2010 Budget
December 10, 2009
APPENDIX A:
AGENCY OVERVIEW
Mission
To identify and meet the critical transportation infrastructure needs of the
...
TABLE OF CONTENTS
Message from the Chairman and Executive Director………………………..……………….. 3
Impact of the Economic Down...
The Government Finance Officers Association of the United States and Canada (GFOA)
presented a Distinguished Budget Presen...
MESSAGE FROM THE CHAIRMAN AND
EXECUTIVE DIRECTOR
Dear Governors,
We respectfully present the 2010 Budget of The Port Auth...
ensure that the Port Authority meets its most critical spending obligations, such as investing in state of
good repair pro...
IMPACT OF THE ECONOMIC DOWNTURN ON
THE PORT AUTHORITY
In order to give the Port Authority’s 2010 Budget and long-term plan...
Detailed below are the main factors that have contributed to the agency’s current capital capacity
challenge, as well as a...
the agency’s 2010 projection made in January 2008, which was used to form the basis of the agency’s
original $29.5 billion...
Aviation Activity Levels
(amount in thousands)
...
Port Commerce Activity Levels
(amount in thousands)
...
TB&T - Drivers
2005 2006 2007 2008 2009 2010
...
TB&T Activity Levels
(amount in thousands)
Y...
The following graph and table depict the deteriorating growth rates of our current projection of PATH
passengers compared ...
When the Port Authority’s $29.5 billion capital plan was adopted in January 2008, it was anticipated that
$4 billion of th...
Lower Financial Income from the Port Authority’s Investment Portfolio
Finally, in addition to decreasing facility revenues...
To ensure the Port Authority meets its critical priorities but also lives within its means, the agency has
taken aggressiv...
Ongoing Prioritization and Austerity Required
Despite the significant actions that the Port Authority has already taken to...
2010 Budget
Summary
2010 BUDGET SUMMARY
2010 Operating Budget Highlights
Despite the continuing decline in activity levels, the Port Authority...
2010 Capital Budget Highlights
The 2010 capital budget totals $3.1 billion and includes:
• $1.6 billion - Worl...
Sources of Funds
The Port Authority is a self-sustaining agency that relies upon its own creditworthiness to access the
ca...
Uses of Funds
The 2010 Budget totals $6.3 billion and provides for $2.5 billion in expenses to operate the agency’s
facili...
Net Income
The decline in activity levels at Port Authority facilities has caused 2010 revenues to be lower by $76
million...
Staffing
Staffing levels for 2010 decrease by 150 to a total of 6,977 – the lowest level in the 40 years – as the Port
Aut...
BUDGETED POSITIONS FOR 2010
DEPARTMENT BY FUNCTION NUMBER
OPERATING LINE DEPARTMENTS
Aviation...
2010 Budget Summary
by Line Department
2010 BUDGET SUMMARY BY LINE DEPARTMENT
AVIATION
Mission
Aviation’s mission aligns with the Port Authority’s at large as it...
Staffing
Aviation has a total of 958 staff, of which 783 are dedicated to operating and maintaining the airports.
The oper...
Aviation
Operating & Maintenance Expenses
Rent...
2010 Capital Budget Highlights
2010
...
PATH
Mission
PATH’s mission is guided by the Port Authority’s goals to excel in the delivery of a safe, reliable, and
cost...
PATH Activity Levels by Station
(in thousands)
20,000 ...
2010 Capital Budget Overview
The 2010 PATH capital budget provides for a total of $357 million in expenditures. A large pa...
PORT COMMERCE
Mission
Port Commerce activities support the Port Authority’s mission to develop and maintain secure,
compet...
Port Activity Levels by Facilities
(in thousands)
...
2010 Capital Budget Overview
The Port Commerce 2010 capital plan of $200 million reflects the challenges posed by the econ...
TUNNELS, BRIDGES, AND TERMINALS (TB&T)
Mission
The heart of the TB&T mission is aligned with the Port Authority's goals by...
Traffic Activity at TB&T Facilities
(in thousands)
60,000 ...
TB&T
Revenue by Categories
...
2010 Capital Budget Overview
The 2010 TB&T capital budget provides for expenditures totaling $161 million, 65% of which is...
DEVELOPMENT, REAL ESTATE and ARC
Mission
To identify and advance strategic business initiatives and operate facilities th...
Revenues and Expenses
Projected 2010 revenues for development activities are $93 million, a decrease of almost $10 million...
2010 Capital Budget Overview
Development’s 2010 capital budget totals $22 million, not including the ARC project. The 2010...
WORLD TRADE CENTER
Mission
To redevelop and operate the World Trade Center site by directly managing projects controlled ...
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Port Authority Budget 2010

Port Authority Budget 2010
Published on: Mar 4, 2016
Published in: News & Politics      Business      
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Transcripts - Port Authority Budget 2010

  • 1. 2010 Budget December 10, 2009
  • 2. APPENDIX A: AGENCY OVERVIEW Mission To identify and meet the critical transportation infrastructure needs of the bistate region’s businesses, residents, and visitors: providing the highest quality, most efficient transportation and port commerce facilities and services that move people and goods within the region, providing access to the rest of the nation and to the world, while strengthening the economic competitiveness of the New York-New Jersey Metropolitan Region.
