With the appointments two weeks ago of Joseph Lhota and Patrick Foye as heads of the Metropolitan Transportation Authority and the Port Authority of New York and New Jersey, respectively, New York Gov. Andrew Cuomo has his own people in charge of the two major agencies.

Lhota and Foye must usher in new eras at their agencies while coping with challenges such as piles of debt and aging infrastructure.

“Different times require different sets of skills, and Lhota and Foye are strong finance people for what New York needs today,” said Mitchell Moss, director of the Rudin Center for Transportation Policy and Management at New York University’s Wagner Graduate School of Public Service.

Moss served on a 12-member committee that Cuomo selected to screen candidates for the MTA post. It included former lieutenant governor Richard Ravitch and MTA board member and former New York City mayoral candidate Fernando Ferrer.

Lhota is the executive vice president of Madison Square Garden, and former New York City deputy mayor for operations under Rudolph Giuliani. The nomination of Lhota, a former bond banker at First Boston and PaineWebber, needs state Senate confirmation before he can succeed Jay Walder in running the country’s largest mass-transit system. Lhota attended last week’s board meeting.

In the Giuliani administration, Lhota oversaw the office of management and budget and frequently ran the city when the mayor was out of town.

Moss saw Lhota as clearly the best candidate.

“He will do a fantastic job, just the way he did when Rudy was mayor,” said Moss. “He has tremendous experience dealing with finance and a labor guy, and the labor issue is on the front burner. He’s a seasoned professional and we’ll need him.”

Lhota’s juggling act will include a new labor contract, probing for new revenue sources, and selling real estate holdings in a soft market. While he does so, cold numbers on escalating debt will stare him in the face.

A report last month by state Comptroller Thomas DiNapoli said that if financing proposals are approved for the 2010-2014 program, the MTA’s annual debt service could reach $3.3 billion by 2018 — 64% more than in 2011.

“The new chairman has to deliver service hopefully at affordable levels during the middle of a financial crisis. The MTA under Jay Walder wanted to cut half a billion out of the budget annually. That’s easier said than done,” said Gene Russianoff, a New York lawyer and head of the Straphangers Campaign ridership lobbying group.

Russianoff and others have chided the authority at board meetings about rising debt, saying commuters are merely paying off debt with their fares.

“The capital plan relies heavily on bonding, backed by the operating budget with no new aid from Albany or City Hall,” he said at a recent meeting. “What does the borrowing mean for the long-term fiscal health, and how much will borrowing cost when you include large fees for financial advisors, bond counsel and insurers?”

Moody's Investors Service cited the MTA's rising debt in a report. "The MTA faces a challenging environment as it manages its operations and a substantial capital plan," the ratings agency wrote. Moody's said the assumption that labor settlements will include three years of net-zero wage growth carries significant risk. "Failure to achieve these savings would likely narrow the MTA's already tight operations, making it more difficult to absorb the increased leveraging at a time when the pace of economic recovery remains weak and revenue-raising options are slim beyond planned fare and toll increases," Moody's wrote.

The MTA has been selling some real estate and trying to pull more revenue from other holdings. In July it approved a 10-year lease with Apple Inc. for a store at Grand Central Terminal, and announced plans to sell or lease its dilapidated, vacant building at 370 Jay St. in downtown Brooklyn. New York University has expressed interest in constructing an applied science research center at the site.

But real estate cash is no cure-all, experts say.

“The problem is that you have an MTA that is dependent upon cyclical revenues. Its real estate transactions are not flourishing. The MTA does well when the real estate market is stronger,” Moss said.

Lhota, according to Moss, must recognize different sources of revenues and protect the regional payroll tax that serves as a major MTA revenue source.

“He also has to find a way to curb labor and pension costs,” Moss said.

In his outgoing press conference in September, Walder called the capital program “the front and center challenge” for the authority. Walder will become chief executive of Hong Kong-based MTR Corp., which runs train systems in Europe and Asia.

