Review of NY & NJ Port Authority Finances Finds Agency ‘Challenged and Dysfunctional’

By Tom Hester, Sr. for

Cost of World Trade Center renewal jumps $3.8 billion to $14.8 billion in 3 years.

The initial phase of a consultant’s review of the financial operations of the Port Authority of New York and New Jersey describes an agency that is “challenged and dysfunctional,” and where poor management has “obscured full awareness of billions of dollars in exposure” to the bi-state agency.

The audit has also found that the World Trade Center renewal project costs, last publicly reforecast at $11 billion in 2008, has since grown $3.8 billion to $14.8 billion at a minimum.

The review also found Port Authority capital planning is plagued by management deficiencies that have resulted in a doubling of debt in 10 years as the agency drifted moved away its core responsibility as a transportation infrastructure organization. Coupled with the consultant’s assessment of the impact of ‘add-on’ compensation for agency personnel – an institutionalized practice that has contributed to a 19 percent increase in gross compensation in just five years.

The audit, entitled the Phase I Interim Report on the Port Authority, makes clear that wide-ranging reform is long overdue.

Gov. Chris Christie and New York Gov. Andrew Cuomo issued a joint statement about the review.

“This record of historic failure must be reversed,” they stated. “Steps have already been taken in the last two years, but much more must be done to restore the Port Authority to a responsible, highly transparent, well-managed organization focused on its core mission of maintaining and expanding our states’ shared transportation infrastructure for the health and growth of our overlapping economies. We will demand nothing short of the agency’s implementation of comprehensive recommendations and reform to achieve this critical mission.

“The interim report released today on operations of the Port Authority of New York and New Jersey describes an agency which failed to exercise proper oversight, control costs and budget transparently,” the governors added. “The report’s executive summary (states there is ) ‘Cause for further concern is the report’s conclusion that the WTC gross project costs, last publicly reforecast at $11 billion in 2008, have since grown a staggering $3.8 billion to $14.8 billion, at a minimum.’”

Port Authority Chairman David Samson also issued a statement.

“The Port Authority Board of Commissioners is committed to a top-to-bottom review of the agency,” Samson stated. “The first phase of our independent review provides an objective analysis of what hasn’t worked, particularly with respect to management controls of World Trade Center redevelopment costs, and the findings of the report provide a strong foundation for current executive leadership to get things moving in the right direction. It is the Special Committee’s intent to present a thorough assessment to the Board for consideration and appropriate action consistent with its commitment of improving efficiencies, cutting costs and pursuing a rational and creative long-term capital planning process. Our goal is to accomplish these objectives with full transparency to enable the public to measure our progress. We remain the world’s leading planning and engineering authority, but we must recognize professionalism and transparency are not mutually exclusive.”

Port Authority Deputy Executive Director Bill Baroni, who was appointed by Christie, said, “The Port Authority of New York and New Jersey oversees billions of dollars of vital infrastructure and transportation operations as well significant real estate holdings. Establishing new financial and management controls at the World Trade Center, leveraging private sector expertise, bringing employee compensation and benefits in line with appropriate public employee benchmarks, and aligning the capital planning process with the agency’s overall priorities will be among the actions we will be reviewing.”

Assemblywoman Valerie Vainieri Huttle (D-Bergen) said of the report, “This audit confirms what we have been saying all along. It’s time to change the way the Port Authority does business. The Assembly took the first steps last week, approving the ‘Port Authority of New York and New Jersey Transparency and Accountability Act’ in committee.

“Now more than ever, it’s important that we get this legislation to the governor’s desk as soon as possible,” Vainieri Huttle said. “Commuters shouldn’t have to pay the price for the Port Authority’s dysfunction. It’s time to institute accountability once and for all.”

Vainieri Huttle is the main sponsor of the legislation (A-1011) and has worked on the issue since last summer when she joined forces with New York state Senator Andrew Lanza, who is sponsoring the measure in the New York legislature. Any legislation governing the bi-state agency must be approved by the legislatures in both New Jersey and New York.