The Real Deal New York

Will LaGuardia cost $5.3B or $4B? Depends on your math

NY and NJ leaders of Port Authority can’t agree

March 24, 2016 03:00PM
By Kathryn Brenzel

Rendering of LaGuardia

Rendering of LaGuardia

The redevelopment of LaGuardia will cost an estimated $5.3 billion, or it will cost $4 billion — it depends on who you ask.

The Port Authority of New York and New Jersey on Thursday unanimously approved the $5.3 billion redevelopment program for LaGuardia Airport. But Pat Foye, who was appointed by Gov. Andrew Cuomo in 2011, railed against news reports that the cost of the project swelled to $5.3 billion, saying that the estimation incorrectly included funds previously approved (under different governors) for the project — even though Thursday’s resolution included those numbers.

Other commissioners, including Michael Fascitelli, agreed, saying that the agency couldn’t approve money approved in the past. Foye pointed out that the design-build contract — with a Skanska USA-led team tasked to build a new Terminal B — has a fixed price of $4 billion. The project also has a fixed completion date of 2023.

But Chairman John Degnan, an appointee of New Jersey Gov. Chris Christie, disagreed, saying that the $1 billion approved in 2004 for planning and design for Terminal B and other components of redevelopment — like the East End Garage and the demolition of certain hangars — and another $406.6 million authorized for the construction of the West Garage should be included in the project’s total cost estimation. He said that Foye shouldn’t “artificially deflate” the cost of the airport overhaul by excluding previous costs, comparing the arithmetic to laying the foundation for a house, and then not including the cost of the foundation when the house is completed 10 years later.

“Let’s be honest when we talk to our public,” Degnan said. “The cost of this project is $5.3 billion.”

Foye praised the project as the largest public-private partnership in the country, noting that the design-build team (LaGuardia Gateway Partners) will be contributing $1.8 billion to the project. Design-build, a project delivery system that Cuomo is seeking to expand in the state, is often touted for streamlining the development process and for shifting cost and time risks to the construction team.

Degnan pointed out that by not constructing the terminal itself, the Port Authority is forgoing operation revenues for the next 30 years.

“There’s no free money. We’re paying for it all,” he said.

Joe Sitt, chairman of the advocacy group Global Gateway Alliance and head of Thor Equities, praised the Port Authority’s approval of the redevelopment of LaGuardia and called the Central Terminal Building the “linchpin in transforming LaGuardia from ‘third world’ to first class.” He also called on the agency to “a adopt a careful and transparent” to the project.

“At the same time, the Port Authority must clarify the total budget and timeline for the planned redevelopment of LaGuardia, where too many questions have already arisen, and increase transparency so the public can track progress and the project remains accountable,” he said in a statement.

Aside from rumbles over the estimated cost, Commissioner Kenneth Lipper also took issue with the language of the resolution. Lipper called the wording the “greatest politicization of the Port Authority that I’ve ever heard of,” arguing that it wrongfully granted the agency’s executive director authority to finalize the contract.

“We are being asked to delegate board authority to someone who we have no control over, currently,” he said. He pointed to the cost overruns of the World Trade Center Transportation Hub. “This is how the Oculus happens. This could make the Oculus look like pussy-footing around.”

Lipper requested an amendment to the resolution that would require the executive director to confer with the board for projects worth more than $500 million. His fellow commissioners, however, pushed to vote on the issue as a separate resolution that would apply to all projects, rather than just LaGuardia. Lipper initially voted in favor of the LaGuardia redevelopment but later — with the blessing of his fellow commissioners — changed his vote to “abstain.”

The redevelopment of LaGuardia is one of several long-delayed projects that Cuomo has recently made a point of championing. In January, he restarted the redevelopment of the James A. Farley Building and Penn Station. He also proposed a $1 billion expansion of the Jacob Javits Center.

“This vote marks a critical step forward in our effort to overhaul LaGuardia Airport,” the governor said in a statement. “Our plan will fundamentally transform LaGuardia – replacing what is now an outdated and poorly designed complex with the world-class airport New York has always deserved.”

In his press release, Cuomo also echoed the $4 billion price tag for the airport.