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Port Authority Pushes Back on Scathing Audit, But Acknowledges Need for Reform

Thursday, February 09, 2012 - 05:07 PM

(photo: Port Authority Chairman David Samson address the media (Janet Babin/WNYC)

UPDATED WITH MORE ON PA STATEMENTS ON WTC & TOLL HIKES (READ A BIT INTO THE POST) The Port Authority of New York and New Jersey is defending the expanded costs for the World Trade Center project, but it also admits it needs to become leaner and more transparent.

The agency addressed the project’s costs at its first public Board meeting since an outside audit released earlier this week.  The interim report revealed that costs at the World Trade Center project had ballooned to $15-billion dollars, up from about $4-billion in 2008.

But Port Authority Chair David Samson said the figures did not reflect cost overruns at the World Trade Center.  “The numbers that provide an increase in the original cost estimate were not on cost overruns, and they were not over budget....there was a cost estimate increase,” said Samson.

The Board said that the project’s expanded costs were simply not included in the original cost estimates created in 2008.  “They were mostly costs associated with One World Trade Center and retail, like tenant improvement costs, financing costs, and leasing commissions,” said Vice Chairman Scott Rechler.  He said these were things that would normally be included in a project cost estimate.

The Board said any cost overruns at the World Trade Center site were due to expanded work on the transportation hub, and the accelerated speed of the project.  Some work was fast tracked in order to complete the 9/11 memorial in time for the ten year anniversary of the September 11th terrorist attacks.

The audit, by Navigant Consulting, was commissioned by NY Governor Andrew Cuomo and NJ Governor Chris Christie after the Board voted to increase bridge and tunnel tolls last August.  Board Chair  Samson said those toll increases are here to stay.  He also maintained the toll revenue is not linked in any way to the World Trade Center project.  “There was never a statement made that linked the toll increase to paying for the World Trade Center redevelopment,” said Samson.

(That's actually not accurate.  An August 5, 2011 press release announcing the proposed hike specifically cited "the overall cost of WTC rebuilding" as pressuring the authority's finances.  "Faced with three unprecedented challenges at once," the statement said – "(1) a historic economic recession that has sharply decreased revenue below projections, (2) steep increases in post-9/11 security costs, which have nearly tripled, and the overall cost of the WTC rebuilding, and (3) the need for the largest overhaul of facilities in the agency’s 90-year history – the Port Authority of New York and New Jersey today proposed a two-phase toll and fare increase to fully fund a new $33 billion ten-year capital plan, which will generate 167,000 jobs."

To be sure, after being sued by the AAA, the Port Authority has maintained that no funding from the toll increase actually goes directly to the World Trade Center, a position the Chair restated Thursday.  Samson said said he "disagreed" that the Port Authority had raised the specter of WTC reconstruction as driving the toll hike, saying that press release was instead painting "a general picture of the financial position of the Port Authority." )

The audit also described the agency as dysfunctional.

The Board blamed that on prior leaders.  Vice Chairman Rechler said that the last ten years at the Port Authority have been “destabilizing.”  The agency lost 83 employees during the 2001 terrorist attacks.  The Board went through seven different executive directors over the past ten years.  “We feel confident now that there’s new leadership,” said Vice Chairman Rechler.

The Board said it’s finding ways to move forward.  It pointed to a new joint venture with Westfield Group as a positive sign. “Our agreement with Westfield leverages public and private sector money that allows us to pursue our core mission: to stimulate job creation and economic activity for the New Jersey and New York region,” said Samson.

The Board said it will also focus on improving capital planning and financing for big projects.  It will also tackle employee compensation.  The audit found that the average Port Authority employee earns about $143-thousand dollars a year.  “We need to better align our compensation and benefits packages to appropriate public employee standards, “said Samson.

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