relatively slow growth. From January 2008 through August 2009 food stamp enrollment increased by 354,000 persons, expanding the caseload by nearly 30 percent. Based on the current average monthly grant, the increase of food stamp recipients over the same period should result in about $680 million annually in additional federal assistance to low-income city residents, a level that’s juiced by the increase in benefits under the stimulus act.

While food stamp enrollment has fluctuated significantly over the last few decades, the pace of growth over the last year and a half has been unmatched since the early years of the program in the 1970s. It is likely that some of this growth can be attributed to policy initiatives by both city and state officials to increase the share of eligible people who enroll in the program.

At the city level, the application has been shortened and the hours of operation at some food stamp offices has been lengthened. As part of a statewide initiative the city’s Human Resources Administration has also been implementing new systems that make better use of information technology to allow for off-site electronic filing of applications and supporting documents, and recertification of some cases over the phone. In 2008 the social services agency also performed a data match to identify Medicaid recipients who might be eligible for food stamps but never applied, and then did a targeted outreach campaign to encourage them to fill out applications.

While these outreach efforts and initiatives to ease the application process helped boost enrollment, the extensive job losses and resultant income decreases experienced by large numbers of New Yorkers over the last year have significantly increased the pool of people who are eligible for assistance. Evidence from previous economic downturns, as detailed in IBO’s 2008 report Most Food Stamp Recipients No Longer Also Welfare Recipients, suggests that further labor market declines are likely to lead to continued growth in the food stamp caseload. Comparisons with prior recessions, however, serve to highlight the unprecedented magnitude of the recent caseload increases. Monthly food stamp enrollment growth since September 2008 has occurred at three times the rate seen in the last downturn that began in 2001.

The combined effects of the more user-friendly policies and rising economic distress have pushed the city’s food stamp caseload beyond its previous peak of 1.46 million people in April 1995. But current recipients differ from their earlier counterparts in one important respect. In 1995 nearly 80 percent of food stamp recipients also received public assistance; today only about one-quarter also receive welfare benefits.

This separation of food stamps from public assistance began with the implementation of welfare reform policies in the mid-1990s and has continued since. Recent caseload numbers offer further confirmation of the severing of these programs. From September 2008 through August 2009, with the local job market faltering, the number of city residents receiving food stamps increased by 258,000 or 20 percent while the public assistance caseload increased by only 13,000 or 4 percent. This suggests that while negative public attitudes and restrictive government policies toward welfare persist, food stamps have become an increasingly acceptable form of low-income assistance.

This trend is not unique to New York; federal statistics indicate that the divergence of these two key income support programs is progressing on a nationwide basis. From January 2008 to July 2009 food stamp enrollment increased by 29 percent to a record high 35.9 million recipients. While federal welfare caseload numbers are not yet available for 2009, the data indicate that during 2008, with the national recession underway, the number of food stamp recipients increased by 15 percent compared to only 4 percent for public assistance. Although high levels of unemployment could eventually lead to a more rapid movement of out-of-work people onto the welfare rolls, the delinking of food stamps and welfare is likely to persist.

Environment, Fees and Fines

Two Decades Later, City’s Water Metering Still Not Universal

1 Comment

Posted by Alexis Arinsburg, October 5, 2009

Even as the city ramps up its initiative to install wireless transmitters for water meters across the city, thousands of city properties still have no meter at all or have a meter that is not being used for billing. Two decades after the city’s Department of Environmental Protection (DEP) first began installing water meters through the Universal Metering Program, 49,595 accounts, or 6 percent overall, are still not part of the system.

That’s a bit better than in 2006, when 8 percent of accounts were still being billed under the old frontage system, which uses a schedule of fees based on building size and the number of sinks, showers, tubs, and toilets to determine the water bill. A small number of building owners still pay on a per apartment basis.

The most recent deadline for getting all water accounts metered was June 30, 2009. The deadline has now been pushed out to June 30, 2012. Why the delay and what is the city doing to make water metering truly universal?

In the wake of a severe drought, the city began installing water meters in 1988 as a way to reduce water usage by charging consumers for the amount of water actually used. It also helped the city comply with state water conservation requirements. The Universal Metering Program was to be completed in 10 years.

At the program’s inception, Department of Environmental Protection officials acknowledged that there would be challenges to metering all its customers immediately. Landlords complained about the expected cost increase due to metered bills, especially if they owned buildings that were home to large families or had plumbing in poor condition. Progress on universal metering also encountered some unexpected hurdles, including a 206-count indictment for fraud and labor law violations against the Kentucky-based company the city contracted with to do a large number of the meter installations. Flawed water bills have also been an on-going problem, likely undermining some customers’ confidence in making the transition to metering.

