Port Authority stays course with long-range airport initiatives
A new budget plan for the Port Authority of New York and New Jersey highlights the bi-state transportation agency's airport redevelopment projects.
The Port Authority’s board of commissioners approved an $8.5 billion fiscal plan for 2019 Thursday that designates $3.7 billion for capital expenses, $3.3 billion for operations and $1.5 billion for debt service. The capital budget, which is a $300 million increase from 2018, is in line with the agency’s $32 billion 10-year capital plan adopted in early 2017 that includes large-scale projects at its three airports.
“The proposed 2019 budget was prepared in a disciplined manner to ensure our sources and uses are fiscally balanced and align with our mission in keeping the region moving,” said Port Authority Chief Financial Officer Elizabeth McCarthy during the Dec. 13 board meeting. “These expenses are being funded by $5.4 billion in projected operating revenues together with grants and passenger facility charges, financial income, current funds on hand the issuance of additional consolidated bonds.”
The capital budget earmarks $1.5 billion for the continued redevelopment at LaGuardia, Newark Liberty International and John F. Kennedy International airports. The LaGuardia overhaul commenced in 2016 as part of a public-private partnership with the first new gates of a rebuilt main terminal opened last month and a planned new AirTrain in the design stages. A new terminal replacement AirTrain is also slated for Newark Liberty while $12 billion of a $13 billion modernization of Kennedy is slated to be covered by the private sector.
Howard Cure, director of municipal bond credit research at Evercore Wealth Management, said the Port Authority’s ability to fund airport projects with a P3 approach provides increased financial flexibility when planning budgets. The Port Authority budgeted just $1 billion in its 10-year capital plan for the JFK project with the expectation that the private sector would spearhead most of the development.
“The Port Authority lends itself to P3 financing since a lot of the components can be self-supporting,” said Cure. “They are not taking the construction risk which for a project as complex as LaGuardia is a huge deal.”
The Port Authority is one of the nation’s largest municipal bond issuers with roughly $21 billion of outstanding bonded debt projected at the end of the year, according to the agency’s budget document. Port Authority bonds are rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.