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A sinking feeling at the Port Authority

While the New York-New Jersey agency pushed through the largest allocation in its history for major projects last month, the occasion also served as an example of how the public sector should not procure public infrastructure.

“What you witnessed today is one of the most important board meetings in Port Authority history.” That statement was made last month by Pat Foye, executive director of the Port Authority of New York and New Jersey, a public agency that builds and operates some of the most important transportation assets in both states.

The assertion came after board commissioners greenlighted projects such as the redevelopment of LaGuardia Airport, the replacement of Terminal A at Newark Liberty International Airport and the Port Authority Bus Terminal during a meeting we attended. The funding allocation for these three projects alone, Foye underlined, now amounts to at least $16 billion.

Arriving at that outcome was neither easy nor pretty, however. As chairman John Degnan put it, transparency and democracy can be “messy”. “Don’t complain about what you’ve asked for,” he said, referring to the agency’s efforts to be more transparent in response to long-standing criticism.

Perhaps the bickering and sometimes entertaining exchanges that attendees witnessed that day were indeed the inevitable result of an open process. But in our opinion they conveyed something else: the political bias inherent to the Authority’s internal debates.

Take LaGuardia Airport for example. The agency began the procurement process in 2011. Five years later and after a preferred bidder was selected last year, Foye and Degnan – appointees of New York and New Jersey, respectively – could not agree on the project’s cost. Foye was quoting the original $4 billion figure, while Degnan was claiming that $5.3 billion was more accurate, although it included a $600 million investment dating back to 2004. The $2.3 billion price tag for Newark Liberty’s Terminal A, however, did not include the $1 billion that’s already been funneled into that asset.

Accounting methods aside, the fact is that the agency has secured a fixed-price, guaranteed construction agreement of $4 billion for LaGuardia’s new Terminal B, with the private consortium, LaGuardia Gateway Partners, funding two-thirds of the cost. In our opinion, that doesn’t leave much room for debate.

Yet LaGuardia proved to be the most contentious project, with one commissioner threatening to vote against it. In the end, it was approved. But there were strings attached. A new Port Authority Bus Terminal – initially absent from the agenda – was squeezed in at the last minute and included in the capital plan.

According to vice chairman Scott Rechler, a New York appointee, deciding to do so – with the provision that the terminal will crowd out any other project if necessary – was a horse trade: New York got LaGuardia, New Jersey got the bus terminal.

But in our view that doesn’t look like a fair trade. The details for the bus terminal are so sketchy that cost estimates range from $10 billion to $15 billion.

“As I look at these projects, one thing that I’m just a little concerned about is on the bus terminal side of things,” Rechler said. The Port Authority vice chairman has been criticised for not readily agreeing to advance the project. But as he told reporters, he would have liked a decision to be made after careful consideration, taking into account that increasing bus terminal capacity will not be very beneficial if the buses that have to pass through the Lincoln Tunnel – which connects the two states – are stuck in traffic.

But even more importantly, why should there be a trade of any kind? Is a project necessary or not? Does an asset need to be repaired, upgraded or replaced? Does it ease congestion, contribute to a region’s economic health? Aren’t those the criteria that should ultimately be driving decisions as to which projects are a priority?

We learnt a lot from the meeting, and are grateful to have been there. But while the Port Authority’s leaders chose to focus on the billions of dollars’ worth of projects they advanced that day – tangible proof, they were at pain to underscore, of their excellent collaboration – we couldn’t help but feel dismayed that this is how the fate of the region’s transportation is decided.

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