Foye, now Cuomo’s secretary of economic development, comes to the Port Authority also with a deep background in the inner, bread-and-butter workings of public finance and law. He also has a reputation as an innovator. While a partner at law firm Skadden Arps Slate Meagher & Flom LLP in the late 1990s, as the post-communist era began, he worked on privatization projects in Europe.

Foye, whose approval the Port Authority’s board rubber-stamped almost immediately, also served on the board of the Long Island Power Authority in the mid-1990s as one of five appointees by then-Gov. George Pataki during his fight to overhaul the Long Island Lighting Co.

He has also drawn praise for his businesslike running of the nonprofit United Way of Long Island, where he served as chief executive about seven years ago.

In his new position, Foye will have two governors tugging at him.

“You have a tension between what makes sound sense for the region as well as the bondholders, and the sometimes narrow views of the two governors, related to their short-term interests,” said Jameson Doig, author of “Empire on the Hudson,” a book that chronicled the agency’s history.

The Port Authority two months ago approved a multi-phased set of toll and fare increases, hikes that board members, Cuomo and New Jersey Gov. Chris Christie said were necessary to protect bond ratings. Moody’s assigned a negative outlook to the authority’s Aa2 rating in January.

The two governors — each appoints six to the 12-member board — have insisted on a stringent audit of the agency’s practices.

Right before the toll and fare hike, DiNapoli criticized the authority for excessive overtime costs. An audit by his office said the agency paid $85.7 million of overtime during 2010, and welched on a commitment to cut overtime costs by 20%.

The Port Authority’s vast holdings beyond its transportation core include the World Trade Center site. But while some critics say the authority should get out of the real estate business, that’s easier said than done.

“In its 80-year history, the Port Authority has not been inclined to dispose of real estate. Regarding the real estate and office space in the old World Trade Center, the transactions involved long-term leases and not asset sales,” said Maria Matesanz, a senior vice president for project finance at Moody’s.

The bond rating agencies are scrutinizing the Port Authority for any signs of financial strain from additional burdens — most notably the Moynihan Station project, which involves expanding Pennsylvania Station into the former James Farley Post Office building.

Earlier this month Cuomo announced that the train station project would be absorbed by the Port Authority, along with its previous overseer, the Moynihan Station Development Corp. and the Lower Manhattan Development Corp.

The Moynihan cost, for now, is a big X factor.

“We have not seen any specifics, but if additional debt is issued it could impact the authority’s cash flow if there are no new revenue sources,” Matesanz said.

Foye’s background begs the question of public-private partnerships. The Port Authority has already waded into the P3 waters with its project to replace the 80-year Goethals Bridge connecting Elizabeth, N.J., with New York City’s Staten Island.

Jonathan Peters, a finance professor at the College of Staten Island, thinks the U.S. Northeast is ripe for P3 development in general, particularly in toll roads. Rhode Island has petitioned the federal government to allow toll collections on Interstate 95, near Connecticut, even prompting some lawmakers in the adjacent state to suggest a border war.

Infrastructure projects have been popular investments with pension funds, in particular, since the leasing in 2005 of the eight-mile toll road that connects Chicago with the Indiana Tollway.

The Chicago Skyway transaction infused the city with $1.83 billion through a 99-year lease, and drew worldwide attention from the capital markets. To pension fund managers, the long life cycles of infrastructure projects offset long-dated liabilities.

“Northeast roads are interesting for P3,” Peters said. “They tend to have high levels of traffic in some of the major corridors and also they have a history of revenue based on existing tolling, both of which are very attractive to P3 operators. P3 does not self-fund well if you want to toll a low-volume road — no traffic, no revenue — so some roads are not real prime candidates.”

Doig, author of the book on the Port Authority, said the agency must be careful about protecting bondholders in any P3 venture.

“It seems to me that the private sector involvement works best when there is a silo around a project,” he said. “The Port Authority issues consolidated bonds for all the facilities. They include big losers such as PATH and the bus terminal. The losers are in there with the winners and you have to have a way to protect the investor if you get the private sector involved.”

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