  • 3. TABLE OF CONTENTS Message from the Chairman and Executive Director………………………..……………….. 3 Impact of the Economic Downturn on the Port Authority...………………...…………………. 5 2010 Budget Summary…………………………………………………………..………….…… 17 2010 Budget Summary by Line Department………………………………..……..………….. 27 a. Aviation…………………………………………………………………………… 29 b. PATH……………………………………………………………………………… 33 c. Port Commerce………………………………………………………………….. 37 d. Tunnels, Bridges and Terminals………………………..……………………… 41 e. Development, Real Estate and ARC………………………………………….. 45 f. World Trade Center……………………………………………………………… 48 2010 Budget Schedules.…………………………………………..…………………..………...51 a. Summary of 2010 Budget………………………………………………………. 53 b. Sources…………………………………………………………………………… 56 c. Uses………………………………………………………………………………. 60 d. Changes in Net Assets, Consolidated Statement of Net Assets, Information on P.A. Operations by Facility, Revenues and Reserves, and Assets & Liabilities………………………………………………………… 67 e. Outstanding Obligations and Financing………………………………………. 73 f. Staffing……………………………………………….…………………………… 76 g. Activity Highlights……………………………………………………………….. 78 2010 Capital Plan Project List………………………………………………………………….. 81 a. Summary by Departments……………………………………………………… 83 b. Sorted by Department, Facility and Program………………………………… 84 Appendix A: Agency Overview……………………………………………...……………… 101 Appendix B: Budget Process and Financial Policies.……………………..……………... 105 Appendix C: Agency Goals, Projects, Outcomes and Deliverables…...…….………… 110 Appendix D: Glossary…………………………………………………………….…………. 111 1
  • 4. The Government Finance Officers Association of the United States and Canada (GFOA) presented a Distinguished Budget Presentation Award to Port Authority of New York & New Jersey, New York for its annual budget for the fiscal year beginning January 1, 2009. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to GFOA to determine its eligibility for another award. 2
  • 5. MESSAGE FROM THE CHAIRMAN AND EXECUTIVE DIRECTOR Dear Governors, We respectfully present the 2010 Budget of The Port Authority of New York and New Jersey. The pages that follow describe a $6.3 billion budget that responds to the historic recession while maintaining investments in the region’s most critical priorities. Like all public agencies, the Port Authority has been hit hard by the economic downturn. When consumer spending is down and unemployment is up, there are fewer goods being shipped and trucked, fewer people commuting to jobs that no longer exist and fewer people flying to destinations that are no longer affordable. As a result, activity levels at all Port Authority facilities are projected to be significantly lower in 2010 than was projected less than two years ago when we adopted the current ten-year capital plan. Passenger traffic is expected to be 10 percent lower at our airports than our original projections and 11.8 percent lower on the PATH system. At our bridges and tunnels, vehicular traffic is expected to be 6.1 percent lower, and at our ports, cargo volume is expected to be 15.6 percent lower. This decline in activity levels has led to a significant deterioration in the agency’s operating revenues. In addition, the economic downturn has forced the agency to incur higher debt service expense and earn lower financial income. As a result of these factors, the Port Authority’s capital capacity for the 2007-2016 plan period has decreased by $5 billion – from $29.5 billion to $24.5 billion. To ensure the Port Authority meets its critical priorities but also lives within its means, we have taken aggressive action to control operating expenses and prioritize capital projects. Zero-Growth Operating Budget and Headcount Reduction. Last year, the Port Authority introduced a zero-growth operating budget and kept the agency’s headcount flat. This year, the agency will go even further, implementing the agency’s second straight zero-growth operating budget and cutting authorized positions down to the lowest level in 40 years. This will require, among other cost control measures, reducing the agency’s authorized positions by 150, cutting the external consulting budget by 32 percent, decreasing overtime by 20 percent, and closing Port Authority-funded operations such as the Ramada Hotel at JFK Airport. Prioritization and Deferral of Capital Projects. In addition to belt-tightening on the operating side of the budget, the Port Authority has had to make difficult choices to live within its means on the capital side of the budget. As the agency’s capital capacity has shrunk, so must its capital expenditures. In order to 3
  • 6. ensure that the Port Authority meets its most critical spending obligations, such as investing in state of good repair projects, the agency has had to defer certain discretionary spending items. The decision to defer these projects has not been made lightly, but these choices are necessary to make certain we can afford our most urgent priorities. As a result of this financial discipline, the 2010 Budget calls for no increases in tolls and fares. We believe our 2010 Budget meets the region’s significant infrastructure challenges, but we can do so only because of aggressive efforts to control operating expenses and defer important, but discretionary, capital projects. That is something we must and will continue to do going forward to weather this economic storm. We look forward to working with you and the public as the Port Authority implements its 2010 Budget. Sincerely, Anthony R. Coscia Christopher O. Ward Chairman Executive Director 4
  • 7. IMPACT OF THE ECONOMIC DOWNTURN ON THE PORT AUTHORITY In order to give the Port Authority’s 2010 Budget and long-term planning efforts greater context, this section details the significant challenges confronting the Port Authority today and in the future, and how the agency is responding. The first section, “Effect of the Economic Downturn,” summarizes the economic downturn’s overall impact on the Port Authority’s net revenues and long-term capital capacity. The second section, “Port Authority Revenues and Capital Capacity Hit Hard by Recession,” breaks down the three principal causes of the decline in the agency’s capital capacity: reduced activity levels at the agency’s facilities, increased debt service expense, and lower financial income. The final section, “Port Authority Response,” discusses the ongoing need for transportation and infrastructure investment throughout the region and the kinds of actions the Port Authority is taking in order to meet those needs while weathering the financial storm. EFFECT OF THE ECONOMIC DOWNTURN While the Port Authority’s economic condition remains fundamentally sound, the global and national economic downturn has had a significant impact on the agency – most reflected in the loss of net operating revenues (gross operating revenue less operating expenses) and the decline of the agency’s long-term capital capacity. In less than two years, the Port Authority’s ten-year capital capacity, from 2007 to 2016, has shrunk by $5 billion – from $29.5 billion, when the agency’s Capital Plan was updated in January 2008, to $24.5 billion today. On the operating side of the budget, the Port Authority’s net income from operations is expected to be negative $39 million in 2010 – a decline of $197 million from the 2009 Budget. The Port Authority has taken a variety of measures over the past year to mitigate the impacts of the economic downturn – such as a zero-growth operating budget, reduced headcount and prioritization of capital spending. However, further actions will be required as the impact of the economic downturn continues to be felt. From an operating perspective, the downturn has required the Port Authority for the second straight year to operate on a zero-growth budget, to reduce headcount to the lowest level in 40 years and to curtail certain operations that can no longer be maintained in such a financially constrained environment. From a capital budget perspective, the current fiscal context has forced a variety of difficult decisions regarding the allocation of constrained capital resources. This will result in a greater concentration on State of Good Repair projects over the near term, and the deferral of certain discretionary capital projects beyond the 2016 end date to the current Port Authority ten-year Capital Plan. In addition, the agency’s reduced capital capacity will require continued prioritization and reassessment in the months and years ahead. 5
