Second Ave. Sagas

PATH and the problem with Port Authority

Written by

Benjamin Kabak

in

While the Port Authority’s future has been in question lately, the bi-state agency’s present has come under the microscope as well Though we’ve long known just how the Port Authority has become a victim of its two overseers and how its projects have strayed far from its core mission into the realm of political whims, a new report issued by NYU Wagner’s Rudin Center for Transportation Policy & Management underscores just how deep these problems run.

The report, authored by Mitchell Moss and Hugh O’Neill, is available online, and Matt Flegenheimer of The Times offered up a succinct summary of the key takeaways:

The report…says the agency spent more than $800 million from 2002 to 2012 on “regional projects” chosen by the governors’ offices. In the coming years, the pace of spending on zero-return state projects is expected to accelerate. As a result, the most powerful testaments to the agency’s peril, according to former agency officials and transportation experts, are not found amid the bridge access lanes of Fort Lee, N.J.

They can be traced to the grounds of industrial parks built in the Bronx and in Yonkers, with little obvious transportation purpose, or along the Pulaski Skyway, which the agency agreed to rehabilitate after Mr. Christie canceled the construction of a rail tunnel beneath the Hudson River in 2010 and claimed billions in planned spending to be New Jersey’s money.

The prospect of reform is particularly urgent, according to the review, given the increasing burden posed by the PATH rail system. In 2012, the system lost about $400 million, according to data compiled by the authors, more than twice its loss in 2000.

The report estimated that between 2002 and 2020, the agency will have put more than $4.6 billion into the PATH system, and that excludes more than $1 billion in spending on a new PATH station at the World Trade Center. “It is no longer possible for the Port Authority to adequately fund its own facilities and services while simultaneously allocating hundreds of millions for non-revenue-generating state projects,” wrote the report’s authors, Mitchell Moss, the Rudin Center’s director, and Hugh O’Neill, a former assistant executive director at the Port Authority.

The report essentially follows these threads of argument deeper. The zero-return issue is a big problem, and one that strong leaders will have to tackle by defying the governors who appoint them. I doubt we’ll see too much movement in that regard any time soon.

But let’s look at the PATH problem. The PATH system should be one of the Port Authority’s bigger focuses. Unless PATH is somehow integrated into the MTA — a politically challenging move to say the least — it remains an important part of the Port Authority portfolio, but unlike the MTA, PATH is funded only through tolls and other PA revenue. As the report notes, “PATH is today the only major rail transit system in the U.S. that is funded entirely through a combination of farebox revenues and subsidies from other transportation facilities, without any support from broader-based tax revenues.”

That’s all well and good for PATH, but the taxes that fund the MTA, for instance, a key revenue driver. Without them, fares would be impossibly high or service highly inadequate. As Moss and O’Neill note, that could be PATH’s fate: “Without some broader base of support, the next decade is likely to see continued escalation of bridge and tunnel tolls and PATH fares, increased pressure to cannibalize revenues from other Port Authority businesses to further subsidize PATH, sharp reductions in service – or some combination of all three.”

Instead of bolstering what the report calls reliable, low-cost, trans-Hudson rail service that has fed Jersey City’s rebirth and Lower Manhattan’s recovery, the Port Authority has become mired in zero-return investments that New York and New Jersey Governors have pushed. It’s an unsustainable business model for the PA and one that has ramifications that extend well beyond the Port Authority’s little fiefdoms. Somehow it needs to change, but I’m not optimistic it will.

Comments

44 responses to “PATH and the problem with Port Authority”

  1. Stephen Smith

    PATH is today the only major rail transit system in the U.S. that is funded entirely through a combination of farebox revenues and subsidies from other transportation facilities, without any support from broader-based tax revenues.

    If the MTA had the same tolled-bridges-and-tunnels-to-money-losing-subway-lines ratio, they could easily support themselves, too. It’s an accounting trick.

    Reply
    1. Bolwerk

      Accounting trick? It’s an accident of PATH not being able to have “broader-based tax revenues” for political reasons. It does have other facilities, and they do supply revenue.

      If it’s a trick, it’s more a budgeting trick.

      Reply
    2. pete

      MTA already uses half of each bridge toll to subsidize public transit. The MTA doesn’t have enough bridges though. Why not give the Willis and 3rd Ave bridges to the MTA? :-p

      Reply
  2. Andy K

    How do you loose $400mil/year on a 13.4 mile subway system?

    Reply
    1. RichardB

      Without knowing the basis for the calculation of the $400 million dollar loss it’s not easy to tell but as a rule of thumb most metro systems make a loss when capital infrastructure is accounted for with the possible exception of places like Hong Kong and Tokyo where because they make so much additional revenue from property related investment at stations they can actually be considered to be profitable in all senses of that term. What you should be aiming for is covering all your operational costs of running e service. In London we are covering over 86% of these costs and we are gradually moving towards a “profit” within the next five years.

