Joe Lhota knew when he returned as Metropolitan Transportation Authority chairman that fixing the battered New York City subway system wouldn’t be as easy as ABC.

Especially with the A, B and C trains out of service.

Then-MTA Chairman and CEO Joseph J. Lhota in Grand Central Terminal on Fri., December 28, 2012
Joe Lhota brings the requisite tough skin to the MTA, which he hopes to turn around. MTA New York City Transit/Marc Hermann

Those three lettered lines and some others weren't running for parts of the past week after a derailment in Harlem on Tuesday injured 34 people, ratcheted up commuter agita and generated more white-hot glare on the transit agency.

"It's the perfect metaphor for the dysfunction of the entire system," said Gov. Andrew Cuomo two days later.

On Thursday, just as another Amtrak-related power failure zapped Long Island Rail Road commuters around Penn Station, Cuomo issued a declaration of emergency for the MTA and ordered Lhota to present him a reorganization plan within 30 days.

"Our challenges are extraordinary," said Lhota.

Cuomo, among other measures, allocated an additional $1 billion to the authority's five-year capital program, while also calling for a complete review of that program within 60 days. He also commissioned a study of Consolidated Edison's role in subway power failures.

Also on Thursday, the MTA postponed its $745 million sale of climate bond certified Series 2017B transportation revenue green bonds.

While Cuomo conveyed a sense of urgency, he faces a jaded public wary of top-to-bottom reviews, panels, "reinvention commissions" and the like. The MTA is beset with breakdowns, delays, archaic equipment and increasingly high debt, among other maladies. Human error caused the Harlem mishap, with MTA officials citing an improperly secured piece of replacement rail stored on the tracks.

"Transit experts will say that the system was actually much worse in the 1970s and 1980s," said Cuomo. "That's all true, but it's also true that the current state of decline is wholly unacceptable."

Around the corner will be the “summer of hell,” i.e., Amtrak’s planned track closures for emergency work around Penn Station. The work will affect Amtrak, LIRR and New Jersey Transit commuters.

LIRR is a unit of the MTA, one of the largest municipal issuers with its nearly $38 billion of debt bound to rise throughout the next five-year capital plan. Debt at the MTA has spiked roughly 80% since Cuomo took office in January 2011.

The MTA did have some positive news during the week: The South Ferry station on the No. 1 line reopened on the southern tip of Manhattan. Restoring the station – which sits below the water table – after Hurricane Sandy damaged it in 2012 cost about $360 million. The original redesign in 2009 cost $545 million.

Lhota brings the requisite tough skin and sharp elbows back to the job he vacated to run for New York mayor in 2013. While he's not one to ask for a show a hands, there's no shortage of advice surrounding him should he seek it.

Proposed remedies run the gamut. They include modernized signaling equipment, the gist of Thursday's Cuomo-inspired "genius challenge" event; a reliable funding source, which Cuomo said he would try to extract from state lawmakers; quicker procurement; and better projections of both megaproject costs and contractor choice.

"The MTA's new project capacity, quite frankly, is deplorable," said Cuomo, citing the five-year turnaround for subway cars and costs that exceed those in many newer cities, including some traditionally hostile to mass transit. "If the MTA's current vendors can't provide them within the timeframe we need, then the MTA should find new vendors. It's that simple."

Other goals include better communication among MTA subdivisions and with other regional transit agencies. For example, the East Side access project to funnel LIRR trains into Grand Central Terminal involves the costly routing of the trains under the existing tracks rather than beside them because of a longstanding feud between LIRR and Metro-North Railroad. The MTA oversees both.

Projected East Side access costs have spiked from $4.3 billion with completion in 2009 to $10 billion and completion no earlier than 2022.

According to infrastructure expert Nicole Gelinas, Lhota must push MTA management to devise an effective plan to update the subway system’s archaic signal-switching mechanism, which dates nearly 80 years -- even if it means shutting down entire groups of subway lines short term.

Despite cries for more funding, she said the MTA must better manage its operating and capital budgets.

“Even if you dropped an extra $2 billion on their heads, I don’t think they’d spend that money very wisely,” said Gelinas, a senior fellow at the Manhattan Institute for Policy Research.

As of March, said Jamison Dague of the watchdog Citizens Budget Commission, the 2015-2019 capital plan and its three predecessors have included more than $110 billion in approved capital investments. Of this amount, he said, $64 billion has been spent, $13 billion is committed but still unspent, and $33 billion has been authorized but remains uncommitted.

