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Port Authority of New York and Jersey Seeks $3 Billion Federal Bailout

Lincoln Tunnel

the staff of the Ridgewood blog

 

Fort Lee NJ, Port Authority of New York and Jersey Chairman Kevin O’Toole and Executive Director Rick Cotton called on the federal government to provide the Port Authority with $3 billion in direct financial assistance to avoid the devastating impact of sharp revenue losses to the agency’s critically important capital construction projects. The agency has projected revenue losses of $3 billion over 24 months as a result of the COVID-19 pandemic. The federal aid will protect the agency’s capital plan – and by doing so, to help drive the region’s and the nation’s economic recovery.

Without direct federal financial assistance, the Port Authority will be forced to urgently reconsider its 10-year capital plan. This would involve crippling the projects and undermining the creation of 100,000 good-paying jobs in a region that represents nearly 15 percent of national GDP. The projects at risk include the redevelopment of JFK Airport, new AirTrain systems for both LaGuardia and Newark Airports, replacement of the aging midtown Bus Terminal, the PATH extension to Newark Airport, and multiple important state-of-good-repair projects.

The PA’s projects would leverage more than $10 billion in private investment on top of the Agency’s spending – private investment that could easily be lost if these projects were compromised. Combining public and private investment, the Port Authority capital plan would drive $20 billion of capital spending in the next five years, beginning this summer. This construction spending could drive the desperately needed regional jobs recovery. Federal dollars would be leveraged five or ten to one through private investment. Good public policy should support the Port Authority moving forward with its capital projects – and preserving the associated private capital – not slashing them. Strong federal aid will allow the agency to do so.

The economic impact of the capital plan is felt strongly both within the region and nationally. The projects drive hundreds of millions of dollars in contracts to local, minority and women-owned businesses, and overall the agency would expect to source nearly $17 billion worth of materials – steel, concrete, glass, mechanical and electrical equipment, and more – materials that are manufactured all over the country.

“The Port Authority is directly responsible for moving people and goods across the region and country every single day,” said Kevin O’Toole, Port Authority Chairman. “It is not only a bi-state agency but also a bipartisan one, having always been supported by leaders across the spectrum, who know that strong infrastructure ensures economic competitiveness and creates great jobs, and is provided by the Port Authority without relying on any tax dollars. We thank the New York and New Jersey Congressional delegations for their strong support and ask the leadership in the House and Senate to support job creation and fuel economic activity by including the Port Authority in the next aid package.”

“There’s a reason that the Port Authority has long received strong support from both sides of the aisle – the agency has always driven job creation and is poised to play a supportive role in the region’s and the nation’s economic recovery. Our capital plan creates 100,000 good local jobs and leverages more than $10 billion in private money,” said Rick Cotton, Port Authority Executive Director. “We are asking Congress to provide the Port Authority with direct financial assistance to offset its massive revenue losses so we can ensure critically important capital construction projects can move forward.”

The Port Authority is undertaking a series of critical, long-overdue infrastructure projects, some of which are deep into heavy construction. These projects employ, and will employ, tens of thousands of construction workers. And the timely commencement and completion of these projects – assuming that doing so is possible given the financial impact on the Port Authority associated with the coronavirus – will reshape the New York and New Jersey region for a generation to come, drawing on labor and supplies from across the region and beyond.

Without federal assistance, the Port Authority will be forced to reconsider its 10-year capital plan which includes the following critical projects:

LaGuardia Airport Redevelopment
Newark Airport Terminal One Replacement
John F. Kennedy Airport Redevelopment
AirTrain LaGuardia
AirTrain Newark
Replacement of the Port Authority Bus Terminal
Complete rehabilitation of the George Washington Bridge
PATH Extension to Newark Airport
PATH Capacity Expansion with New, Longer Trains
Cashless Tolling at Hudson River Crossings

Throughout the coronavirus crisis, the Port Authority has kept all of its facilities open and operating to get necessary food, fuel, and medical supplies into the region and to get essential workers safely to their jobs and back home. But the drop in activity at those facilities is staggering.

Over the course of the crisis, airport traffic has fallen over 90 percent; PATH commuter rail ridership has dropped over 90 percent; bridge and tunnel traffic has declined significantly. This collapse in traveler volume continues to produce enormous revenue declines for the agency, with current estimates showing the Port Authority will have a reduction in revenue of approximately $3 billion due to the coronavirus crisis. The outlook for the aviation sector has worsened in recent weeks given the explosion of cases across the country and the impact on air travel.

The Port Authority is financially self-supporting. It does not rely on state or local government funds. It has no power to tax. The Port Authority relies on revenue generated by businesses and customers who chose to use its facilities and rent paid by businesses that want to operate out of the agency’s airports or seaports or bus terminals.