      However this is only achievable through a high tariff on fares plus increasing patronage. I get the impression that New York’s fare structure limits that possibility which is a problem as you are then wholly reliant on subsidy or cross subsidy to fill the gap. Worst of all is a reliance on debt to fund the gap. I think New Yorkers would fiercely object to London type ticket prices but that is probably the only way out of this mess unless the city and state governments wish to divert more of their tax revenue to cover the costs.

      New York City via its mayor should be directly responsible for the management of MTA and ideally PATH as well although I recognise the latter is more problematic due to the two states being involved but realistically the current system is deeply flawed as neither governor or the state assemblies have any real stake in the transit systems. I know there are historic reasons why such agencies were set up at arms length from the mayor’s office but it is something that needs re-examination as the icy government does have a real stake in the viability of transit systems even if individual politicians are unaware of this. Interestingly enough the mayor if London is judged to a considerable extent in his ability to manage and improve London’s transport needs and as a resident of London I would say the travelling public has gained from this relationship. However London’s mayor has a genuine degree of power to make changes and Transport for London (TfL) has to do so he says.

      Reply
      1. Alon Levy

        the possible exception of places like Hong Kong and Tokyo where because they make so much additional revenue from property related investment at stations they can actually be considered to be profitable in all senses of that term.

        This canard again? Tokyo and Hong Kong (and Osaka, and Singapore, and maybe Nagoya) urban rail lines are profitable purely on transportation revenue. The real estate development has higher margins, but doesn’t subsidize the trains. They’re synergistic – the real estate creates demand for train travel, the trains raise real estate value – but even systems that do not engage in real estate development (Tokyo Metro, Toei, the Osaka subway, the Singaporean companies, JR East traditionally) are profitable.

        Reply
        1. MLD

          They are also profitable because there’s zero competition from other modes, and they crowd passengers on the trains.

          They are efficient from a farebox standpoint, and a big part of that is that they are “efficient” from a persons per square meter standpoint. People in the US or Europe won’t stand for that level of crowding on a regular basis.

          Reply
          1. Bolwerk

            When trains get too crowded, everyone stops using them.

            Reply
            1. johndmuller

              Didn’t Yogi Berra say something like this? Perhaps: Nobody goes there anymore, it’s too crowded.

              Reply
          2. Alon Levy

            Zero competition from other modes? Um, no. You may not be aware of it, but car ownership in Tokyo is not much lower than in New York. And the fares in Tokyo are the same as in New York, so if there’s no competition, how come they don’t jack up fares?

            Reply
      2. lop

        The MTA has limited ability to increase fares – both because it is used as a welfare agency, to increase social equity by providing cheap mobility to those who cannot afford to drive or otherwise get around because other social services are inadequate, and many can afford to drive because it is so highly subsidized and often encouraged by other arms of the government.

        Reply
        1. Bolwerk

          The only “welfare” the MTA arguably provides is a high level of extra staffing, benefits, and remuneration to the TWU. People do need mobility; if that’s welfare, it’s welfare to business owners.

          Reply
          1. pete

            +1

            Plus funding construction union pension funds in addition to transit union benefits.

            Track workers only work an hour or 2 each night but are paid for atleast a 6 hour shift. How many times to do you see a whole gang of them sitting on benches or subway stairs reading newspapers, station after station? I see it every night.

            See also http://www.nydailynews.com/new…..e-1.433685

            The car cleaners do the same thing http://bkabak.wpengine.com/201…..n-the-job/

            Reply
        2. Michael K

          I agree. $2.50 per trip is waay too cheap. It should be dynamically congestion priced – perhaps $5 to enter at 86th & Lex during the A.M. peak and the like.

          Reply
          1. Tower18

            The problem with this is that it incentivizes exactly the wrong behavior. Raising costs in times of congestion incentivizes people NOT to use transit in exactly the times when we’d really hope they use transit.

            The only alternative structure is distance-based fares, but these are also a non-starter in New York for various other reasons.

            Reply
      3. BruceNY

        New York long ago set a precedent of creating the expectation of maintaining one set fare for all. And the city basically put the IRT and BMT out of business by not allowing an increase to the nickel fare for over a generation.
        The idea of charging fares by distance has always been a political non-starter here because it is labelled as a “tax on the poor”–they tend to live further away from the core.

        Reply
        1. Michael K

          Maybe it is time to run the system like a business and not a political welfare program.

          Reply
        2. pete

          Maybe its time to do something about the crush loads. If you increase fares to Manhattan (distence fares), then there will be less jobs on the island and less commuting time since job centers will be more distributed. It also makes better use of existing transit lines you won’t have empty unused trains going to the outer borough terminals to reverse and go back to the island.

          Reply
          1. AG

            The commuter rails have distance fares and that hasn’t changed a thing. All that will happen is more poor ppl will be squeezed more.

            Reply
  3. BoerumHillScott

    Using 2012 actual numbers seems like a bad idea because of Sandy.