  • 8. Detailed below are the main factors that have contributed to the agency’s current capital capacity challenge, as well as a description of the actions the Port Authority has taken to ensure that, despite the economic downturn, the agency continues to live within its means. PORT AUTHORITY REVENUES AND CAPITAL CAPACITY HIT HARD BY RECESSION The historic recession of the past two years has affected the Port Authority as follows: (1) declining revenue due to falling activity levels at our bridges and tunnels, airports, PATH, and ports; (2) increasing debt service due to the collapse of the variable rate debt market and the real estate finance market; (3) lower financial income due to the historic drop in the U.S. Federal Funds rate, which drives the agency’s financial return given our investments in U.S. Treasury obligations. These impacts are explained in detail below. Declining Revenue Activity levels in all Port Authority businesses – aviation passenger volume, container movements, vehicle crossings, PATH ridership – began to slow in 2008 and further erode in 2009. These declines have been driven by an interrelated set of global, national and regional economic forces – leading to an historic recession, second in magnitude only to the 1930’s Great Depression. As a consequence, the regional unemployment rate has more than doubled since 2007, reaching 9.4% as of September 2009 with national unemployment rising into double digits. Based on forecasts from Economy.com, the region will lose 156,000 jobs by the end of 2009 compared with 2008, with an additional decline of 72,000 in 2010. These economic forces translate directly into declining Port Authority revenue. When consumer spending is down and unemployment is up, there are fewer goods being shipped and trucked, fewer people commuting to jobs that no longer exist and fewer people flying to destinations that are no longer affordable. Thus toll and fare revenue is down, as is revenue derived from flight fees, airport parking and concessions, and container and other Port-related fees, among other facility revenue sources. As a result, projected net operating revenues over the current capital plan period (2007-2016) have declined by approximately $1.8 billion. The following graphs and tables show the key economic drivers that have led to declining activity levels and compare the projected activity levels that supported the Port Authority’s ten-year $29.5 billion capital capacity as of January 2008 versus $24.5 billion in capital capacity as of today. These figures are based on actual results and revised projections as of November 2009. Aviation A steep climb in jet fuel prices in the first half of 2008, the slowdown in global GDP, and the drop in domestic consumer spending all contributed to the 2.6% decline in aviation passenger traffic for 2008 at our airports. Even as jet fuel prices stabilized, a continuation of the national and global recession led to a further decline of 3.2% for 2009. Most significantly as it relates to the agency’s current capital capacity challenge, the Port Authority is now projecting a 10% decline in passenger traffic in 2010 as compared to 6
  • 9. the agency’s 2010 projection made in January 2008, which was used to form the basis of the agency’s original $29.5 billion plan. Aviation - Drivers 2005 2006 2007 2008 2009 2010 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 GDP - Western Europe GDP - U.S. Unemployment Rate - Port Authority Aviation (% Chg)* (% Chg)* U.S. * Passengers (% Chg) * Global Insight, October 2009 The following graph and table depict the lower growth rates under our current projection of passenger traffic at our airports compared with the prior projections that supported the $29.5 billion capital plan. Aviation Activity Levels (amount in thousands) 130,000 125,000 Passengers 120,000 115,000 110,000 105,000 100,000 95,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Actual Levels Jan 2008 Projections Nov 2009 Projections 7
  • 10. Aviation Activity Levels (amount in thousands) Year Jan 08 Nov 09 Variance 2008 110,453 106,214 (4,239) 2009 112,392 102,847 (9,545) 2010 115,072 103,588 (11,484) 2011 117,997 105,961 (12,036) 2012 121,134 108,603 (12,531) 2013 124,068 111,186 (12,882) 2014 125,853 114,163 (11,690) 2015 127,619 117,417 (10,202) 2016 129,398 120,770 (8,628) Port Commerce As GDP has fallen in nearly every region of the world, the volume of trade handled at our marine facilities has declined – 1% in 2008 and a projected 13% drop in 2009. Most significantly as it relates to the agency’s current capital capacity challenge, the Port Authority is now projecting a 15.6% decline in cargo volume in 2010 as compared to the agency’s 2010 projection made in January 2008, which was used to form the basis of the agency’s original $29.5 billion plan. Port Commerce - Drivers 2005 2006 2007 2008 2009 2010 15.0 10.0 5.0 0.0 -5.0 -10.0 -15.0 -20.0 GDP - World Total Trade in Goods - U.S. Port Authority Containers (% Chg)* (% Chg)* (% Chg) * Global Insight, October 2009 The following graph and table depict the deteriorating growth rates of our current projection of containers at our marine terminals compared with the prior projections that supported the $29.5 billion capital plan. 8
  • 11. Port Commerce Activity Levels (amount in thousands) 4,700 4,200 Containers 3,700 3,200 2,700 2,200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Actual Levels Jan 2008 Projections Nov 2009 Projections Port Commerce Activity Levels (amount in thousands) Year Jan 08 Nov 09 Variance 2008 2,942 3,069 127 2009 3,090 2,670 (420) 2010 3,244 2,724 (520) 2011 3,406 2,832 (574) 2012 3,577 2,960 (617) 2013 3,755 3,115 (640) 2014 3,943 3,272 (671) 2015 4,140 3,620 (520) 2016 4,326 3,901 (425) Tunnels, Bridges and Terminals The fall in regional employment, particularly employment in Manhattan office space, lower consumer spending, and the drop in international trade combined to drive down vehicular crossings over the Port Authority controlled bridges and tunnels. Total vehicular crossings fell by 2.6% in 2008, with autos and trucks declining by 2.8% and 1.5%, respectively. With the continuation of the recession, crossings are expected to decline by an additional 1.7% for 2009, with autos 1.1% lower and trucks – a key revenue driver – 9.5% lower. Most significantly as it relates to the agency’s current capital capacity challenge, the Port Authority is now projecting a 6.1% decline in passenger traffic in 2010 as compared to the agency’s 2010 projection made in January 2008, which was used to form the basis of the agency’s original $29.5 billion plan. 9
  • 12. TB&T - Drivers 2005 2006 2007 2008 2009 2010 15.0 10.0 5.0 0.0 -5.0 -10.0 -15.0 -20.0 Office Employment - Recreation Spending - Total Trade in Goods - Total Port Authority Region (% Chg)** U.S. (% Chg)* U.S. Vehicular Crossings (% Chg)* (% Chg) * Global Insight, October 2009 ** Economy.com, September 2009 The following graph and table depict the deteriorating growth rates of our current projection of vehicular activity at our tunnels and bridges compared with the prior projections that supported the $29.5 billion capital plan. TB&T Activity Levels (amount in thousands) 145,000 140,000 Vehicles 135,000 130,000 125,000 120,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Actual Levels Jan 2008 Projections Nov 2009 Projections 10
  • 13. TB&T Activity Levels (amount in thousands) Year Jan 08 Nov 09 Variance 2008 126,009 123,725 (2,284) 2009 127,648 121,646 (6,002) 2010 129,998 122,125 (7,873) 2011 132,353 122,800 (9,553) 2012 133,665 124,024 (9,641) 2013 135,375 124,427 (10,948) 2014 137,380 125,665 (11,715) 2015 139,425 126,792 (12,633) 2016 140,296 128,549 (11,747) PATH Rail Transit Regional employment is also a major driver of passenger volumes on the PATH system. PATH bucked the trend in 2008, rising 4.7% to 75 million, compared with 2007 levels, partly reflecting the switch to transit caused by the huge rise in gas prices in the first half of 2008. However, the decline in regional jobs has now taken its toll on ridership, with the PATH system expecting a decline of 3.1% in 2009. Most significantly as it relates to the agency’s current capital capacity challenge, the Port Authority is now projecting an 11.8% decline in passenger traffic in 2010 as compared to the agency’s 2010 projection made in January 2008, which was used to form the basis of the agency’s original $29.5 billion plan. PATH - Drivers 2005 2006 2007 2008 2009 2010 12.0 10.0 8.0 6.0 4.0 2.0 0.0 -2.0 -4.0 Regional Employment PATH Passengers (%Chg)** (%Chg) ** Economy.com, September 2009 11
