Port Authority’s Money Woes Continue, Top Execs Will Get Senatorial Grilling
Top management for Port Authority of New York and New Jersey’s are expected to go in front of a joint assembly of the New York Senate’s transportation committee and the New Jersey Assembly next month to field questions on why the bi-state agency was undercharging John F. Kennedy Airport tenants like British Airways an Delta Airlines for utilities, The NY Post reports.
The Port Authority reportedly lost $16.9 million a year by using outdated utility meters to measure the electricity usage of its airline tenants.
“The Port Authority needs to completely overhaul the way it operates,” Sen. Charles Fuschillo (R-Merrick), the chair of the NY Senate’s transportation committee, told the NY Post.
The hearing is set for April 20 and will be held in Staten Island – where Port Authority executives are likely going to get it in the ear from angry Staten Islanders who may still be smarting about the agency’s decision to raise bridge and tunnel tolls from $8 to $12.
This is the yet the latest knock on the Port Authority’s mismanagement of its finances. Last week, the agency said it lost $63 million on a 2006 interest rate swap with investment bank BNP Paribas SA.
“These mistakes are now forcing us to deal with the costs of unwinding these risky deals,” said Pat Foye and Bill Baroni, the agency’s two top executives said in a joint statement last week. “We are committed to aggressive action to ensure that this agency does not enter into such speculative deals in the future.”
The AP reported on the deal:
A top agency official said Friday that the authority would end its relationship with the financial adviser who tried to stem the potential losses in 2008 by restructuring the deal. That adviser, Peter Shapiro of Swap Financial Group LLC, said Friday he had not been notified of any change. His firm received $165,000 in fees from the Port Authority, and the firm that arranged the original swaps, First Albany Capital Inc., made $667,000, a Port Authority official said.
Last month, the Port Authority’s Special Committee of the Board of Commissioners announced its findings from an internal audit of the agency’s expenses, depicting the PA as an agency that was “at a crossroads, one that is in need of a comprehensive overhaul of its management structure,” said David Samson, Port Authority Chairman.
Among the audit’s findings was that redevelopment costs for the World Trade Center site grew from $11 billion in 2008 to $14.8 billion today, according to the report, with the 9/11 Memorial playing “a key role in the escalation of these costs,” said Mr. Sampson.
The estimated net cost to The Port Authority after third party reimbursement has grown from approximately $6 billion to an estimated $7.7 billion.