Report Urges Port Authority P3 Model

The Port of Authority of New York and New Jersey needs to reinvent itself with a model that utilizes long-term public-private partnerships to keep up with the challenges of maintaining its major transportation assets, according to a new report.

Robert Poole, director of transportation policy at the libertarian-oriented Reason Foundation, proposed in the report released Thursday by the Manhattan Institute that the Port Authority cease to own or operate transportation infrastructure, instead planning and regulating an array of concession companies who would be held accountable for operating transportation performance through bond covenants and long-term concession agreement terms.

Poole said the P3 model would produce major benefits for the Port Authority's transportation links, including added runway capacity at Kennedy and LaGuardia Airports along with reconstruction and expansion of aging bridges and tunnels. He said the approach would also create more-productive seaports, "a greatly reformed" Port Authority Trans-Hudson rapid-transit rail system and "a sensible replacement" for an aging Port Authority Bus Terminal.

"The Port Authority risks a political backlash if they don't rethink their approach," said Poole. "By treating airports, bridges, and tunnels as cash cows to subsidize its other lines of business, the Port Authority has ended up with mediocre airports, congested and inadequate bridges and tunnels, money-losing seaports, a pathetic bus terminal, and the worst heavy-rail transit system."

Poole noted that the Port Authority has been stressed in recent decades by politicization, money-losing facilities and declining financial viability. Poole said the new model would draw on global best practices of mobilizing large sums of new capital investment and long-term P3s with dedicated revenue streams. The plan would also recognize the importance of ongoing investment to add capacity as needed, renew and replace facilities and keep pace with the latest technological advances.

Poole's report was published as Port Authority commissioners are deciding whether to approve a $32 billion 10-year capital plan that many New Jersey lawmakers oppose because it only allocates $3.5 billion toward a new Manhattan bus terminal estimated to cost up to $10 billion. The agency has also been grappling with changing its focus following a 2014 panel convened by New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie that recommended it divest and monetize its commercial real estate holdings at the World Trade Center and return to its "core" transportation mission.

The Port Authority press office did not respond to a request for comment on the Manhattan Institute report.

The Port Authority is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings. The agency projected late last year it would have roughly $20.4 billion of consolidated bonds outstanding as of Dec. 31, 2016.