  • 14. The following graph and table depict the deteriorating growth rates of our current projection of PATH passengers compared with the prior projections that supported the $29.5 billion capital plan. PATH Activity Levels (amount in thousands) 105,000 95,000 Passengers 85,000 75,000 65,000 55,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Years Actual Levels Jan 2008 Projections Nov 2009 Projections PATH Activity Levels (amount in thousands) Year Jan 08 Nov 09 Variance 2008 75,102 74,954 (148) 2009 77,777 72,620 (5,157) 2010 80,499 70,986 (9,513) 2011 83,317 72,858 (10,459) 2012 86,987 78,027 (8,960) 2013 90,785 84,526 (6,259) 2014 93,963 88,606 (5,357) 2015 97,252 91,624 (5,628) 2016 101,077 94,806 (6,271) Increasing Debt Service Expense The economic downturn has not only caused activity levels at our facilities to drop, leading to a decline in the revenue that is generated from that activity, it has also meant higher debt service expense for the Port Authority. As an agency that relies on debt issuance as a primary source of funding capital investments, this increased debt service expense has had significant impacts on the agency’s overall capital capacity. Debt service expense increased primarily because of two factors related to the economic downturn: the collapse of the variable rate debt market and the collapse of the speculative real estate market. 12
  • 15. When the Port Authority’s $29.5 billion capital plan was adopted in January 2008, it was anticipated that $4 billion of that amount would be funded through variable rate debt, rather than fixed rate debt. Historically, variable rate debt carried lower borrowing costs as compared to traditional long-term fixed rate obligations, which the Port Authority issues for the majority of its capital financing. However, as a result of the deterioration of the variable rate debt market, the Port Authority has had to replace its expected use of variable rate obligations with fixed rate bonds. This modification was essential in light of the current financial markets, but it came at a cost of nearly 2.5% higher in annual interest rates for approximately $4 billion of planned borrowing. In addition, the Port Authority’s $29.5 billion capital plan assumed over $2.5 billion of funding from Special Project Bond proceeds to be issued and secured by the anticipated lease revenues to be generated by 1 WTC LLC on a tax-exempt basis. However, like the variable rate debt market, over the course of the past year, the bond market for financing speculative office space has also evaporated. For the Port Authority, this means that this form of borrowing has had to be replaced with higher-interest rate taxable debt. The effect of the above changes, coupled with increased construction costs at the World Trade Center site that also required the use of higher rate taxable debt, increased debt service costs by approximately $1 billion over the forecast period through 2016. Debt Service Comparison 1,500 1,400 Amount in Millions 1,300 1,200 1,100 1,000 900 800 700 2009 2010 2011 2012 2013 2014 2015 2016 Years Jan 2008 Projections Nov 2009 Projections 13
  • 16. Lower Financial Income from the Port Authority’s Investment Portfolio Finally, in addition to decreasing facility revenues and increasing debt service expense, the Port Authority’s capital capacity has declined due to reduced financial income from the agency’s investment portfolio. The Port Authority’s investment portfolio is comprised primarily of low-risk United States Treasury notes and bills, in accordance with certain statutes and covenants. Historically, Treasury securities have been a time honored prudent investment and, remain secure relative to the rest of the securities market. However, even though the Port Authority has been protected relative to the rest of the securities market during this economic downturn, the agency has not escaped pain entirely. Because of the nationwide economic crisis, the U.S. Federal Funds Rate has been lowered to record-low levels as shown in the graph below and, as a result, the agency’s anticipated financial income from Treasury securities has fallen as well. To put this in perspective, since September 2007, the U.S. Federal Funds Rate has dropped from nearly 4.75% to an extraordinary low of between 0% and 0.25%. This extremely low- interest rate environment is far below what was imagined by business or governmental entities when the existing $29.5 billion capital plan was adopted. As a result, the significant drop in the Federal Funds Rate has resulted in approximately $500 million of lower financial income over the forecast period through 2016. Federal Funds Rate 5 4 Percent Rate 3 2 1 0 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Month PORT AUTHORITY RESPONSE Perhaps the Port Authority’s greatest challenge is to manage the negative impact of the historic economic downturn at a time when the region’s infrastructure needs continue to rise. Investment in State of Good Repair projects to maintain near century-old bridges and tunnels needed to modernize our region’s airports, drive ahead the World Trade Center redevelopment and begin the Access to the Region’s Core mass transit tunnel project, among other transportation needs, continue to impose a great demand on the Port Authority’s capital resources. 14
  • 17. To ensure the Port Authority meets its critical priorities but also lives within its means, the agency has taken aggressive action to control operating expenses and prioritize capital spending. Zero-Growth Operating Budget and Headcount Reduction Last year, the Port Authority introduced a zero-growth operating budget and kept the agency’s headcount flat. These initiatives built on the agency’s efforts since 2004 that had reduced headcount by nearly 400 positions and kept the rate of operating budget growth significantly below the rate of inflation. This year, the agency will go even further, implementing the agency’s second straight zero-growth operating budget and cutting authorized positions down to the lowest level in 40 years. That will require reducing the agency’s authorized positions by 150, cutting the external consulting budget by 32%, decreasing overtime by 20%, and closing Port Authority-funded operations such as the Ramada Hotel at JFK Airport which given the significantly lower air traffic and need for substantial renovation, would result in losses of $1 million per month if it were to remain open. Prioritization and Deferral of Capital Projects In addition to fiscal discipline on the operating side of the budget, the Port Authority has had to make difficult choices to live within its means on the capital side of the budget. As the agency’s capital capacity has shrunk from $29.5 billion to $24.5 billion, so must its capital expenditures. In order to ensure that the Port Authority meets its most critical spending obligations such as investing in State of Good Repair projects, the agency has had to defer certain discretionary spending items, even though these items remain critical to the region’s growth. Projects like the Bus Garage for the Port Authority Bus Terminal that will act as a traffic reliever to the Lincoln Tunnel and adjacent Manhattan streets must be deferred beyond the 2007-2016 capital plan period. Funding for the replacement of the LaGuardia Central Terminal Building and Newark Liberty International Airport’s Terminal A has been restricted to only planning dollars, allowing these projects to advance as funding becomes available. Similarly, funding for Stewart Airport’s modernization, while still committed over the long-term, has been slowed as well. In addition, the replacement of the Lincoln Tunnel Helix must be restaged to ensure that we maintain its structural integrity while deferring its full replacement beyond 2016. The decision to defer these projects has not been made lightly; and the agency is committed to completing these projects over the long term. But given the economic downturn and the significant impact it has had on the Port Authority's capital capacity, they were difficult choices that had to be made to live within our means. 15
  • 18. Ongoing Prioritization and Austerity Required Despite the significant actions that the Port Authority has already taken to ensure its budget reflects the new economic and fiscal realities, if we are to continue to live within our means, we must continue to make sure our operating budget is as lean as possible, make adjustments where necessary and continue to prioritize capital spending in recognition of a rapidly shifting economic landscape. 16
