The administration has consistently argued that the BQX project can pay for itself, since the city can capture a piece of the rising property values that would be spurred by the creation of the streetcar, a financing model known as “value capture.” | Demetrius Freeman/Mayoral Photography Office City memo suggests BQX may not be financially feasible after all

Mayor Bill de Blasio’s plan for a streetcar along the Brooklyn and Queens waterfront may not pay for itself after all, according to an internal City Hall memo.

A confidential memo prepared by the administration’s “BQX Project Team” and whose substance was conveyed to Deputy Mayor Alicia Glen in February says that the “successful implementation” of the $2.5 billion, 16-mile Brooklyn Queens Connector “faces several serious challenges,” including its financing model.


Since de Blasio unveiled the proposal in his February 2016 State of the City address, critics have questioned why the mayor would consider funding a developer-driven streetcar through already gentrified neighborhoods, rather than putting more capital behind another of his ideas, a subway extension into working class neighborhoods along Utica Avenue.

The administration has consistently argued that the BQX project can pay for itself, since the city can capture a piece of the rising property values that would be spurred by the creation of the streetcar. It’s a financing model known as “value capture.”

“It’s really the political pillar for this project, that this thing will pay for itself,” said Jon Orcutt, the communications and advocacy director for Transit Center, and the former policy director at the city’s transportation department.

The February memo acquired by POLITICO New York suggests that the city’s confidence in the streetcar’s ability to pay for itself may be wavering.

Among the “four serious challenges” listed in the memo is the following: “Value Capture not providing sufficient revenue to fund the entire project as originally stated.”

In part, that's because, as the memo also notes, it's really expensive to move and rehabilitate the water, gas and sewer mains that lie along the streetcar’s proposed path between Sunset Park and Astoria.

“Utility relocation continues to be the biggest single cost factor and if policies cannot be implemented to limit the impact, it has the possibility to make the project unaffordable and render implementation timelines unfeasible,” the memo says.

Over about the past six months, city officials have begun boring beneath the streets, to determine which mains have to be moved, and which have to be hardened. Officials spearheading the project meet every two weeks. Sometimes the numbers line up and the financing model seems feasible. Sometimes it doesn't.

If, in the final analysis, city officials determine there is too big a gap between what the city can derive from value capture and the project’s actual projected cost, they will pursue other options, including perhaps abandoning the streetcar idea entirely.

Given concerns about the project, the memo offers three possible options, referred to as the “green light,” “yellow light” and “red light” alternatives, in accordance with the pace at which the city plans to move forward.

Any slowing down of the process would allow for more analysis and perhaps prevent the city from spending resources on a more-expensive-than-anticipated project. But any delay in the project's implementation would also make its ultimate completion that much more expensive.

The inflation of construction costs alone could cost the city another $100 million a year.

The city has yet to decide what to do.

“Given the anticipated cost and complexity of implementing the BQX project and the likely need for the use of some City Capital, there may be merit in undertaking additional study/review and options analysis prior to the CIty making a final decision on the project,” the memo reads.

Melissa Grace, a spokesperson for the de Blasio administration, said in a statement responding to the memo that the city "is costing out the price of moving specific water mains, and estimating tax revenue from individual lots along the route. The numbers change constantly, and that study has to be completed so we can move ahead. The project will improve transportation for hundreds of thousands of people, and we continue to work to move it forward.”

CORRECTION: Contrary to an earlier version of this story, the substance of the draft memo was conveyed to Glen in discussions, rather than in paper form.