To address owner concerns about a jump in costs due to metering, the city has created several programs to ease the switch. There are currently 29,962 customers in the Transition Program for buildings with six or more apartments. Under this program a meter is installed but bills are still generated based on the frontage system. The idea was that owners would be in the program for up to a year and prepare for the switch to metered billing. The program was supposed to expire in 1997 but was instead extended annually until this year, when the deadline was pushed to 2012.

A New York State audit from 2008 found “no indication DEP was routinely transferring accounts from the Transition Program to metered billing.” It is reasonable to assume that Transition Program customers who remain on frontage billing do so because it is less costly than switching to metering.

There’s also a Pre-Transition program with 761 customers. While similar to the Transition Program, accounts in Pre-Transition had meters installed between 1988 and July 1, 1992, but owners pay a water bill based on $821 per apartment. Additionally, all accounts in the Pre-Transition program should have undergone an inspection or audit to ensure that there were no major leaks, and if leaks were found, they were promptly repaired.

There are currently about 700 owners who, after leaving the Transition Program, have enrolled in the Conservation Program for Multiple Family Residential Buildings. The program, established in 2001, remains a long-term alternative to metering for some owners of buildings with six or more apartments. To be eligible, owners must take steps such as converting 70 percent of a property’s toilets, faucets, and showerheads to low-flow fixtures. Owners are subject to periodic conservation audits by DEP. To encourage additional participation and to reduce the expense of installing fixtures that comply with the program’s conservation requirements, DEP is considering offering rebates for the installation of low-flush toilets, much as it did in the early 1990s.

About 8,600 customers currently prefer to pay a 100 percent surcharge on their frontage bill rather than have a meter installed. These customers, typically single-family residences, don’t qualify for either the transition or conservation programs. The Department of Environmental Protection is exploring ways to encourage these customers to agree to have meters installed and convert to metered billing. As with the accounts that remain in the Transition Program, presumably most of the customers still pay less than they would under metering, even after paying twice their frontage charge.

That leaves 9,500 customers still billed on a frontage basis who are not paying a surcharge nor are they enrolled in the transition or conservation programs. The Department of Environmental Protection provided no further explanation when IBO asked about these accounts.

When it comes to achieving the goal of universal metering first announced more than two decades ago, the city is still swimming upstream.

Economic Development, Housing

The Big, and Small, Stall in Construction Projects

1 Comment

Posted by Kerry Spitzer, September 21, 2009

One clear sign of the city’s real estate downturn is the abundance of sites where the construction of apartments or commercial space has come to an abrupt stop. City officials are concerned that many of these sites pose a public safety hazard. But some also see a potential opportunity to use these projects as a resource for affordable housing.

This summer, the Department of Buildings began posting a weekly list of sites where construction has stalled. The sites have been mapped by several news sources (see Times and WNYC). IBO recently matched the department’s August 2, 2009 list of stalled sites to the department’s Building Information Services permits file and reviewed what types of buildings developers had underway. Because buildings are added or removed from the list on a weekly basis, the data offer only a snapshot at a point in time. Regardless, the list may understate the extent of the problem; as some real estate observers have pointed out, several large projects are not listed. Nonetheless, it provides some insight into the kind of projects that have been stalled and the diversity of approaches that may be needed if public officials want to jump start construction at these sites.

On August 2, 2009, the list contained 398 unique sites, roughly three-quarters of which were in Brooklyn and Queens. In total, 44 percent of the sites were in Brooklyn, 32 percent in Queens, 15 percent in Manhattan, 5 percent in the Bronx, and 4 percent in Staten Island.

Eighty-one percent of the sites were residential. These 305 sites were to produce 6,741 units of housing—apartments and one-to three-family homes. Among the rest of the stalled construction sites, 15 percent (57 sites) had been planned for commercial use and 3 percent (12 sites) were proposed for hotel or other kinds of transient occupancy. (Twenty-four of the records did not include occupancy data.)

Reading press coverage about the stalled projects, one could come away with the impression that all or most of the sites are large luxury condo developments in Williamsburg and other up-and-coming neighborhoods. While the Greenpoint and Williamsburg areas have the highest concentration of stalled projects—with over 42 of the 305 stalled residential sites and 971 of the units—in fact, most of the projects are fairly small, with less than 10 units. And over one-third (40 percent) of the stalled residential developments are one- to three-family homes.

