Port Authority: We've Reformed. Critics: Really?
Wednesday, September 19, 2012 - 07:37 PM
(New York, NY -- WNYC) Two consulting firms hired to conduct an independent review of the Port Authority of New York and New Jersey have concluded that the bi-state agency has experienced major improvement in how it is operating -- but still must find additional ways to raise revenue to pay for the region's aging transportation infrastructure.
Last year, in the midst of a public outcry over toll and fare hikes at the agency's bridges and tunnels, Navigant Consulting and Rothschild Inc were retained to take a detailed look at the Port Authority. The consultants reported that under the agency's watch the redevelopment costs for the World Trade Center had ballooned from $11 billion to $14.8 billion.
The initial outside review described a dysfunctional bureaucracy with a debt load that had more than doubled -- from $9 billion to $21 billion in just ten years -- while boosting the compensation pay for its employees by 19 percent over the same period.
Now, just seven months later, Port Authority chairman David Samson says a multi-faceted push to reform the agency has paid off with glowing reviews from the same consultants for the management team put in place by New Jersey Governor Chris Christie and New York Governor Andrew Cuomo.
In a conference call with reporters Wednesday, Samson quoted from the latest Navigant report which concluded "the Port Authority has made great improvements in transparency and efforts to complete the World Trade Center program within the estimated costs." Samson said the agency had embarked on "50 distinct initiatives" to revamp everything from its basic governance structure to how the agency manages its capital projects.
The consultants also backed up the Port Authority's controversial toll and fare hikes as being "necessary" to support the agency's capital spending for its Interstate Transportation Network. That point is still hotly contested by local elected officials from both states and the Automobile Association of America. AAA has taken the Port Authority to court over what it claims is the illegal diversion of toll revenues to support non-transportation related projects like the World Trade Center.
And the same day that the Port Authority rolled out the consultant report on the agency's increased transparency, Assemblywoman Nicole Malliotakis was expressing outrage over the agency's decision to appeal a judge's order requiring the Port Authority to turn over an internal report on the impact of its toll hikes on the New York Container Terminal on Staten Island. Malliotakis says the terminal, which provides 550 good-paying jobs, has already lost 58 percent of their business "mostly due to these toll hikes." "What makes this organization so unbelievable is their arrogance in that they feel they can hide this information from the public who partially paid for this study to take place," Mallitokis said. The agency maintains the report is just a draft.
On the conference call to announce the major reset at the Port Authority, executive director Pat Foye insisted the agency's efforts at cost containment had produced tangible results. According to Foye, requiring the agency's non-union staff to contribute to the cost of their health insurance will save the Port $41 million dollars over the next 18 months and tens of millions of dollars in the out years.
But Port Authority officials conceded they still face formidable fiscal challenges. "Our ambitious ten-year capital plan budgets $26.9 billion dollar in capital expenditures for the 2011-2020 planning period. But there is more than $44 billion dollars of known investments that we need to maintain our region's competitiveness," said Port Authority vice chairman Scott Rechler.
"The agency's 80-plus year-old faculties are at capacity and are in critical need of state of good repair work," Rechler said. "There is a significant backlog of projects due to past deferral of state of good repair expenditures. For more than eight years our tunnels, bridges and terminals departments have not met its 80 percent target of preventative maintenance routines which could lead to more costly emergency repairs down the road in the future."
"The region's airports have aged significantly, frequently ranking among the worst in the nation in terms of customer satisfaction, and upgrades will require up to $6.5 billion dollars in additional capital through 2020," Rechler added.
Foye says the Port Authority is going to look to the private sector to help it finance some of its big ticket items -- like the rebuilding of the Goethals Bridge, which links Staten Island and New Jersey. Foye says the public-private partnership model is being given "serious consideration" for upgrading the Central Terminal Building at LaGuardia, as well as at Newark Airport's Terminal A. He says using this model could help the agency raise the $6 billion dollars needed to complete all three projects.
The consultants identified several areas where they felt the Port Authority could bring in as much as $150 million dollars in additional cash annually in non-toll revenue. On the list of possible money makers: additional advertising revenue, improving toll violation recovery, selling off some of the agency's real estate portfolio like the Newark Legal Center and the Teleport business park -- as well as selling air rights to the Port Authority's midtown bus terminal and its Journal Square PATH train station.
Port officials told reporters they are also looking to raise revenue by bringing new hotel capacity to the area around JFK Airport. "The JFK region doesn't have the hotel rooms adequate to service the millions of people who go through each day," Foye said. "We are working on two or three hotel opportunities right now that we expect to be announcing in the future."
New Jersey Assemblywoman Valerie Vainieri Huttle, a long time Port Authority critic, credited the Port Authority with "responding to years of inadequate accounting and managerial procedures" but hoped "the newfound commitment to proper governance" would endure.
“My greatest concern is that once the agency no longer feels public pressure to reform, it will return to its old ways," Huttle said in a statement. She's still pushing for passage of the Port Authority Accountability and Transparency Act, which legislators say would increase the Port's public accountability and require an annual audit.
Any legislation to reform the agency has to be passed in both Albany and Trenton. The Port Authority, a bi-state compact, was created by an act of Congress in 1921.