  • 19. 2010 Budget Summary
  • 20. 2010 BUDGET SUMMARY 2010 Operating Budget Highlights Despite the continuing decline in activity levels, the Port Authority’s overall fiscal condition remains sound due in large part to numerous cost-cutting measures taken in anticipation of the economic downturn. That fiscal discipline continues in the agency’s 2010 Budget. Major highlights of the Port Authority's 2010 operating budget include: • Zero growth in operating expenses for the second consecutive year. The agency’s operating expense growth has been well below inflation for several consecutive years: o 2010: 0% o 2009: 0% o 2008: 0.9% o 2007: 1.1% • Cutting authorized position levels by 150 to a total of 6,977 compared to 7,127 in 2009 – the lowest level in 40 years. On top of previous headcount reductions dating back to 2004, the Port Authority has reduced non-police, mostly professional and managerial positions by 507 or nearly 9%. • Cutting overtime by 20% or $24 million. • Cutting the use of external consultants by 32% or $15 million. • Closing the Ramada Plaza Hotel at JFK International Airport. Given significantly lower air traffic and need for substantial renovation, keeping the Ramada Hotel open would have resulted in losses of $1 million per month. • Investing $444 million in security operating costs while implementing innovative patrol tactics and improved deployment of public safety resources. • Providing $226 million in municipal rent payments and payments of amounts in lieu of taxes to cities, counties and municipalities under various property agreements. • Committing $21 million toward on-going activities for the Clean Air Program at our port facilities, and to reducing greenhouse gas emissions, promoting environmental protection, and conserving energy. 19
  • 21. 2010 Capital Budget Highlights The 2010 capital budget totals $3.1 billion and includes: • $1.6 billion - World Trade Center redevelopment • $504 million - ARC Tunnel project • $180 million - Advancing the JFK flight delay reduction program • $175 million - New PATH rail car purchases and signal system • $70 million - Dredging Program at Port Authority Ports • $21 million – Planning for the modernization of the Central Terminal Building at La Guardia Airport and Terminal A at Newark Liberty International Airport. • $17 million – Completing a permanent ferry terminal in Hoboken, NJ. • $16 million – Stewart International Airport modernization • $15 million - Holland Tunnel rehabilitation of ventilation system • $ 9 million - Continued planning efforts for the new Goethals Bridge The capital budget also includes $326 million for essential security projects to protect the agency’s facilities infrastructure and install state-of-the-art surveillance and detection equipment such as: • $63 million - PATH tunnel mitigation project • $15 million - In-line baggage screening for all airports Combined with the $444 million in security operating costs, in 2010, the Port Authority will spend a total of $770 million on security-related expenditures in, bringing the agency’s total investment in security to $5.2 billion since the terrorist attacks on September 11, 2001. 20
  • 22. Sources of Funds The Port Authority is a self-sustaining agency that relies upon its own creditworthiness to access the capital markets to raise the necessary funds for the acquisition, operations and investment of its facilities. It is not dependent on state or local taxes from New York or New Jersey and has no power to levy its own taxes or assessments. The agency generally funds its operating and capital expenditures through revenues generated by its facilities, the issuance of bonds, notes and other obligations, receipt of grants, insurance proceeds and other contributions, financial income earned on its investments, and the collection of Passenger Facility Charges (PFCs) at its airports. Sources of Funds $6.3 Billion PFCs 3% Grants and Contributions 9% Gross Operating Financial Revenues Income 58% 1% Bonds, Notes and Other 29% Tolls and Fares 30% Aviation Fees Rentals 17% 42% Parking Other 6% 5% 21
  • 23. Uses of Funds The 2010 Budget totals $6.3 billion and provides for $2.5 billion in expenses to operate the agency’s facilities, $3.1 billion in capital expenditures to build and improve upon the region’s transportation capacity and rebuild the World Trade Center site, $689 million for debt service on the agency’s outstanding bonds, notes and other obligations, and $44 million for other expenditures, which are deferred and amortized in future periods. Uses of Funds $6.3 Billion Debt Service: Operations and Reserves 11% Deferred Exp & Other 1% Operating Capital Expenses Expenditures 39% 49% Security Regional 18% 1% Rent State of Debt 13% Good Expense Mandatory Repair 4% 27% 19% Management Services System 1 4% Operatio ns Security Enhancing 33% 10% 21% Maint enance Revenue 1 8% Producing 22% 22
  • 24. Net Income The decline in activity levels at Port Authority facilities has caused 2010 revenues to be lower by $76 million, compared with the 2009 budget. These declining revenues, combined with increased interest expense and lower financial income, result in an anticipated net loss to the agency of $39 million in 2010. The facilities that generate net income - such as the airports, tunnels, and bridges - along with financial income help pay for those facilities that operate at a loss - primarily the mass transit-oriented operations, such as PATH, regional ferry services, and the bus terminals, as well as port terminals. The graph below illustrates this split and compares 2010 net income to 2009. Port Authority of New York & New Jersey Comparison of 2010 and 2009 Budget Net Income/(Loss) From Operations (in millions) $600 $478 $457 $450 $330 $249 $300 $159 $150 $6 $12 $0 ($57) ($39) ($150) ($107) ($125) ($111) ($155) ($180) ($300) ($336) ($341) ($450) ($600) Airports Bridges & PATH Bus Ports World Regional, Tunnels Terminal/Station Trade Ferries & Other Total 2009 2010 Budget Budget 23
  • 25. Staffing Staffing levels for 2010 decrease by 150 to a total of 6,977 – the lowest level in the 40 years – as the Port Authority continues to restructure staff functions, streamline operations, leverage technology, and reallocate positions to priority projects. Seventy percent of Port Authority staff, in the functional areas of operations, security and maintenance, are represented by unions through the collective bargaining process. The remaining non-represented staff consists of engineering, technical, and management workforce. 2010 Staffing Operating Line Depts 48% Staff Services 13% Operations Services 6% Engineering 8% Public Safety 25% The table on the next page shows staffing by major function: 24
  • 26. BUDGETED POSITIONS FOR 2010 DEPARTMENT BY FUNCTION NUMBER OPERATING LINE DEPARTMENTS Aviation 958 Real Estate & WTC Redevelopment 80 Port Commerce 172 Rail / PATH 1,081 Tunnels, Bridges & Terminals 911 WTC Construction 116 PUBLIC SAFETY Public Safety 1,725 Office of Emergency Management 18 ENGINEERING Chief Engineer/Engineering 557 GENERAL SERVICES Operations Services 444 STAFF SERVICES Audit 77 Capital Security Projects 25 Chief Administrative Officer 9 Chief, Capital Planning 7 Chief Financial Officer 4 Chief Operating Officer 8 Chief, Public & Government Affairs 2 Chief, Real Estate & Development 2 Chief Technology Officer/Technology Services 105 Comptroller's 103 Executive Offices 9 General Counsel/Law 132 Government and Community Affairs 12 Human Resources (including Medical Services) 66 Inspector General 30 Labor Relations 11 Management and Budget 40 Marketing 28 Media Relations 9 Office of Business and Job Opportunity 13 Office of Environmental & Energy Programs 12 Office of Financial Analysis 7 Office of the Secretary 17 Office of Strategic Initiatives 4 Operations Standards 7 Planning 19 Priority Programs 8 Procurement 94 Project Management Office 9 Treasury 46 TOTAL POSITIONS 6,977 25
  • 27. 2010 Budget Summary by Line Department
