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New York Post

 

Why the PA Should Sell Off the WTC

August 21, 2011

By E. J. McMahon, Nicole Gelinas

The Port Authority toll-hike outrage is a signal to Govs. Andrew Cuomo and Chris Christie, who control the agency for New York and New Jersey: The Downtown reconstruction project is consuming tolls that should go to bridge and tunnel work, not to real estate.

Sure, the Port Authority backed away from its plan to hike tolls by 50 percent -- but only temporarily. EZ-Pass tolls on the Lincoln and Holland tunnels and the George Washington Bridge will reach $9.50 at rush hour in September, up 19 percent. Four years from now, they’ll be $12.50 -- a 56 percent hike.

These hikes exceed inflation by the length of the GWB. E-ZPass tolls rose 60 percent just three years ago. Twenty years ago, the toll was $3. If it had kept up with general prices, it would be $5 today.

The Port Authority is selling its plan with noise about how the hikes are going toward bridges, tunnels and airports. It promises to rerope the GWB, raise the Bayonne Bridge for bigger ships and work on the Lincoln Tunnel.

In fact, even with the new cash, the PA will struggle to fix its aging transportation system -- because World Trade Center rebuilding costs are taking away money that the authority needs to do its real job.

Over six years, the Port Authority has devoted a quarter of its $16.9 billion investment budget to the WTC office towers and related work. This year, work on the rising $3.1 billion One World Trade will consume a third of the budget.

It doesn’t end there; commuters will be shouldering the burden for 9/11 rebuilding for years more.

Despite a “partnership” with the Durst real-estate family, the PA, not private real-estate interests, holds the bag if leasing doesn’t go well at One WTC, which has 2.6 million square feet of office space.

Yes, Conde Nast made headlines with its commitment to take 1 million square feet. But who knows where this media giant will be in five years -- or how healthy Downtown office prices will be?

Moreover, the PA has also partly guaranteed debt for Larry Silverstein to build 4 WTC and promised to lease 600,000 of the tower’s 2 million square feet.

In a few years’ time, too, on Tower 3, the PA is potentially on the hook for $200 million. Eventually, it will take on another 1.2 million feet at the old Deutsche Bank site.

Nothing wrong with gambling for a profit, but it’s the rest of us -- Jersey drivers in the lead -- who are being forced to take this high-stakes bet.

If the PA is stuck for years with an unprofitable real-estate portfolio, the entire regional economy could suffer. Higher commuting costs will discourage employers from keeping jobs in the city. Bigger truck tolls will raise the price of groceries and other consumer goods in New York.

Even if the authority’s bridges, rail lines and tunnels are kept in shape, fewer dollars will be available to fix the crumbling roads that feed them. All of this, ironically, will undermine the value of the new World Trade Center buildings.

The problem isn’t that tolls are going up by half by 2015; it’s what happens in four years’ time, if it’s not enough.

Cuomo and Christie should move the Port Authority beyond the WTC. This is a good time to start -- not just because of the toll outcry but also because the memorial’s opening in a few weeks will be an important milestone.

Cuomo and Christie should direct the authority to look into selling the Tower 5 site to a private-sector investor. Right now isn’t the greatest time, but it doesn’t hurt to start the long process. (That’s why the MTA is starting some real-estate sales now.)

Perhaps the PA could use the money from a sale to simplify its obligations to Silverstein’s towers. It would be worth it -- to end the uncertainty that looms over the authority’s credit.

Long term, the governors’ goal should be what former Gov. George Pataki did 10 years ago last summer, before the terrorists’ attack. As Pataki said in July 2001 when transferring the Twin Towers to Silverstein, “today the Port Authority returns to the core mission of dealing with transportation.”

Recovery would mean doing that -- selling the completed One World Trade Center to a private company outright in the next decade, as market conditions improve.

Letting real-estate firms be really responsible for, well, real estate would let the authority concentrate on those tunnels, bridges and airports that private-sector real-estate profits depend on.

Original Source: http://www.nypost.com/p/news/opinion/opedcolumnists/why_the_pa_should_sell_off_the_wtc_GNinNmxKwCOQAis7flD73J#ixzz1VlHI12sA

 

 
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