Joseph Lhota will resign as chairman of New York's Metropolitan Transportation Authority on Dec. 31 to consider running for New York City mayor, he said Wednesday.
"This is a life-defining decision and one that I will be seriously considering in the upcoming weeks," he told reporters after the board's monthly meeting in midtown Manhattan. He submitted his resignation letter to Gov. Andrew Cuomo later in the day.
Lhota, chairman since late last year of the agency that oversees the country's biggest transit system and a former deputy mayor under Rudolph Giuliani, said he would decide in January whether to run.
Next year's mayoral election will be open-seat, with term limits constraining incumbent Michael Bloomberg. Lhota is a registered Republican and his wife, Tamra, is a GOP fundraiser.
Lhota, whose favorability factor rose considerably after overseeing the system's quick rebound from the devastation of Hurricane Sandy, will leave behind an agency still gauging the short- and long-term costs of the storm, with unfinished labor negotiations and with heavy debt — $32 billion and rising.
His departure will also leave the agency without a top spokesman for increased state and federal aid. Lhota two weeks ago pitched the agency's Sandy-related needs to U.S. senators in Washington.
Former Bronx borough president and two-time mayoral candidate Fernando Ferrer, a board member since June 2011 and promoted to board vice chairman at Wednesday's meeting, will become acting chairman after Lhota leaves. New York City Transit president Thomas Prendergast will be interim executive director.
Ferrer said emphatically that he did not want the permanent position.
"No. What can't you accept about a simple, one-syllable answer?" Ferrer asked amid a post-meeting media crush resembling that of a Yankees playoff game. Lhota's announcement even prompted one reporter to jokingly ask him about his positions on gun control, gay marriage and marijuana legalization.
"This entire week has been an interesting turn of events," Ferrer said.
Andrew Saul had served as the agency's vice chairman until his term expired in June. Saul will continue as finance committee chairman.
Gene Russianoff, attorney and chief spokesman for the Straphangers Campaign rider advocacy group, said his organization "gives good marks to [Lhota] for the year he spent running the mega-agency," while opposing him on the fare hikes.
Earlier Wednesday, the board approved a series of Lhota-recommended increases in subway and commuter train fares and bridge tolls designed to raise $450 million annually.
In March, basic subway fares will rise to $2.50 from $2.25 per ride, while unlimited-ride passes will go to $112 from $104 for 30 days and $30 from $29 for seven days. The bonus for advanced purchases drops to 5% from 7%, but at Lhota's urging, the board lowered the minimum purchase threshold to $5 from $10.
Although the board approved the fare increases unanimously and bridge toll increases only with the dissent of Allen Cappelli - who lives on Staten Island, where the Verrazano-Narrows Bridge toll rose to $15 - many members raised questions about the MTA's rising debt, the shortage of city, state and federal funding and the need for even more far-reaching measures such as congestion pricing in Manhattan and tolls on the East River bridges.
"We are adding debt at an alarming pace, like an addiction - year after year, purpose after purpose, and it must stop, except for refundings," said board member Charles Moerdler. "We're doing bond after bond and we're putting a huge burden on our kids."
Lhota, however, defended the MTA's practices. "So long as the debt is needed to buy and repair capital projects and is not a part of the operational budget, I'm OK with it," he said. "We have a system that's 100 years old and trains that are up to 150 years old. They need to be made safe and secure and we need to do that with bonded money."
The storm will intensify the need for further MTA borrowing. Lhota and other top officials have pegged early estimates of Sandy-related losses at $5 billion. Even with insurance and Federal Emergency Management Agency reimbursements, the agency may have to borrow an additional $950 million externally. The board on Wednesday amended its four-year capital plan to include such borrowings.
The agency would structure interim borrowings as bond anticipation notes under the MTA's transportation revenue, dedicated tax fund or Triborough Bridge and Tunnel Authority (MTA Bridges and Tunnels) general revenue bond resolutions.
Any external borrowing, according to MTA officials, would increase debt service in 2013 and beyond. For example, should the MTA and its Bridges and Tunnels division issue Bans amounting to $2.9 billion in 2013 and a further $1.9 billion in 2014, they expect annualized debt service costs to rise by $29 million in 2013 and by a further $19 million in 2014 until the notes are repaid from insurance or federal reimbursements or bond proceeds.
State officials have told the MTA that they would waive fees for Sandy-related bond refinacing. The waiver for this year from a state law requiring the MTA to pay a fee of $8.40 for every $1,000 in bonds saved the agency $44 million in refinancing fees. State Rep. Nicole Malliotakis, R-Staten Island, told the board Wednesday she would propose a bill in the General Assembly to make the waiver permanent.