  • 28. 2010 BUDGET SUMMARY BY LINE DEPARTMENT AVIATION Mission Aviation’s mission aligns with the Port Authority’s at large as it recognizes and accepts its charge to achieve regional prosperity through a unified system of airport facilities that have unsurpassed capacity and quality and that moves people and goods through its five airports as efficiently as possible, with a commitment to safety, security, unequalled customer service, and are environmentally sustainable and community friendly. Facilities • John F. Kennedy International Airport (JFK) • LaGuardia Airport (LGA) • Newark Liberty International Airport (EWR) • Stewart International Airport (SWF) • Teterboro Airport (TEB) Activity Levels In 2010, approximately 104 million people are expected to use the Port Authority’s aviation facilities compared to the revised estimate of 103 million people in 2009. While the anticipated increase in 2010 passenger levels is approximately 1 million, or 1%, it falls short of the projection of 106 million passengers stated in the 2009 Budget and is 10% lower than the projections used to develop the Port Authority’s $29.5 billion 2007 – 2016 Capital Plan. This is largely attributable to the global economic downturn, which has adversely impacted the aviation industry at large. Passenger growth in the coming years is expected to be slower than that projected prior to the economic downturn. Aviation Activity Levels by Facilities (in thousands) 50,000 40,000 JFK Passengers 30,000 LGA EWR 20,000 10,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 est bud Years 29
  • 29. Staffing Aviation has a total of 958 staff, of which 783 are dedicated to operating and maintaining the airports. The operations staff operates and manages the aeronautical, landside, security and customer care functions, including compliance with Federal Aviation Administration rules and regulations. The maintenance staff provides craft-based maintenance programs to ensure that the structural integrity of the facilities’ assets, infrastructure and equipment are operating at a high level of performance, including code and regulatory compliance. The remaining management services staff provide the functions that support the facilities and line business operations, including capital program delivery; asset management; property and revenue management; strategic, business planning and financial functions; airspace modernization; security and environmental management; as well as facility management and departmental oversight. Revenues and Expenses Aviation’s 2010 projected revenues of $2 billion are down $48 million from the 2009 budget. Significant revenue sources include: fixed rentals from leases for airline terminals, hangars and cargo facilities, concessions and aircraft services; flight fees from cost recovery agreements with airlines; fees and charges, such as the AirTrain’s farebox revenues, utilities and fuel fees; and other airport activities such as parking. Aviation Revenue by Categories Parking Percentage & 10% Other Rentals 26% Other 4% Flight Fees Fixed Rent 29% 31% Aviation projects expenses for 2010 of $1.3 billion that include payroll, technology services, rent, contract services, and utilities. Through a significant cost-cutting effort, Aviation has been controlling expenses with productivity improvements, a diminished consultant budget, and cost reductions to certain low priority programs that are expected to offset contractual and inflationary increases. 30
  • 30. Aviation Operating & Maintenance Expenses Rent Security 18% 17% Debt Expense 6% Management Services 4% Operations Maintenance 37% 18% 2010 Capital Budget Overview The 2010 Aviation capital budget provides for $520 million in expenditures. A large part of the budget will be used to enhance overall system capacity and security. The 2010 capital priorities focus on addressing current challenges that include aging infrastructure, safety and security, congestion/delays and federal caps on flights per hour imposed by the FAA, and customer expectations. Aviation 2010 Capital Budget System Enhancing 11% Mandatory 11% State of Good Repair Revenue 57% Producing 11% Security 10% 31
  • 31. 2010 Capital Budget Highlights 2010 Project Description Budget Outcomes 1 JFK Flight Delay Reduction Replace the Bay runway as part of a flight $180 M Reduce maintenance costs and flight delays. Program delay reduction initiative. 2 EWR Modernization of Construct additional gates and provide for $24 M Increase capacity for the airlines and airport. Terminal B terminal expansion to meet expected growth in air passenger traffic. 3 Stewart International Replace Airport Weather Instrumentation $16 M Increased operating capability and reliability Airport Modernization Power Circuit; rehabilitate taxiway lighting; with replacement of aging infrastructure. Terminal Improvements; Customer Service Initiatives. 4 LGA Central Terminal Provide planning dollars to begin the $15 M Enhance facility operations and replace Replacement Planning modernization of the Central Terminal Building. increasingly obsolete terminal building. 5 TEB Engineering Material Begin construction for Runway 1-19 Safety $15 M Increase safety and meet FAA standards. Arresting System (EMAS) Enhancements installing the arrestor system and Redneck Avenue and relocating Redneck Avenue. Relocation 6 EWR Rehabilitation of Install modifications to drainage, milling, $6.2 M Reduce maintenance costs and flight delays. Runways pavement, depth and upgrade of lighting per FAA standards. 7 EWR Terminal A Planning Provide planning dollars for renewal or $6 M Increase airport capacity and replace aging replacement of aging terminal building to infrastructure. increase airport capacity. 32
  • 32. PATH Mission PATH’s mission is guided by the Port Authority’s goals to excel in the delivery of a safe, reliable, and cost-effective transportation service that operates as a critical link in the regional transportation network, contributing to regional mobility and economic development and serving as stewards of the regional environment by providing efficient mass transit service and effectively managing energy resources. Facilities • PATH Rail Transit System Stations in New York Stations in New Jersey th 9 Street Exchange Place th 14 Street Grove Street rd 23 Street Harrison rd 33 Street Hoboken Christopher Street Journal Square World Trade Center Newark Penn Station Pavonia / Newport • Journal Square Transportation Center Activity Levels PATH ridership is expected to decline by 2.3% in 2010 to approximately 71 million passenger trips compared to the estimated 73 million in 2009. This represents a 5.5% drop from the original projection of 77 million passenger trips in the 2009 budget and is 11.8% lower than the projections used to develop the Port Authority’s $29.5 billion 2007 – 2016 Capital Plan. The rate of annual ridership growth is expected to decline through 2010 as the New York-New Jersey region continues to experience the impacts of the recession. However, the long-term demand for PATH service is expected to increase as the new World Trade Center Transportation Hub is completed and significant commercial development advances along the New Jersey waterfront and other areas within the PATH service region. 33
  • 33. PATH Activity Levels by Station (in thousands) 20,000 9th St. 18,000 14th St. 16,000 23rd St. 14,000 33rd St. Passengers 12,000 Christopher St. 10,000 WTC 8,000 Exchange Pl. 6,000 Grove St. 4,000 Harrison 2,000 Hoboken 0 Journal Sq. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Newark est bud Pavonia / Newport Years Staffing PATH has a total of 1,081 staff, of which 1,021 are dedicated to operating and maintaining a full service rail transit system and bus terminal. The operations staff operate and manage the dispatching and movement of trains in and out of the stations and yards, develop and maintain train schedules, and provide passenger information and customer care programs throughout the stations, including compliance with Federal Railroad Administration rules and regulations. The maintenance staff ensures that the railcars are inspected, repaired and perform at a high level; maintains and replaces tracks, station structures and operating equipment; and services the signals and power distributions systems to ensure safe and efficient train movement. The remaining management services staff provide the functions that support the facilities and line business operations, including capital program delivery; asset management; rail operations planning; property and revenue management; strategic business planning and financial functions; security and environmental management; and facility management and departmental oversight. 34
