Port Authority approves capital spending hike as costs soar

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Higher user fees will pay for a nearly $5 billion increase in the Port Authority of New York and New Jersey’s long-range capital spending plans.

The authority approved the increase to its capital plan to $37 billion from $32 billion last week, largely to keep pace with rising construction costs for projects at its LaGuardia, Kennedy and Newark Liberty airports.


Costs will be borne by airport users through an array of higher fees, including higher terminal rents, airline cost recoveries, ride-hailing fees and fare hikes for the Newark and JFK AirTrains.

"We are spending billions and billions and billions of dollars we have committed at LaGuardia at JFK at Newark to invest in those airports and move them to 21st-century global standards," said Port Authority executive director Rick Cotton during a press conference after Thursday's board meeting. "Infrastructure improvements require investment and for decades we have under-invested across the board in our facilities."

The higher capital plan includes additional $1.64 billion for a replacement of the AirTrain at Newark Liberty International Airport, a project now expected to cost a total of $2.05 billion. A planned AirTrain project at LaGuardia Airport that is key focal point of an $8 billion overhaul is receiving another $390 million with the entire project slated to cost $2.05 billion, a 36% initial $1.5 billion estimate.

The $13 billion JFK Airport redevelopment project is set to get $1.9 billion of additional funding to be used largely for infrastructure enhancements around the facility. An extra $350 million will also be funneled toward a $2.7 billion Newark Liberty Terminal One redevelopment.

Large-scale investments in the Port Authority airports are occurring amid record passenger volume at LaGuardia, Kennedy and Newark. The agency announced Monday that through August the three airports handled a record 94.5 million passengers, a 1.9% increase above last year's previous eight-month period high.

Port Authority officials said that the 94%, or $4.5 billion, of the capital plan increase will be funded through incremental project-related revenues largely centered on increased user fees. The board voted last week to implement toll and fare hikes for the Port Authority’s trains and crossings in a move the agency said was needed to keep pace with inflation. About one-third of Port Authority's revenues are from tolls and fares with most of the rest coming from business partners, according to Cotton.

"We go to every extreme to avoid both fare and toll increases, but we must on the other hand support investment in our aging legacy facilities," Cotton said during the press conference. "If we're going to get to 21st century infrastructure facilities there must be funding."

The approved user fee changes includes a new “ground transportation access fee” at the LaGuardia, Newark and Kennedy airports that was scaled back from an original proposal which would have involved a $4 charge for ride-hail vehicle pickups and drop-offs along with a $4 per-taxi pickup fee. The revised plan charges $2.50 toward for-hire drop-offs and pick-ups, $1.25 for pooled for-hire drop-offs and pickups. An initial taxi fee of $1.25 per pick-up will also take effect with the new policy once it takes effect in January.

AirTrain fares at JFK and Newark will increase to $7.75 from $5 on Nov. 1. At JFK, the 55% fare increase for the driverless trains comes despite long-term service reductions.

Cash tolls on Port Authority bridges and tunnels will rise to $16 from $15 as of Jan. 5, 2020. The Port Authority is also increasing fares on its PATH service for multi-trip purchases for the first time since 2014.

The Port Authority is one of the nation’s largest municipal bond issuers with $22.1 billion of outstanding bonded debt at the end of 2018, according to its year-end financial statement. The transportation agency is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.

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