Hochul Slams Brake On Congestion Pricing, Rejecting Real Estate-Backed Policy

Less than a month before the United States' first congestion pricing program was set to take effect, New York Gov. Kathy Hochul has made a historic about-face.

The toll, which became state law in 2019 but has taken five years and millions of dollars to implement, would charge passenger cars $15 to drive below 60th Street during the peak hours of 5 a.m.-9 p.m. on weekdays and 9 a.m.-9 p.m. on weekends, with higher pricing for delivery trucks.

Congestion pricing was projected to raise $1B annually for the Metropolitan Transportation Authority to make improvements to public transportation, as well as reducing traffic and emissions in the most populated areas of the city. 

Hochul announced Wednesday she will be indefinitely halting the plan, just weeks before its June 30 start date. 

“After careful consideration, I have come to the difficult decision that implementing the planned congestion pricing system risks too many unintended consequences,” Hochul said. 

She added that she fears the toll would “create another obstacle to our economic recovery.” 

Although congestion pricing exists outside of the country, New York's plan would be the first of its kind in the U.S. In its place, Hochul is considering alternative ways to improve the more than century-old subway system and balance the MTA's budget, including a tax on businesses, Bloomberg reports.

However, business leaders have long said that congestion pricing would be positive for the city’s recovery. The industry's largest lobbying group, the Real Estate Board of New York, had thrown its support behind the plan, calling it “critical to the region’s long-term economic health.”

REBNY was also one of several groups to support the implementation of congestion pricing in a 2021 letter to Hochul. 

“Congestion pricing will provide environmental and transportation benefits that will make New York City more competitive on the national and international stage,” REBNY President James Whelan said in a statement following Hochul's announcement. “Any delay in its implementation should be of a limited duration.”

When the outline of the plan was approved in 2022, many real estate players told Bisnow that congestion pricing would be beneficial to property owners, especially in getting workers back into the office, by improving commutes. Last year, subway ridership was 68% of 2019 levels, according to the MTA.

The decision represents a rapid 180 for Hochul, who said she was “proud” to move ahead with the program last year and just weeks ago had touted the upcoming implementation at the Global Economic Summit in Ireland.

“It took a long time because people feared backlash from drivers set in their ways,” Hochul said at the event May 20. “But, much like with housing, if we’re serious about making cities more livable, we must get over that.” 

However, congestion pricing has been repeatedly challenged in ongoing lawsuits, including by a group dubbed New Yorkers Against Congestion Pricing, the Trucking Association of New York, the town of Hempstead on Long Island, and the state of New Jersey. In lawsuits, some groups claimed the toll is unconstitutional, while others sued over an alleged failure to conduct proper environmental and economic reviews. 

“The MTA’s poorly conceived plan to implement congestion pricing is just another cash-grab scheme that will once again come at the expense of hard-working Nassau residents who are just trying to get to work,” Hempstead Supervisor Don Clavin said in a statement when the lawsuit was filed. 

The Federal Highway Administration concluded last year that the program would have no significant environmental impact.

Many lawmakers in the city met Hochul's reaction with anger and dismay, expressing fear that the MTA could fall into an economic crisis and that gridlock would continue to worsen. Hochul said Wednesday that the MTA had adequate funding for its capital project budget.

Regional Plan Association Executive Vice President Kate Slevin told The New York Times the move is “a total betrayal of New Yorkers and our climate.”