Tom Prendergast will depart as Metropolitan Transportation Authority chairman on a high note, with the long-awaited Second Avenue subway line open.
His successor will face numerous short- and long-term in charge of an agency that is one of the largest municipal issuers with roughly $37 billion in debt.
Prendergast, 64, announced his resignation on Monday, to take effect sometime this winter. Gov. Andrew Cuomo, who appoints the chairman subject to state Senate approval, expects a permanent successor within "several weeks."
Over the holiday weekend, officials were still binging on self-congratulations after trains rolled along a line 100 years in the making on New Year's weekend. Facades imprinted with "excelsior" and "e pluribus unum" adorned shiny stations. Congresswoman Carolyn Maloney likened their architecture to the Egyptian pyramids, "only the pyramids don't have this beautiful artwork." Cuomo, who leaned on the transit agency to open the line by Jan. 1, said Prendergast would "go down in history."
Now it's January and for the MTA, the party's over.
Challenges for the agency, beyond working in the shadow of the micromanaging Cuomo, include a contract with Transport Workers Union Local 100 to replace the one that expires Jan. 15. Other tasks include the dispersal of fare hikes – the board expects to approve them in late January – and working within a $27.7 billion capital plan that many transit advocates consider miniscule given the authority's vast needs.
Additionally, uncertainty hovers in Washington with a new government set to take over Jan. 20.
"Basic operations, the labor contract, fare increases and where to put them … those are the big issues for the MTA," said Howard Cure, director of municipal bond research for Evercore Wealth Management.
Prendergast's retirement marks the latest chief-executive departure at the MTA, noted for turnover at that position in recent years.
Predecessor Joseph Lhota was in charge for just a year before quitting at the end of 2012 to run for New York mayor. Lhota, a Republican, lost the general election to Democrat Bill de Blasio. Jay Walder ended his two-year run in October 2011 to direct Hong Kong transportation company MTR Corp. Walder is now the CEO of Motivate, which operates bicycle ride-share systems including Citi Bike in New York.
Prendergast was the MTA's 12th chairman. A Chicago native, he rose through the ranks of the MTA's New York City Transit unit, returning to head it after a stretch as CEO of the Vancouver, British Columbia system TransLink.
A career engineer, Prendergast had to balance the X's and O's of running a transit system with the political land mines that come with life at the MTA.
"Not a lot of engineers can make the transition of being able to get a handle on the political side. A lot of people on the operations side don't want to do the other," said Beverly Scott, a former general manager of the Massachusetts Bay Transportation Authority who worked with Prendergast at New York City Transit.
"If you had asked me 25 years ago if Tom really wanted to be chairman, I'd have said hmmm, maybe not," she said. "But he does know the business."
Contract talks are on the front burner for January.
About 250 transit workers attended the December MTA board meeting in lower Manhattan, at which TWU international president Harry Lombardo and Local 100 president John Samuelsen spoke.
The MTA has baked 2% raises into its operating budget and four-year financial plan. According to Samuelsen, it's not enough.
"We are not accepting 2% raises," said Samuelsen, who is also an MTA nonvoting board member. "We are not doing it."
Six transit employees spoke emotionally before the board about the travails of transit work, notably safety concerns.
"We move 8 million a day through this chaotic system," said Samuelsen. "We get assaulted, we get spat upon, we even get murdered in the line of duty."
In Philadelphia, a 5,000-worker Southeastern Pennsylvania Transportation Authority union struck six days in November before agreeing to a five-year deal. Employees will receive pay and pension increases, but must contribute more to health care.
Spiraling health-care and other post-employment benefit, or OPEB costs, pose a bigger threat to the MTA's finances, said infrastructure financing expert Nicole Gelinas.
"Those costs are still growing out of control," said Gelinas, a senior fellow at the Manhattan Institute for Policy Research.
According to Gelinas, too generous a contract could trip up the MTA's efforts to reduce its outyear deficits. Chief financial officer Robert Foran told board members in December that the authority is on track to reduce its 2020 deficit from $371 million to $319 million.
"That's assuming 2%," said Gelinas.
TWU Local 100 struck for three days right before Christmas in 2005. Three years ago, Cuomo brokered a six-and-a-half-year agreement with Long Island Rail Road workers three days before 5,400 workers at the nation's busiest commuter railroad were to walk off.
Meanwhile, as the board prepares to enact its biennial fare increases, a faction is calling for a reduced fare for lower-income riders.
"One could make an argument as to whether or not we're getting two dichotomies in the population in terms of low income and higher income," Prendergast told reporters last month.
Capital funding, meanwhile, is an ongoing battle.
It took the authority 20 months to secure $27 billion for its 2015-2019 capital program, which a state review board held in limbo until Cuomo, New York Mayor Bill de Blasio and MTA officials agreed to a complex package that represents the largest investment ever in New York transit infrastructure.
Sources include nearly $6 billion in MTA bonds; $3 billion from pay-as-you-go, or Paygo; and asset sales, leases and other MTA sources. Federal funds total nearly $7 billion. The state and city have committed roughly $8 billion and $2.5 billion, respectively.
The Straphangers Campaign ridership lobbying group worries that dedicated state funds have yet to exist in Cuomo's executive budget. Straphangers has called it "Cuomo's IOU."
Also on the MTA's plate are replacing the fare-payment MetroCard, and contingencies for the closing of the L subway line's Canarsie Tunnel between Brooklyn and Manhattan to fix damage from Hurricane Sandy.
