Report Traces Port Authority’s Flaws to a Crumbling Business Model

[GojiMet86]

http://www.nytimes.com/2014/04/02/nyregion/report-traces-port-authoritys-flaws-to-a-crumbling-business-model.html?ref=nyregion
 
Basically confirms the divergence of funds that were dedicated to rail projects into road, or other, projects.
 

Report Traces Port Authority’s Flaws to a Crumbling Business Model
By MATT FLEGENHEIMER APRIL 1, 2014
 
 

In 2012, the PATH lost about $400 million, according to a review of the Port Authority of New York and New Jersey operations. Michael Kirby Smith for The New York Times

For years, the Port Authority of New York and New Jersey has been an easy target — a behemoth so 
politicized that its role in last year’s lane closings at the George Washington Bridge is perhaps the
scandal’s least surprising element.
On Friday, Gov. Chris Christie of New Jersey said he was “intrigued by the idea of dismantling the
Port Authority” and dividing control between the states. One day later, Gov. Andrew M. Cuomo agreed
that “structural changes are a possibility” at the bistate agency.
But as the furor over the lane closings has grown, engulfing Mr. Christie and several of his top aides,
a review of agency operations suggests that its familiar flaws — mismanagement, patronage, rivalries
between the states — are symptoms of a decaying business model, done in by a relentless desire to
expand beyond the agency’s core transportation functions.
In recent decades, according to a new report, the agency has increasingly yielded to governors on
fiscally dubious projects, contributing to a need in recent years to seek new revenue from bridge and tunnel toll increases.
 

The George Washington Bridge and its accompanying bus station earned more than $350 million in 2012. Michael Kirby Smith for The New York Times
 
The report to be released this week, from New York University’s Rudin Center for Transportation
Policy and Management, says the agency spent more than $800 million from 2002 to 2012 on “regional
projects” chosen by the governors’ offices. In the coming years, the pace of spending on zero-return state
projects is expected to accelerate.
As a result, the most powerful testaments to the agency’s peril, according to former agency officials
and transportation experts, are not found amid the infamous bridge access lanes of Fort Lee, N.J.
They can be traced to the grounds of industrial parks built in the Bronx and in Yonkers, with little
obvious transportation purpose, or along the Pulaski Skyway, which the agency agreed to rehabilitate
after Mr. Christie canceled the construction of a rail tunnel beneath the Hudson River in 2010 and
claimed the $1.8 billion in planned spending to be New Jersey’s money.
The prospect of reform is particularly urgent, according to the review, given the increasing burden
posed by the PATH rail system. In 2012, the system lost about $400 million, according to data compiled
by the authors, more than twice its loss in 2000.
The report estimated that between 2002 and 2020, the agency will have put more than $4.6 billion
into the PATH system, and that excludes more than $1 billion in spending on a new PATH station at the
World Trade Center.
“It is no longer possible for the Port Authority to adequately fund its own facilities and services while
simultaneously allocating hundreds of millions for non-revenue-generating state projects,” wrote the
report’s authors, Mitchell Moss, the Rudin Center’s director, and Hugh O’Neill, a former assistant
executive director at the Port Authority.
For decades, governors have relied on the agency to help fund pet projects.
Mr. Christie in particular appeared keenly aware of how the agency’s resources could be steered.When he appointed Bill Baroni, a close ally, as deputy executive director, the governor noted that the
agency offered “significant opportunities for funding projects in the state of New Jersey.” Mr. Baroni
resigned in December as questions mounted about the lane closings.
Though the scandal has prompted calls for reform, attention has only begun to focus on the agency’s
financial model as a root problem.
“It’s like telling Dracula he’s got to leave the blood bank,” said Stephen Berger, who served as
executive director at the Port Authority from 1985 to 1990.
Asked about the New York University analysis, a spokesman for the Port Authority said the agency
would not comment until it could review the full report.
The agency has made a handful of changes in recent months, including the adoption of more
transparent rules to announce votes and recusals, but progress has come in fits and starts.
 

From the 1930s through the 1950s, the Port Authority built or developed some of the region’s most significant infrastructure, including the Lincoln Tunnel. CreditMichael Kirby Smith for The New York Times
 
Other proposals have ranged from the modest — the most recent meeting of a newly formed
oversight committee devolved into quarrels about whom to invite for a panel on nonbinding
recommendations — to Mr. Christie’s suggestion that dismantling the Port Authority was worth
considering.
Mr. Cuomo has signaled a willingness to assume more state responsibility for the agency, at least in
some cases, announcing in January that the state would take over the management of major
construction projects at Kennedy and La Guardia airports.
Yet the agency is too important, and its operations too entrenched across both states, to consider
tearing it down completely, experts say. Among many complications would be determining who retains
control of bistate facilities like the George Washington Bridge. According to data compiled by the
report’s authors, the bridge and its accompanying bus station earned more than $350 million in 2012.
Speaking to reporters on Tuesday morning after a speech in Midtown, Patrick J. Foye, the PortAuthority’s executive director, said that dividing the agency “would be an extraordinarily challenging
and difficult endeavor.” But he added that “lots of challenging and difficult things have been undertaken
to great advantage, or sometimes to not great advantage.”
In fact, the agency’s operating model has thrived in the past. From the 1930s through the 1950s, the
agency built or developed some of the region’s most significant infrastructure, including the Lincoln
Tunnel and the airport that would become Kennedy International.
In the 1960s, though, the modern blueprint for bistate interactions was formed. The Port Authority
developed the World Trade Center and, to secure the approval of Gov. Richard J. Hughes of New Jersey,
agreed to rehabilitate and operate the privately owned Hudson and Manhattan Railroad, which would
become the PATH.
The move “represented a significant departure from past practice,” the authors wrote. “The Port
Authority was not merely getting into another line of business — it was taking on an ailing rail transit
network that (as all parties acknowledged upfront) would never cover its operating costs, let alone
provide any return on the authority’s investment.”
As late as the 1990s, the agency’s business model still appeared to be working, with the burdens of
state projects often offset by profits from rapid increases in both air passenger traffic and the volume of
container cargo at agency ports.
But the PATH’s ballooning cost and an increased devotion to state projects chosen by the governors
have combined with other growing burdens to imperil the agency.
The Port Authority Bus Terminal, the busiest bus station in the world, has proved a significant
drain, with a net loss of more than $105 million in 2012, according to the authors.
And the Sept. 11 attacks had a significant effect on the Port Authority’s bottom line. In 2000, the
World Trade Center accounted for more than $33 million in net revenues; in 2012, it produced a netoperating loss of more than $46 million. (The authors’ figures were compiled using a combination of the
Port Authority’s annual reports, its recent 10-year, $27.6 billion capital plan and an outside audit from a
consulting firm in 2012, among other sources.)
In addition to abandoning nonessential state projects, Mr. Moss and Mr. O’Neill said, one potential
remedy would be placing the executive director in charge of all high-level appointments, and making
clear that the deputy executive director reports only to the executive director, not to a governor.
It was the current executive director, Mr. Foye, who reopened the lanes last September in Fort Lee.

[traingoat]

This is a problem wherever money is involved as pet projects get tossed in.  The Port Authority job is to build commerce not build parks  or the mirage of other madness.  PATH is the only thing while losing money gives a needed service to allow both States to make more money. I rode that PATH train from Newark to Downtown Manhattan  about 50 years ago  and the old PRR cars were the most modern in the fleet and they ran to Newark and they were old still with PRR emblems on them not PATH Now to build parks by the Skyway is insane as the land is all industrial  with trucking terminals and chemical tank farms etc.  So you are taking land from the taxbase to make it pretty. Give me a break.