The Port Authority of New York and New Jersey's proposed 10-year $27.6 billion capital plan returns the authority's emphasis to transportation projects.
The plan calls for the authority to spend 82% of its capital budget on transportation-related projects. Just 18% would be spent on the World Trade Center.
The authority said the plan "provides a roadmap to focus the agency on its core mission of maintaining and building transportation infrastructure and provides for projects that will have meaningful benefits to the millions of travelers who use its airports, tunnels, bridges, ports and rail system."
The authority's staff presented the plan to its Capital Planning, Execution and Asset Management Committee on Tuesday. The public is asked to deliver comments on it by Feb. 14 but the authority will review submissions made through Feb. 18. The authority's board will vote on the plan Feb. 19.
The port authority is rated Aa3 by Moody's Investors Service, AA-minus by Standard & Poor's, and AA-minus by Fitch Ratings. It has $19 billion in outstanding bonds, according to Standard & Poor's. The total does not include $1.2 billion in Liberty revenue bonds for 4 World Trade Center.
"The authority's very large, complex, and growing future capital needs, including major growing commitments to maintain revenue producing assets in a state of good repair; the completion and operation of World Trade Center projects and on-going contributions to subsidize transit operations and non-revenue producing regional economic development projects, will continue to exert credit pressures," said Miller Tabak Asset Management chief executive officer Michael Pietronico. "An increasingly back-loaded debt amortization structure also could exert downward rating pressure as debt escalation would require higher rates of revenue growth in the future."
On Jan. 21 Standard & Poor's analyst Joseph Pezzimenti said that the authority's financial forecast for 2013 to 2018 assumed $18.7 billion in capital spending.
Authority managers expected to fund this approximately 35% from consolidated bonds to be sold from 2014 to 2018. When previously issued bonds are included, total bond funding is expected to cover 45% of capital spending, Pezzimenti wrote.
The authority did not respond to inquiries about the plan's bonding assumptions.
Despite the $27.6 billion size of the proposed plan, Fitch senior director Saavan Gatfield said this might not be enough.
"Recent completed audit reports indicate capital needs may be significantly greater than presently expected over the next 10 to 15 years," he wrote in January.
In creating the plan the authority wanted to improve project selection, authority Chief Financial Officer Elizabeth McCarthy said. The authority rated projects in various categories to determine which to include in the plan.
For existing infrastructure that might need repair or upgrading, the authority said it looked at physical condition and operational impact criterion. Under physical condition, the authority looked at whether the failure of the asset would be a threat to safety, the useful life of the asset, the reliability of the asset, whether the asset require immediate repairs, and the extent to which the asset may become obsolete. Under operational impact, the authority looked at how critical the asset was to the facility where it was located, the potential revenue impact of asset failure, and the asset's impact on customer service.
Authority vice chairman Scott Rechler said the plan heavily emphasizes the state of good repair of existing assets. The authority wants to make sure things are safe, he said. Authority Executive Director Patrick Foye said that 46% of the plan's spending is targeted at state of good repair projects.
The plan breaks down capital projects into aviation; tunnels, bridges and terminals; the Port Authority Trans-Hudson PATH rail transit line; port commerce; and World Trade Center redevelopment categories.
With $8 billion to be invested in the authority's airports, aviation is the biggest category. Within it, the most expensive project (and the most expensive capital project overall for the authority) is a $3.6 billion plan to build a new central terminal at LaGuardia Airport in Queens.
New York state has taken over the management of the project and expects to pick a private sector partner for a public-private partnership in the next five months.
An official under New York Gov. Andrew Cuomo has told The Bond Buyer said the Port Authority is too bureaucratic and slow-moving in its development of capital projects, and setting up a state committee to oversee the LaGuardia project will make the approval process go much quicker, he said.
The port authority plan also calls for a new $2 billion, 33-gate terminal at Newark Liberty Airport.
The plan would include $7.9 billion in capital spending on tunnels, bridges and terminals. Two of the three biggest projects are for New Jersey access to the Lincoln Tunnel to Manhattan, including a $1.8 billion Lincoln Tunnel Access program and a $1.4 billion Lincoln Tunnel Helix Replacement program to replace the Route 495 roadway approach.
Finally, there is a public-private partnership that is already working to replace the Goethals Bridge connecting Elizabeth, New Jersey and Staten Island, N.Y., at a cost in the next 10 years of $1.5 billion.
The plan would authorize $3.3 billion in capital spending for the PATH rail transit system between New Jersey and New York City. The biggest project would spend $1.5 billion to extend the system two miles from the current terminus at Newark Penn Station along the existing Amtrak corridor to the AirTrain station at Newark Airport.
The authority would also spend $1.5 billion on improvements to port commerce facilities. The biggest project would involve changes to Greenville Yards to serve the Global Container Terminal in Jersey City, N.J.
Finally, the plan would authorize $4.9 billion in spending on the redevelopment of the World Trade Center site. Of this total, 62% would be devoted to retail development and the site's common infrastructure.
Airline fees would cover the costs of the airport projects.
However, the PATH transit system requires subsidies that are covered by surpluses from bridge and tunnel operations, Manhattan Institute Searle Freedom Trust Fellow Nicole Gelinas said.
Total vehicular traffic at the bridges and tunnels has declined from 124 million in 2003 to 116 million in 2012. This was partly because there has been less driving in general in the region and partly because of increasing authority tolls, Gelinas said. Yet the authority already has toll hikes scheduled.
The authority's bridge and tunnel crossings collect tolls eastbound only, charging car drivers as much as $13 for cash tolls with discounts for E-Z Pass electronic debit device users. The declining traffic through its facilities raises questions about the authority's ability to cover capital improvements at PATH, Gelinas said.
If the authority adopts the plan it would not be committed to follow it. The authority would approve each capital project as it came up. The authority would monitor the progress of projects on a quarterly basis and make adjustments, it they made sense, authority staff said.