  • 34. 2010 Capital Budget Overview The 2010 PATH capital budget provides for a total of $357 million in expenditures. A large part of the expenditures will be used towards the PATH modernization program, which includes replacing rail cars with a new, 340 car fleet, signal system, and upgrading all stations. The 2010 Capital Plan also includes projects designed to maintain PATH’s aging assets, including track, substations, and communications equipment. PATH 2010 Capital Budget System Enhancing State of Good 2% Repair 63% Mandatory 1% Security 34% 2010 Capital Budget Highlights 2010 Project Description Budget Outcomes 1 Safety and Security Enhance system access control and overall $120 M Enhance the safety and security of the Projects operational safety and security enhancements. system. 2 New Car Purchase Replacement of aging railcar fleet with 340 $110 M Improve service reliability and customer Program new rail cars. service. 3 Signal System Replace outdated current signal system with a $65 M Increase capacity due to shorter headways. Replacement modern computerized system. Program 4 State of Good Repair Comprehensive maintenance and $52 M Improve service reliability. Program rehabilitation program to ensure the integrity of the infrastructure 5 PATH Station Enhanced information displays, install new $6 M Improve customer service. Improvement lighting, and upgraded seating. Program 36
  • 35. PORT COMMERCE Mission Port Commerce activities support the Port Authority’s mission to develop and maintain secure, competitive port infrastructure and services for New York and New Jersey, expediting the movement of international cargo and supporting the regional economy in a financially sound manner. Port Commerce also aims to minimize the impact to the environment, conserve natural resources and support sustainable growth, particularly with respect to reducing pollutant air and greenhouse gas emissions. Facilities • Port Newark • Elizabeth – Port Authority Marine Terminal • Brooklyn – Port Authority Marine Terminal • Howland Hook Marine Terminal • Greenville Yard – Port Authority Marine Terminal • Port Jersey – Port Authority Marine Terminal • NY/NJ Rail LLC • Red Hook Container Terminal Activity Levels In 2010, the agency's port facilities expect to handle 2.7 million containers, a slight recovery of 2% from estimated 2009 container activity. However, this represents a 14.1% drop from the original projection of 3.2 million containers in the 2009 budget and is 15.6% lower than the projections used to develop the Port Authority’s $29.5 billion 2007 – 2016 Capital Plan. While cargo volumes are expected to be significantly less than projected prior to the economic slowdown, a 3-4% annual growth rate is anticipated in the years ahead as the economy begins to recover. 37
  • 36. Port Activity Levels by Facilities (in thousands) 2,500 Elizabeth Marine 2,000 Terminal Containers 1,500 Port Newark 1,000 Howland Hook 500 Red Hook 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 est bud Years Staffing Port Commerce has a total of 172 staff, of which 105 are dedicated to operating and maintaining the marine terminals and port system. The operations and maintenance staff operate and manage the berths, roadways, rail facilities, multi-tenant properties, and common utilities at the marine terminals to expedite the movement of international cargo that supports the regional economy, including code and regulatory compliance. The remaining management services staff provides the functions that support the facilities and line business operations, including capital program delivery; asset management; terminal properties and waterways management; cargo and revenue management; strategic, business planning and financial functions; security and environmental management; as well as facility management and departmental oversight. Revenues and Expenses Port Commerce anticipates $213 million in gross revenues in 2010, which is almost $7 million lower than the 2009 budget. Seventy-eight percent of these revenues consist primarily of land and building rentals related to containers, autos, warehouse operations and bulk storage. The remaining sources of revenue are from percentage and other rentals that are derived from container throughput, intermodal rail and dockage and wharfage. 38
  • 37. 2010 Capital Budget Overview The Port Commerce 2010 capital plan of $200 million reflects the challenges posed by the economic downturn and its effects on the shipping industry. Port Commerce’s capital plan includes the necessary investments that will enable the Port Authority to sustain port growth over the next decade. This investment includes an improved transportation infrastructure that will alleviate truck traffic and port congestion and deepen channels and berths, allowing for more cost-efficient and environmentally conscious transportation of cargo. Port Commerce 2010 Capital Budget Mandatory 39% Revenue Producing 6% System Enhancing Security 35% 5% State of Good Repair 15% 2010 Capital Budget Highlights 2010 Project Description Budget Outcomes 1 Harbor Deepening Continue deepening NY/NJ Harbor’s main $70M Improve navigational safety and provides Program channels to 50 feet. waterside access for larger vessels, expediting the movement of international cargo. 2 Infrastructure Maintain Port Commerce assets to ensure a $35 M Ensure the long-term safety and reliability of Program state of good repair. Port Commerce assets while reducing day-to- day maintenance costs. 3 Roadway Improve and expand capacity of the port $15 M Reduce roadway congestion, reduce pollution, Improvement marine terminal roadway system. and improve roadway safety. Program 4 Security Program Install Security ID System (TWIC) and $10 M Ensure compliance with Federal regulations complete the Closed Circuit TV and improve overall Port security. implementation. 5 Intermodal Rail Continue construction of a comprehensive rail $6 M Diversify modes of transporting goods and Program system throughout the Port. prevent increased truck pollution and provide a growing revenue source. 40
  • 38. TUNNELS, BRIDGES, AND TERMINALS (TB&T) Mission The heart of the TB&T mission is aligned with the Port Authority's goals by connecting the road networks of New York and New Jersey with tunnels, bridges and bus terminals that permit people and goods to move safely, efficiently and conveniently by operating facilities that are safe, secure, reliable, well maintained and easy to use; providing service levels that instill customer confidence and satisfaction; coordinating with other agencies to ensure integrated transportation systems; and improving traffic flow, efficiency and travel reliability through innovative technology and new work practices thereby strengthening the region’s economic competitiveness. Facilities • Bayonne Bridge • Goethals Bridge • George Washington Bridge (GWB) • George Washington Bridge Bus Station (GWBBS) • Holland Tunnel • Lincoln Tunnel • Outerbridge Crossing • Port Authority Bus Terminal (PABT) Activity Levels After record levels of traffic in recent years, it is expected that TB&T’s facilities will handle 122 million eastbound cars, buses, and trucks in 2010, 6.1% lower than the projections used to develop the Port Authority’s $29.5 billion 2007 – 2016 Capital Plan but 0.3% higher than the 2009 budget but is. While this is a slight increase in total vehicles, truck traffic is projected to decline by 5.3% in 2010 on top of a 6.2% drop estimated in 2009 activity compared to the 2009 budget. Despite this decline, TB&T continues to anticipate long-term growth in its business. 41
  • 39. Traffic Activity at TB&T Facilities (in thousands) 60,000 Holland tunnel 50,000 Lincoln tunnel 40,000 George Washington Volume Bridge 30,000 Bayonne Bridge 20,000 Geothals Bridge 10,000 Outerbridge - Crossing 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Year Est Bud Staffing TB&T has a total of 911 staff, of which 770 are dedicated to operating and maintaining the bridges, tunnels and bus terminal facilities. The operations staff manages vehicular traffic through the bridges and tunnels and passenger traffic at our bus terminals, as well as toll collection, emergency response and customer care programs. The maintenance staff manages the facilities assets through a comprehensive preventive maintenance program to ensure that the integrity of the assets, infrastructure and equipment are operating at a high level of performance, including code and regulatory compliance. The remaining management services staff provide the functions that manage and support the facilities and line business operations, including capital program delivery; asset management; operational and transportation planning; revenue management including oversight of our electronic tolling system; strategic business planning; security and environmental management; as well as facility management and departmental oversight. Revenues and Expenses TB&T forecasts 2010 revenues of $1 billion, consisting 96% of toll revenues from the bridge and tunnel crossings, along with rentals from the bus terminals, advertising and parking revenues. Revenues are expected to decline from 2009 levels mainly due to truck traffic declines associated with the depressed regional economic conditions. 42
