The idea of breaking up the Port Authority of New York and New Jersey is almost as old as the bi-state agency itself. On Thursday, the idea got a new boost from Scott Rechler, CEO of RXR Realty and until recently the Port Authority’s vice chair.
“Maybe in reality it’s impossible to keep it from being attacked by politics,” he said at the Anchin Construction & Development Forum, adding that it may be time to ask, “Should we break it up?”
Rechler didn’t exactly back a breakup, he just floated it as one possible solution to the agency’s travails, along with appointing an independent CEO and revamping its management structure.
According to Rechler, a key flaw of the agency’s structure is that each governor can blame its failures on someone else, making it easier to tolerate inefficiencies. Breaking it up would solve that incentive problem. “The advantage is that each governor in each state is accountable for the success of their assets,” he said.
Rechler has said in the past that a breakup “should be considered” but also cautioned against doing it too abruptly. A Cuomo appointee, he joined the Port Authority in 2011 and announced his departure in late April.
At a panel in September, Rechler joked with the crowd that when he was appointed in 2011, Gov. Andrew Cuomo “didn’t really explain to me the Port Authority was some sort of combination of Boardwalk Empire and Scandal in terms of what goes on there.”
The agency has long been plagued by infighting between appointees from New York and New Jersey, stalling important projects. Most recently, the two states quarreled over a new $10 Billion Bus Terminal On 42nd Street in Manhattan.
Rechler also questioned the Trump administration’s plan to spur infrastructure investment, suggesting that it should shift the focus of planned subsidies. Trump’s current plan calls for tax subsidies to companies that build tunnels or bridges in public-private partnerships. Rechler argued that up-front gifts to firms that offset much of their investment don’t create enough of an incentive to finish projects on time and on budget.
“You want (investors) to say ‘I’m going to lose money unless I’m’ successful,” Rechler said. “So you really want the tax credits focused on the debt market, like the Build America bonds.”