Stung by a scathing auditor’s report that called the Port Authority of New York and New Jersey dysfunctional, its board of commissioners responded by saying it would not be business as usual at the bi-state agency.
“This report is not going on a shelf to gather dust,” chairman David Samson said at Thursday’s meeting in Manhattan. “It’s a starting point for action by the board.”
An interim report conducted by Navigant Consulting Inc. and Rothschild Inc., released Wednesday, called the Port Authority “a challenged and dysfunctional organization suffering from a lack of consistent leadership, a siloed underlying bureaucracy, poorly coordinated capital planning processes, insufficient cost controls, and a lack of transparent and effective oversight of the World Trade Center program that has obscured full awareness of billions of dollars in exposure.”
The report said costs for redeveloping the World Trade Center site soared from an estimated $11 billion in 2008 to about $14.8 billion today, with the estimated net costs after third-party reimbursements rising from $6 billion to $7.7 billion.
Governors Andrew Cuomo and Chris Christie of New York and New Jersey, respectively, insisted on a “stringent audit” last August when they approved a set of bridge toll and train-fare increases.
The report also said the authority underestimated about $1 billion of costs that private partners later identified. “There may have been an opportunity to mitigate some of these costs had they been identified earlier,” it said.
Vice chairman Scott Rechler said lack of continuity — seven executive directors in 10 years — has hurt the authority. The most recent chief, former New York City deputy mayor Patrick Foye, took over in October. “Now we have new leadership in town. New leadership with a new perspective, and two like-minded governors watching them,” Rechler said.
Moody’s Investors Service last year assigned a negative outlook to the authority’s Aa2 rating. Standard & Poor’s and Fitch Ratings each assign a AA minus with a stable outlook. Commissioners, when they approved the latest toll and fare increases, said the revenue was necessary for continued access to the capital markets.
A four-member special committee coordinated the review, led by Samson, Rechler and commissioners William Schuber and Jeffrey Lynford. The next phase of the committee’s work will review in further detail the hundreds of projects in the authority’s capital plan.
Also Thursday, the commissioners approved an agreement valued at $1.2 billion with Australian shopping center owner Westfield Group for a 50% stake in the World Trade Center’s retail space, which is expected to open in 2015 at the earliest.
The parties signed a letter of intent in 2008, with the Port Authority agreeing to provide about $825 million toward the project. Westfield will invest $613 million, the agency said Thursday.