Even though many projects have 10 or fewer units, the majority of units are in larger developments. Seven percent of the sites (20 projects) account for nearly 50 percent of the planned units (3,290). The largest stalled site is on Manhattan’s far West Side at 605 West 42nd Street, which was expected to include 764 units. The Hudson Yards and Clinton neighborhoods of Manhattan have only a half-dozen stalled residential sites, but they contain a large share of the proposed units —1,046 units or 16 percent of the total. Other areas that have a concentration of moderately sized projects include: East Harlem, Lower Manhattan, the Rockaways, Clinton Hill, Downtown Brooklyn, Prospect Heights, and Prospect-Lefferts Garden. In contrast, South East Queens (Community District 12 and the southern half of Community District 13) contains roughly 35 developments and just over 65 units.

Some policymakers consider these stalled sites an opportunity for the city to further its affordable housing goals. As city and state officials consider programmatic options, focus could easily fall on just the big sites where more units could be leveraged in each deal, perhaps at a lower cost per unit than at smaller sites, and developers are likely to be more experienced at navigating public programs.

But there is also reason to focus on the sites with fewer units, many of which are in neighborhoods already considered distressed. For example, all 39 of the stalled residential developments located in census tracts defined by the federal Department of Housing and Urban Development as distressed are one- to three-family homes. Stalled projects in distressed neighborhoods are of particular concern because they threaten to increase the likelihood of abandonment and vandalism in areas already hit by foreclosures.

Economic Development, Taxes

Quiet on the Set?

1 Comment

Posted by Eldar Beiseitov, August 19, 2009

Shooting movies and television programs in New York City has always been expensive. At the end of June, it became even more expensive. That’s when the city’s program that provided tax credits for qualified film and television production ran out of money.

This, and uncertainty about the renewal of a similar New York State tax credit, which had also run out of money, may have been factors in the decision by Warner Brothers Television in February to move Fox’s hit series “Fringe” from New York to Vancouver for next season. Currently, it is filmed in Long Island City. (Back in 2008, NBC’s “Ugly Betty” moved from California to New York, to take advantage of our tax credit.)

From 2005 until it ran out of money, the city offered a Film Production Tax Credit program, with eligible film and television productions receiving a fully refundable tax credit equal to 5 percent of qualified production expenses. While many states, including New York, provide similar incentives, New York City is the only U.S. municipality that has had such a program.

The city’s film credit program was funded at $12.5 million in 2005 and then $30 million annually through 2011, but funding could be shifted from future years if needed for eligible productions until the total allocation of $192.5 million was reached. Now, with three years to go, all the money has already been committed.

Certain categories of productions are not covered by the program, including documentaries, news or current affairs programs, interview or talk shows, instructional videos, sport shows or events, and daytime soap operas. Similarly, while qualified expenses include costs of technical and crew production and expenditures for facilities, props, makeup, and wardrobe, the program excludes costs of stories and scripts, and wages for writers, directors, producers and performers.

The State of New York also offers production companies a similarly structured but much larger tax credit—30 percent—for filming in the state. When combined, the city and state refundable tax credits total 35 percent of eligible production costs for qualified feature films, television pilots, and television movies and miniseries.

Unlike many tax credits, which are available to all qualifying taxpayers regardless of the aggregate cost of the program, the city and state film credits are capped which means that once the authorized total spending for the program is reached, no new benefits are available, even for projects that would otherwise qualify. With both the state and the city tax credits maxed out, studio owners warned that New York had become a much less attractive place for film production. When the state adopted its budget for the 2009-2010 fiscal year, which began in April, the state credit was funded for an additional year.

Last May the Bloomberg Administration submitted to Albany a proposal to authorize additional funds for the city tax credit through 2011, at lower rates and with limits on how long television productions can receive the credit. Under the proposal, the program would receive $24 million annually through 2011 in additional city funding on top of the funds already committed. Projects that do 75 percent of their work in the city would receive a 4 percent tax credit, down from 5 percent.

Television shows would get the full 4 percent for three years, but the credit would drop to 3 percent in the fourth year and to 2 percent the following year. Also, the proposed legislation would set a $250,000 cap for each qualified production.

Whether tax credits are effective is the subject of some debate. A study by the Federal Reserve Bank of Boston of a similar program in Connecticut evaluated the tax credits’ costs and benefits in 2009, and concluded that the credit does not pay for itself, meaning that new tax revenues generated by the production did not offset the cost of the credit.

On the other hand, a 2009 study by Ernst & Young, prepared at the request of the New York State Governor’s Office of Motion Picture and Television Development and the Motion Picture Association of America, concluded that the state’s tax credit did pay for itself, while another Ernst &Young study prepared for New Mexico reached the same conclusion. A recent publication by the Boston Fed explores why the findings of these studies diverge so widely.