The Port Authority does not generally seek federal assistance. The agency is a stranger to the annual federal appropriations process. It is financially independent and is built to stand on its own two feet. Throughout its recent history, the Port Authority has only sought emergency federal assistance twice – after the 9/11 terrorist attacks and after Superstorm Sandy.

3 thoughts on “Port Authority of New York and Jersey Seeks $3 Billion Federal Bailout

  1. A very tough situation indeed. Hopefully Feds will extend a loan.

  2. Theyve got nerve!

  3. Port Authority of New York & New Jersey Executive Director Rick Cotton was less than candid when he said that “The Port Authority has asked Congress for a $3 billion bailout to make up for revenue losses and to allow its ambitious capital construction plan to continue. If the funding isn’t approved, except for projects under construction, such as Terminal One at Newark and the building of new terminals at LaGuardia airports, the rest are on the chopping block,
    The historic $37 billion capital plan will be revised. We will revise the scope and schedule of every other major project. Projects to rebuild and expand the Port Authority Bus Terminal in mid-town Manhattan, extend the PATH line to Newark Airport, expand PATH stations to run longer trains and replace Newark airport’s aging monorail with a new AirTrain could be in jeopardy,”
    What he neglected to mention was that two of his projects already were in jeopardy long before COVID-19.
    In 2014, New York Governor Andrew Cuomo said the cost for the LaGuardia Air Train was $450 million with a completion date of 2019. The Port Authority has budgeted $2.05 billion of funding within the $37 billion 2017 – 2026 Ten Year Capital Plan for the LaGuardia Air Train. This doesn’t include several hundred million more which is necessary to relocate the NYC Transit Casey Stangel Bus Depot. There is no funding within the MTA $51 billion 2020 – 2024 to pay for this cost. The Federal Aviation Administration will not issue a environmental NEPA finding until 2021. Who can predict the final cost and completion date?
    There was always only $3.5 billion allocated toward the $10 billion new Port Authority midtown Manhattan Bus Terminal. This project has carried a $6.5 billion shortfall for years. Earlier this year, the Port Authority abandoned plans to build a new 42nd Street Bus Terminal using eminent domain to acquire adjacent property, but instead proposed building a new terminal 100% within the existing foot print. This still may never happen.
    The approved Port Authority 2017 – 2026 ten year $37 billion Capital Plan provided only $3.5 billion toward construction of the new $10 billion 42nd Street PA Bus Terminal. Initiation of another planning study for $70 million was just the first down payment. How many more years will it take to complete this study, environmental review process, preliminary along with final design and engineering?
    It is wishful thinking that the Port Authority can count on $6.5 billion in future federal funding to make up the difference. Don’t be surprised in waiting until the next Port Authority ten year 2027 – 2036 Capital Plan before a complete $10 billion or more funding package is in place. This is necessary to support awarding construction contracts. Remember that the project has never advanced beyond the environmental review process. There has never been a final determination to rebuild at the existing site or relocate to the Javits Convention Center. Nobody knows if the Port Authority has talked to the Federal Transit Administration about potential funding down the road. No one can predict the final cost and completion date.
    Last December, New York Governor Andrew Cuomo celebrated the $1.5 billion Javits Convention Center expansion being on the path to completion on time and within budget. .
    One of the two concepts proposed by the Port Authority is to build a new bus facility under the Javits Convention Center. This was previously proposed by the New York Regional Planning Association. It would replace the existing 42nd Street Bus Terminal. This would have an adverse impact on the ongoing $1.5 billion new improvements currently under way.
    Costs for construction modifications to lower levels of the existing Javits Convention Center and new ventilation system to accommodate NJ Transit and intercity buses could increase overall costs by a billion or more, above the current $10 billion. The subway connections at this location, which commuters count on, are not as plentiful as what is available at the present Port Authority Bus Terminal location. How much would it cost to extend the Lincoln Tunnel & modify the West Side Highway to build at this location? How could the Javits facility be modified to accommodate larger buses, space for riders to wait by departure gates and be in compliance with the Americans with Disabilities Act?
    Mr.Cotton reminds me of Chicken Little who said “the sky is falling.”
    (Larry Penner — transportation advocate, historian and writer who previously worked 31 years for the Federal Transit Administration Region 2 New York Office. This included the development, review, approval and oversight for billions in capital projects and programs for the MTA, NYC Transit bus and subway, Staten Island Rail Road, Long Island and Metro North Rail Roads, MTA Bus, New Jersey Transit along with 30 other transit agencies in NY & NJ).

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