New York Public Interest Research Group Straphangers Campaign, Inc. v. Metropolitan Transportation Authority

196 Misc. 2d 502, 765 N.Y.S.2d 422, 2003 N.Y. Misc. LEXIS 850
CourtNew York Supreme Court
DecidedMay 15, 2003
StatusPublished
Cited by2 cases

This text of 196 Misc. 2d 502 (New York Public Interest Research Group Straphangers Campaign, Inc. v. Metropolitan Transportation Authority) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New York Public Interest Research Group Straphangers Campaign, Inc. v. Metropolitan Transportation Authority, 196 Misc. 2d 502, 765 N.Y.S.2d 422, 2003 N.Y. Misc. LEXIS 850 (N.Y. Super. Ct. 2003).

Opinion

OPINION OF THE COURT

Louis B. York, J.

This is a CPLR article 78 proceeding challenging the March 6, 2003 determination by the Metropolitan Transportation Authority’s Board of Directors (the Board) to raise subway, bus and commuter railroad fares, and scale back or close certain station booths. For the reasons below, the court grants the petition, declares the notice and the Board vote invalid, vacates the vote in question except as it relates to the tolls pertaining to the Triborough Bridge and Tunnel Authority (TBTA), and remands to the Metropolitan Transportation Authority for proceedings consistent with this decision.

Facts

The New York State Metropolitan Transportation Authority and the other respondents (collectively, MTA) run New York City’s subways and buses, certain of its bridges and tunnels, and the commuter railroads in the 12-county transportation district which includes the five counties within New York City along with Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, and Westchester Counties. The MTA carries approximately one third of the transit riders in the United States, or around 2.3 billion riders each year (Hevesi exhibit K).

On November 22, 2002, the MTA announced at a public Board meeting that it would end fiscal year 2002 with a budget [504]*504surplus of $24.6 million and a $2.8 billion deficit for fiscal years 2003-2004. On December 18, 2002, the MTA approved an interim financial plan for 2003-2004 (the December Plan) reiterating the financial information announced on November 22, asserting that the $2.8 billion deficit would be reduced to $951 million based upon cost-saving measures enacted within the MTA, and calling for subway, bus and commuter railroad fare increases of up to 33% beginning in 2003 along with subway token booth closings (see Hevesi exhibit B).

The MTA is required by statute to hold a public hearing when it is contemplating changing fees for the transportation of passengers (see Public Authorities Law § 1266 [3]). The New York City Transit Authority (TA) is required to hold a public hearing if it is contemplating a complete or partial closing of a passenger station within the City of New York (see Public Authorities Law § 1205 [5]). The parties dispute the necessity of holding a public hearing when the TA contemplates a fare increase. Regardless, the MTA and TA chose to include the subway fare increases in the notice and to address these proposed changes at the hearings.

In January 2003 the MTA issued notices of public hearings (the notice). In its “Introduction/Overview,” the notice stated:

“In November 2002, the MTA published its two-year Financial Plan for 2003 and 2004 in which it projected a combined gross deficit of $2.8 billion. Numerous internal actions have been identified, including administrative reductions and cost-saving measures such as the closing [of] some token booths and the elimination of the token, as a means to reduce this deficit to an estimated $1 billion. This remaining deficit is proposed to be addressed by one of the three options described below, which include combinations of fare and toll increases, service reductions, and/or increased governmental assistance. Public comments are being solicited on these proposals through a series of hearings throughout the region as noted below. Comments can also be submitted via e-mail * * *” (exhibit A to amended petition).

The notice invited “customers * * * to comment on the proposed fare and toll increases and subway station closings to help close a projected MTA budget gap of $2.8 billion for 2003 and 2004” within the parameters of the three stated options (id.).

[505]*505In February 2003, 10 public hearings were held throughout the region serviced by the MTA, including the five boroughs of New York City. On March 6,2003, after the hearings concluded, the Board voted to approve the following: a 33% increase in subway and bus fares; elimination of the token; a 25% average increase in commuter railroad fares; an increase in bridge and tunnel tolls; higher fares for other services such as express buses; and a scaling back or closing of not more than 62 token booths.

Meanwhile, the announcement regarding the MTA’s sparse financial resources was met with surprise. Prior to the announcement, there was a general belief that the MTA currently enjoyed a large surplus. Concerned, the New York State Comptroller, Alan G. Hevesi, undertook an examination of the MTA’s finances. According to Comptroller Hevesi, his initial requests to the MTA for financial information were fruitless and he was forced to issue subpoenas on February 19, 2003 for records and testimony from MTA officials in order to obtain the information (see Hevesi affidavit, Apr. 29, 2003, 2-7). In early January 2003, following his receipt of the records, the State Comptroller commenced an audit of the MTA’s finances, focusing on the December Plan.

On April 23, 2003, the State Comptroller released a report of his audit of the financial affairs of the MTA (Hevesi exhibit K; the Hevesi Report). The Hevesi Report found that the MTA “had two versions of its December Plan: the one it showed the public and the one it kept to itself’ (the Internal Plan). The Internal Plan revealed that, instead of ending 2002 with a surplus of $24.6 million, the MTA actually had a surplus of $537.1 million. However, through previously undisclosed material transactions, which the Hevesi Report characterizes as “secret transactions,” the MTA moved resources off the 2002 budget to cover expenses in 2003 and 2004. In particular, the MTA transferred $182.5 million of the surplus to an “off-budget reserve” that would be drawn down in 2003 and $125 million to a similar reserve for 2004. In addition, the MTA planned to prepay future debt service costs in 2002 by $205 million, effectively transferring $65.8 million to 2003 and $139.2 million to 2004 for this purpose. These transactions created the $512.5 million budget gap.

Based on this information, the report concluded that, “[wjhile it would have been imprudent to use all of the [$537.1 million] surplus resources in 2003, there was far more flexibility in the size and timing of the fare hike than was acknowledged by the [506]*506MTA.” (Id.) The report further stated that the MTA’s failure to disclose the available resources to the public and its elected officials foreclosed public consideration of options other than those proffered by the MTA and stifled public debate. Furthermore, the MTA Director of Budgets and Financial Management did not recall advising the Board, which voted on the increases and the booth closings, of the actual surplus. Thus, the Comptroller concluded that “the public hearings were, in effect, a sham because the public and its elected officials did not have the information necessary to make informed comments about the December Plan” (Hevesi exhibit K at 22).

The New York City Comptroller, William C. Thompson, Jr., also issued a report on April 23, 2003 (the Thompson Report) stating that the TA “did not provide the public with complete, clear, and accurate information about its current and future financial position,” that the TA’s operating budget proposal lacked essential information, and that it was “impossible for all concerned parties to assess the financial position of the Transit Authority and make an informed judgment about the necessity for a fare increase” (see Rose exhibit A at 2).

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Related

Samuelsen v. Walder
29 Misc. 3d 225 (New York Supreme Court, 2010)
New York Public Interest Research Group Straphangers Campaign, Inc. v. Metropolitan Transportation Authority
309 A.D.2d 127 (Appellate Division of the Supreme Court of New York, 2003)

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Bluebook (online)
196 Misc. 2d 502, 765 N.Y.S.2d 422, 2003 N.Y. Misc. LEXIS 850, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-york-public-interest-research-group-straphangers-campaign-inc-v-nysupct-2003.