- New York will sell bonds backed by a "mansion tax," a one-time tax on properties over $2 million.
- The bond sale will fund $2 billion in infrastructure improvements to the city's subways and buses.
New York City is planning to fund upgrades to the largest public transit system in the country with bonds backed by taxes on expensive homes.
The bond sales will put $2 billion toward infrastructure projects at the Metropolitan Transportation Authority, the city's subway and bus service, which has long struggled to find ample funds to repair and upgrade its aging infrastructure. The agency currently has $47.4 billion in outstanding debt.
The city plans to start selling these bonds as early as the end of this year or early next year, Bloomberg reports. Investors who buy the bonds will be repaid with money from New York's "mansion tax."
The tax, which started funding infrastructure projects for the MTA back in 2019, pulls revenue from the transfer of residential properties that cost $2 million or more.
The tax is an especially lucrative source of funds in New York, where a strong housing demand makes for frequent turnover . The mansion tax generated $345 million in funding for the MTA last year alone.
The bond sales will go toward financing the MTA's $51.5 billion plan to improve its subway, bus, and rail infrastructure. The program is the largest investment of its kind in MTA history, according to the agency's website.
Mansion tax bonds are not the MTA's first foray into debt backed by alternative funding sources. In the past, the MTA has sold bonds backed by the city's sales tax revenue, among other debt financing vehicles.
Other cities like Los Angeles and Santa Fe have employed similar taxes on the sales of large homes to generate new revenue streams for underfunded government initiatives, including affordable housing and homeless prevention projects. Chicago introduced a similar tax on properties over $1 million earlier this year, but voters rejected it.