“This includes more than $17 billion in unspent funds from previous plans, or more than one-fifth of these previously approved investments," said Dague, the CBC's director of infrastructure studies.

“Even if the MTA secured additional funding to bring the system to a state of good repair, it is unclear if the agency could adequately manage the corresponding projects,” said Dague.

Board independence from an increasingly hands-on governor has also come up for debate.

“I think the best move he can make is to make the board more independent,” said Gelinas. “The board members have a legal duty to protect the riding public. They’re not standing up to Cuomo and not standing up to management.” Cuomo over the past two years has tightened his grip on the MTA. He pushed authority officials, for example, to open the Second Avenue subway line – 100 years in the making -- “on time” last Dec. 31.

Right before reappointing Lhota, Cuomo called on the state legislature to add two more gubernatorial appointees to the MTA board. The governor now appoints a plurality of the voting board seats, or six of 14.

State Sen. Michael Gianaris, D-Queens, favors establishing a three-year emergency manager and a graduated surcharge for that period on personal income taxes for people in the MTA region earning more than $1 million annually, and on New York City hotel and motel taxes.

Speaking two months ago at think tank Regional Plan Association’s annual summit, Lhota’s predecessor, Tom Prendergast, said crisis often spawns creative thinking.

“I can tell you two events in New York where it didn’t matter [about] governance because there was unanimity of purpose: 9/11 and [Hurricane] Sandy,” said Prendergast, now executive vice president and chief strategy officer at consulting firm STV. “If we can clearly state as government officials the enormity of the problem, the consequences that will occur if we don’t deal with it, you will get that unanimity of purpose.”

Lhota was deputy mayor for operations under Rudolph Giuliani during the Sept. 11, 2001, terrorist attacks and MTA chairman when Sandy struck on Oct. 29, 2012.

Some contingency measures the MTA crafted for Long Island to mitigate the Penn Station mess could stick long-term.

Ferry expansion and bus service – the latter a culture shock of sorts to many Long Islanders – are among the summer alternatives for island commuters.

“Some of our customers may for the first time end up on a bus, which is on Long Island a very unusual occurrence,” said Mitchell Pally, chairman of the MTA board’s LIRR committee.

According to the MTA's interim executive director Ronnie Hakim, the authority intends to monitor a pilot ferry program in Glen Cove, home to the bond-financed $1 billion, mixed-use Garvies Point development waterfront development on former industrial land. It will be one of several launching sites for the stop-gap ferries.

“Frankly, the ferry from Glen Cove is an example,” said Hakim. “[It] is being viewed by Glen Cove as a pilot of what they think will be something they’re going to implement, together with other work that is going on in that town.

“So, we’ll we. What we’ve said in terms of the Long Islanders and their ability to use alternate service, it’s about giving them choices, and we’ll see what actually works.”

MTA officials acknowledge it's a work in progress. For example, said Hakim, Long Island might not need the full fleet of 200 buses.

The LIRR plan also called for discounts on overnight truck tolls – a form of congestion pricing that piqued Cuomo's curiosity and prompted calls by transit advocates for more serious discussion of the “MoveNY” plan championed by former city transportation commissioner “Gridlock Sam” Schwartz.

The plan would impose tolls on now-free East River bridges and traffic moving south across 60th Street in Manhattan, just north of the Ed Koch Queensboro Bridge, the northernmost of the now-free bridges that would be tolled.

MTA board members Scott Rechler and Polly Trottenberg suggested a stick, not a carrot, on bridge tolls.

“Did we consider actually instead of an overnight discount, perhaps congestion pricing, i.e., charging more during the peak?” said Trottenberg, New York City’s transportation commissioner.

“We’re probably going to have to eat some of the costs of this entire [Penn Station] situation. Now we’re turning this into a potentially $10 million money loser. Did we consider turning it into a money winner? Perhaps financial incentives in the other direction could potentially do more.”

Gelinas said congestion pricing, a political hot potato when de Blasio predecessor Michael Bloomberg called for it, is gaining momentum.

“I don’t see where else you can get a whole lot of money in a pinch.”

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Paul Burton

Paul Burton

Paul Burton is the Northeast Regional Editor for The Bond Buyer and the author of the book "Tales from the Newsrooms." He is a sought-after public speaker and has appeared on radio and TV shows, including former CBS News White House correspondent Sharyl Attkisson’s public-affairs program, “Full Measure.”