Gridlock defines Port Authority's CEO search process

Two and a half years after the Port Authority of New York and New Jersey announced the creation of a chief executive officer position, it has yet to hire one.

A special panel commissioned by New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie recommended a restructuring in December 2014 that included replacing the executive director post with a CEO. The Port Authority then adopted the recommendation and executive director Pat Foye announced in November 2015 his intention to exit by the end of February 2016 to make way for the new CEO.

Foye remains in his executive director position today.

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John Degnan, chairman of the Port Authority of New York and New Jersey, speaks at the "Future of Transportation: Spotlight on New York" event in New York, U.S., on Tuesday, March 22, 2016. Degnan said the agency, which has spent more than $1 billion since 2001 on increasing security, is on the highest state of alert after the terrorist attacks in Belgium. Photographer: Chris Goodney/Bloomberg *** Local Caption *** John Degnan

Port Authority Chairman John Degnan told The Bond Buyer that the search hasn’t yielded a candidate acceptable to both governors. Degnan said that at the agency’s June 15 meeting he told the board of commissioners in executive session that he was suspending the CEO search indefinitely, but added he hopes the process can get resurrected soon.

“I’d like if we could reactivate it,” said Degnan, who was nominated by Gov. Christie for the chairman position in April 2014. “I would still like to find a CEO for the Port Authority that fits guidelines with the special panel’s recommendations.”

Foye declined to comment on the CEO search. Cuomo appointed the former Metropolitan Transportation Authority board member as Port Authority executive director in October 2011.

The Port Authority’s board of commissioners initially planned to have a CEO recommendation in late 2015 after appointing a search committee to work with executive search firm Spencer Stuart. It extended the process after the search committee urged a broadening of the CEO search to incorporate its new transportation initiatives.

A CEO model at the Port Authority was urged in the December 2014 report from the Special Panel on the Future of the Port Authority. The panel was formed in an effort to increase transparency at the agency following public scrutiny over the September 2013 traffic jam on the George Washington Bridge, engineered as retaliation against the mayor of Fort Lee, N.J. for not endorsing Christie. Two of Christie's aides received prison sentences for their role in the "Bridgegate" scandal.

The CEO position should not be a political appointment, the panel recommended, while the chairman role should rotate between New York and New Jersey.

The Port Authority’s CEO search spanned a busy period in which the agency tackled ambitious transportation projects that include a $4 billion overhaul of LaGuardia Airport, leading financing efforts for a new rail Gateway Tunnel linking Manhattan and New Jersey and planning for a new Port Authority Bus Terminal. The authority, which has around $20 billion in outstanding debt, is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.

Moody’s analyst Kathrin Heitmann noted in a June 30 report that the Port Authority’s “complex governance structure and risk of political interference” are factors in its Aa3 credit rating. The authority is planning to issue $827.5 million of consolidated bonds on July 10 to refinance debt and finance capital expenditures.

New York passed reform legislation to formally change the Port Authority’s governance setup, but New Jersey has not followed suit. New Jersey Senate Republican Leader Tom Kean, R-Westfield, blames the Port Authority overhaul inaction on a failure by leaders of the Democratic majorities to take action on a bill he sponsored that would pave way for a new CEO. Kean called for a vote on the measure at the Senate’s June 19 session, but the matter was tabled.

“We’ve been trying for years and New Jersey Senate Democrats have stood in the way of any realistic Port Authority reform that could make way for a quality CEO,” said Kean. “There is no CEO that is going into that place without legal structures securely in place.”

New Jersey Senate Legislative Oversight Committee Chairman Bob Gordon, D-Fair Lawn, said Democrats oppose advancing the reform bill this year since it would mean losing the leadership of Degnan, who has been an ally for Garden State interests such as building a new Port Authority Bus Terminal in Manhattan.

The proposed legislation would rotate the chairman position every two years with New York getting the first selection. Gordon expressed frustration that one CEO candidate had support from Christie, but was opposed by Cuomo, which he said is the main cause for the delay.

“The whole argument that not approving the legislation got in the way of the CEO search is bogus,” said Gordon. “It’s unfortunate that we haven’t been able to get a new CEO, but don’t blame us.”

When asked about the status of the CEO position and the qualities Cuomo is looking for in a candidate, Cuomo spokesman Jon Weinstein said, “We think the search should continue.”

Christie spokesman Brian Murray declined to comment.

Martin Robins, a former Port Authority planning director, said changing the governance structure is vital because the agency’s antiquated power-sharing system enabled the George Washington Bridge closure by Christie's Port Authority appointees.

The Port Authority’s executive director position has traditionally been appointed by New York’s governor while the New Jersey governor taps the agency’s board chairman. A deputy executive director position, which was eliminated as the special panel recommended, was selected by New Jersey governors starting in the mid-1990s.

“There are very significant projects that the Port Authority has undertaken and it’s very important that leadership be straightened out, but it seems we have missed out on accomplishing this in 2017 due to governmental structure,” said Robins, who founded the Alan M. Voorhees Transportation Center at Rutgers University. “We’ll just have to wait until 2018 when there is a new governor in New Jersey who can hopefully work with Governor Cuomo.”

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Infrastructure Transportation industry Port Authority of New York & New Jersey New York New Jersey
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