  • 40. TB&T Revenue by Categories Rentals 3% Tolls 96% Parking 1% TB&T’s total 2010 operating budget is $451 million, allocated as follows: TB&T Operating & Maintenance Expenses Operations 41% Maintenance 22% Rent Management 1% Services 7% Security 29% 43
  • 41. 2010 Capital Budget Overview The 2010 TB&T capital budget provides for expenditures totaling $161 million, 65% of which is geared toward rehabilitating and maintaining the facilities in a state of good repair. TB&T 2010 Capital Budget System Enhancing 10% State of Mandatory Good Repair 5% 65% Revenue Producing 2% Security 18% 2010 Capital Budget Highlights 2010 Project Description Budget Outcomes 1 Holland Tunnel Rehabilitation of ventilation fan blowers and $15 M Provide an upgraded and modernized tunnel Rehabilitation of motors in all four vent buildings, new ventilation system. Ventilation System automatic control system, and new low and high voltage switch gear. 2 Goethals Bridge Planning dollars to replace the existing $8.8 M Create safer, more efficient mobility between Replacement Goethals Bridge with a new six-lane bridge. New York and New Jersey once a new bridge is reconstructed. 3 All-Electronic Tolling Prepare a new toll collection system with $7.6 M Enhance system capacity and seamless traffic (AET) cashless (AET) capability. flow when AET is fully implemented. 4 Bayonne Bridge Study Provide a market driven cost-effective plan for $5 M Study alternatives to evaluate the replacement determining the future of the Bayonne Bridge. of the Bayonne Bridge. 5 Lincoln Tunnel Helix Replace approximately 44,000 sf of bus ramp 5.6 M Ensure a state of good repair at the Lincoln and Bus Ramp concrete panels and complete the Helix Tunnel and prepare for future traffic growth. Rehabilitation design to ensure the structural integrity of the facility. 6 Planning for the Planning dollars for the replacement of all 592 $2.1 M Ensure the long-term safety and functionality George Washington suspender ropes and rehabilitate main cables of the George Washington Bridge. Bridge Suspender to a state of good repair. Rope Replacement and Main Cable Rehabilitation 44
  • 42. DEVELOPMENT, REAL ESTATE and ARC Mission To identify and advance strategic business initiatives and operate facilities that enhance the Port Authority’s financial capacity; stimulate private investment in agency facilities and host communities; promote safe and sustainable regional economic growth; and facilitate expansion of an efficient, safe, secure and reliable regional transit system by partnering with NJ Transit to develop and deliver a safe, secure and reliable high-quality transit system that significantly expands the Trans-Hudson commuter rail network and substantially increases station capacity in Midtown Manhattan. Facilities • Bathgate Industrial Park • Essex County Resource Recovery Facility • Ferry Transportation • Industrial Park at Elizabeth • The Legal Center • The Teleport • Waterfront Development - Queens West Waterfront Development - The South Waterfront at Hoboken • Access to the Region’s Core’s Tunnel (ARC) Staffing Development, Real Estate and ARC have a total of 64 staff, of which 55 are dedicated to identifying and advancing new revenue opportunities; negotiating cost-effective property acquisitions and sales, land swaps, development agreements and leases; and operating, maintaining and managing facilities and other programs aimed at optimizing financial return to the agency and supporting regional economic growth. This includes industrial and commercial properties, ferry transportation, and waterfront developments as well as partnering with New Jersey Transit to deliver the ARC Tunnel. The remaining management services staff provides the functions that support the development activities, including financial analysis, planning and human resource functions; and security and environmental management. 45
  • 43. Revenues and Expenses Projected 2010 revenues for development activities are $93 million, a decrease of almost $10 million from the 2009 budget. Revenue largely consists of gate/tipping fees and the sale of electricity from the Essex County Resource Recovery Facility and rents generated by terms of existing agreements. Development Revenue by Categories Fixed Rent 16% Variable/ Electricity 33% Gate/Tipping Fees NLC Net 47% Lease 4% Development’s operating budget for 2009 is $86 million. Development Operating & Maintenance Expenses Rent 9% Security 2% Management Services Operations 5% 81% Maintenance 3% 46
  • 44. 2010 Capital Budget Overview Development’s 2010 capital budget totals $22 million, not including the ARC project. The 2010 ARC capital budget totals $504 million; nearly 80% of capital expenditures will be used for site acquisitions and is not reflected in the chart below. Development 2010 Capital Budget Mandatory 16% System Enhancing Security 63% 7% State of Good Repair 14% 2010 Capital Budget Highlights 2010 Project Description Budget Outcomes 1 Access to the Partner with NJ Transit to construct a new $504 M ARC will double capacity between NJ and Region's Core’s commuter rail line under the Hudson River midtown Manhattan to meet growing Tunnel (ARC) and expand NY Penn Station. ridership demand, improve service, reduce emissions and create new construction and permanent jobs. 2 Ferry Advance PA share of work to rehabilitate and $17 M Improve regional ferry service. Transportation return ferry service to the Hoboken Ferry Terminal. 3 New York-New Fund land acquisition for conservation, $14M Preserve open space throughout the Jersey Harbor ecological enhancement, public access, or Hudson-Raritan Estuary in the states of Estuary Program environmental mitigation to offset New Jersey and New York. environmental impact of PA’s port facilities. 4 Queens West Fund remaining PA commitment for property $4.2M Revitalize underutilized waterfront area into Waterfront acquisition, planning, infrastructure and other successful a residential, commercial, and Development predevelopment costs. recreational development, create new business opportunities, and stimulate development in the surrounding area. 5 George Redevelop and construct a modernized bus $3 M Higher quality transportation services, Washington station and retail complex bringing new improvement in intermodal connections, Bridge Bus construction and permanent jobs to the new electronic communications, transit Station community as well as increased retail oriented retail and enhanced architectural Redevelopment services. qualities. 47
  • 45. WORLD TRADE CENTER Mission To redevelop and operate the World Trade Center site by directly managing projects controlled by the Port Authority, overseeing elements controlled by third parties, and constructing key site elements thereby creating a safe, secure, environmentally-sustainable, financially successful and physically integrated complex that anchors the revitalization of Lower Manhattan and enhances the Port Authority’s financial capacity while honoring those lost on 9/11. Staffing World Trade Center activities employ a total of 134 staff, of which 116 are dedicated to rebuilding the WTC Site by managing the design guidelines, contracting for and constructing capital program elements and overseeing the different construction managers and contractors on the site. The remaining staff manage all real estate issues associated with development of the entire site including oversight of Master Plan components controlled by the Agency and by third parties; development and leasing of One WTC and the 460,000-square-foot retail complex; other site development; financial analysis; as well as operations, management and maintenance of project components as they are completed. Revenues and Expenses World Trade Center projected revenues for 2010 are $152 million, which primarily consist of World Trade Center leases, intercompany rent and rentals. Revenue estimates are based on terms of existing agreements. World Trade Center Revenue by Categories Intercompany Rent WT Leases 41% 52% Fixed Rent 7% 48

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