Osama bin Laden could have the last laugh thanks to New York politicians and PANYNJ
Major legacy of the Islamist downing of the World Trade Center towers September 11 2001 seems likely to be in severely stressing the finances of the PANYNJ and the economy of New York City. The passions to rebuild at the World Trade Center site regardless of financial viability have seen the bistate toll and airports conglomerate saddle itself with nearly an extra $8 billion in debt on iconic towers that will present a grand skyline view from Brooklyn or Jersey City but which make little economic sense as commercial real estate.
In fact lower Manhattan is going to be hit with millions of square feet of luxury taxpayer subsidized high-rise space - all this made possible by a bistate agency that was created in the first place solely to do NY-NJ transportation, but has long since been drawn into the morass of 'development' and 'revitalization.' And now its mission is showing Al Qaeda and the world that New York is "back" by sponsoring the Freedom Tower and other grand monumental buildings.
Nicole Gelinas has a review of the PANYNJ's sad history as a 'developer' in the Manhattan Institute's City Journal, current issue.
Some excerpts: "(The Port Authority's) share of the bill comes to $7.7 billion, which it has borrowed. And to repay that massive debt, the agency will have to divert toll revenue from bridges and tunnels and fee revenue from airports—money that won’t be available for the transportation projects that New York badly needs…"
"The fiscal toll of this arrangement is becoming clear. One World Trade Center’s price tag has ballooned to $3.9 billion and the PATH station’s to $3.7 billion. Even after insurance and other reimbursements, these costs, along with the cost of other projects at the site, mean that the Port Authority—which had no World Trade Center costs at all a decade ago—is now on the hook for a total of $7.7 billion. The agency has had no choice but to borrow. In 2002, it was $9.5 billion in debt; it now owes $19 billion. Debt has far outpaced revenue, which has risen only 41 percent over the same period, to $3.8 billion a year.
"It will face not only debt payments but colossal operating costs as well, including security costs. At the unfinished site, these expenditures totaled $106.3 million last year; in 2000, the last full year of the old complex’s operations, they were $203.9 million, or $272.8 million in today’s dollars. (They may be even higher at the new complex; after all, the Port Authority’s overall security bill has tripled in a decade, to nearly $500 million annually, as its public-safety headcount has risen nearly 15 percent.) If the Port Authority hadn’t deferred its principal payments on debt, it would have to spend roughly $500 million a year on debt and operating costs. And to cover those bills, the agency would have to lease all the available office space in the two towers now under construction at $80 per square foot or more. These days, prime office space downtown rents for $42.81 a square foot...
"Even under its current arrangements, the Port Authority has taken a risky step. By the middle of the next decade, to pay just its debt costs of $90.2 million annually, Four World Trade Center will have to lease its entire 1.8 million square feet of office space at more than $50 a square foot. Bondholders wouldn’t have taken on this risk normally…
"The question is not whether the Port Authority can attract tenants—any landlord can, at the right price—but whether it can attract enough super-prime tenants to pay the bills. And answering that question means predicting the future of Manhattan real estate, a risky endeavor. Prices may rise over the next decade, or they may not. One World Trade Center and Four World Trade Center represent 5 million square feet of new space dumped onto a market still struggling after the credit bust. Nearby towers at the World Financial Center are themselves losing major tenants to midtown….
"Like so many other public entities, the Port Authority also has rising employee costs to battle. As the Navigant consulting firm noted in early 2012, the agency spends $143,000 for each of its 6,913 workers in salary and benefits. In 2010, each worker consumed $37,645 in payments for health and pension benefits, up from $27,737 in 2006. Over the past half-decade, benefits grew more than twice as fast as salaries. The Port Authority owes $1.7 billion for the future health costs of its retirees. Though the agency has taken steps to rein in the costs of management and other nonunion employees, the fact that public-safety and other unionized workers dominate the staff makes substantial cuts difficult. Even as the authority has pared down the number of civilian workers, the number of its police officers, who are highly paid, has risen 27.1 percent, to 1,752. In 2010, Navigant notes, every person on the Port Authority’s Top Ten list of overtime earners was a police officer or commander, with nine of the ten more than doubling their six-figure base salaries….
"Also burdening the Port Authority’s budget are construction expenditures, which are higher than they need to be. State and federal laws dictate that on projects funded in part with state and federal support, the agency must pay “prevailing wages,” which run well above market rates for some construction jobs….The Port Authority also sets aside work for minority and other “disadvantaged” contractors in its large projects, artificially pushing costs higher still.
At expense of motorists, air travelers...
"The price of the last decade’s rebuilding mistakes will be borne by the people who use New York and New Jersey transportation. The Port Authority lacks the power to tax, so its budgets rely on profits from bridge and tunnel tolls (about $260 million last year) and from airport fees ($447 million). These profits subsidize the PATH system (which lost $396 million), the bus terminal ($113 million), ferries ($8 million), and port operations ($124 million)….
"Over the next decade, commuters and air travelers will be lucky if the Port Authority can care for the assets that it does have (let aslone build anything new.)
Capital budget slashed after toll hike protests
"It slashed its ten-year capital budget by $8 billion to reduce last year’s toll hike after Governors Andrew Cuomo of New York and Chris Christie of New Jersey criticized the hike and accused the authority of wastefulness, as if its money woes weren’t the fault of elected officials. The Port Authority does still plan to spend $1 billion to replace cables on the George Washington Bridge, $1.5 billion to rehabilitate the entrances to the Lincoln Tunnel, $1 billion to raise the Bayonne Bridge so that ports can accept larger ships, and at least $1 billion to build a new Goethals Bridge, which has needed replacing since at least the mid-nineties. But again, these projects don’t make life better for residents; they just keep things from falling apart. And the Port Authority is looking to cut capital spending even more. If the agency does have to pay a hefty annual operating subsidy for the World Trade Center, it’s hard to see how it will be able to invest in new infrastructure for the region."