    Pre-Sandy, in 2012 PATH was budgeted to have 78.4 million trips, and was budgeted to lose $162 million from operations ($303 expense, $141 revenue), for a budgeted loss of $2.06 per trip.
    This seems in line with national averages.

    The capital budget was $351 million.

    The thing that jumped out at me is that 22% of the operating expense and 24% of the capital spending is devoted to security.
    That seems insanely high to me. Any ideas where that money could be going?

    Interesting read:
    http://www.panynj.gov/corporat…..budget.pdf

    Reply
    1. Tower18

      WTC?

      Reply
    2. Bens

      There are at least five to ten PATH police in every station at all times, plus there’s always a military presence at the WTC station (National Guard, I guess, not sure if the Port Authority pays for that cost or the U.S. military does). The Port Authority is ridiculously terrorism paranoid, and it’s also a great sinecure to be a Port Authority cop.

      Reply
      1. AG

        Ummm – there is a lot of waste… but security is NOT one. There is no paranoia. I guess you forget how many plots against NYC infrastructure have been foiled. Not to mention 9/11 happened after the 93 bombing – and other foiled plots.

        Reply
        1. Benjamin Kabak

          Let’s be honest about this: There’s good security spending and there’s bad. Those plots you mentioned were foiled because of idle security guards sitting in expensive hallways. The PA approach to security spending doesn’t fall on the “good” side of the ledger. It’s security theater, not security.

          Reply
          1. AG

            yes we can honestly say that none of us on here knows what goes on behind closed doors. Nor are we security and terrorism experts.

            Bridges – tunnels – subways – buildings were all targeted and had their plots foiled before they got too close.
            I’d rather pay for security than a lot of the other bloat that goes on. I don’t care if it stops one rouge bomber – that’s enough for me. Who is to say someone with malicious intent couldn’t have breached the WTC site as has been done recently by pranksters? All it takes is one.

            Reply
  4. Larry Littlefield

    The average PATH worker gets paid a hell of a lot more than NYCT workers. The cost of a PATH ride is very high.

    http://larrylittlefield.wordpr…..-for-2012/

    And that cost has soared.

    http://larrylittlefield.wordpr…..7-to-2012/

    From a labor relations point of view, since the Port Authority can borrow its employee deserve to get ahead of other workers, who come out behind. It’s one of the things I called out in my posts using FTA data.

    The small size of the PATH may also work against it. It wouldn’t take much of a productivity gain, perhaps from better equipment and even better work scheduling, for NYCT to maintain the PATH tracks and cars with the same staff it has now.

    Reply
  5. lawhawk

    The $4.6 billion includes buying a new fleet of cars that took PATH from operating the oldest rail fleet in the nation to the youngest. It was a long time coming and necessary given the problems with maintaining the aging fleet.

    It also includes the recovery following the 9/11 attacks, including building the temporary station at WTC, crossovers at Exchange Place, but far and away the biggest cost increase is security.

    It’s also one area where governors of both states could move with minimal effort – shift the security requirements onto local police, rather than the far more costly PAPD.

    NYPD could shoulder that burden just as easily as it absorbed the Housing Police years back. There’s no reason to maintain a separate police force for JFK, LGA or other facilities wholly within one jurisdiction. Bistate facilities could pose a problem, but even there, swapping PAPD for a combination of local police coverage would result in a cost reduction.

    Reply
    1. Spendmor Wastemor

      But how else could you find a way to pay $100K salary/benefit packages for several hundred people to stand at toll booths and watch bridges?

      Reply
  6. Rob

    “increased pressure to cannibalize revenues from other Port Authority businesses to further subsidize PATH, sharp reductions in service – or some combination of all three.” – but no pressure for opto.

    Reply
  7. Ray

    Seems to me the PA needs to find as many ways as possible to close the gap. Employees seem to be the biggest cost. And doesn’t 1000+ employees seems incredibly excessive? Could they share personnel with the MTA? Could they share MTA maintenance yards?

    I’m interested in how Christie and NJ taxpayers would handle the burden of running PATH largely on their own. Other than west of Hudson Metro North Riders, which are likely a very small share, New York State has little interest.

    Reply
    1. Bens

      New York almost certainly gains more from PATH than New Jersey does. New York gets to have all those extra people commute into and shop in the city who otherwise might not, which means they work in NYC and boost NYC and state’s commercial and sales tax revenues without burdening the city with most of the costs associated with residential development. (This is less true in NYC, but typically residential development is a tax drag while commercial and industrial development are a tax advantage.)

      Reply
      1. AG

        A large percentage of high earners who live in NJ work in NYC. NJ absolutely benefits from it’s transit access to NYC. If those were shut down – what would become of NJ’s economy? Long Island – Hudson Valley and Connecticut would have to become more dense to take in additional resident commuters – but NJ would be devastated.

        Reply
  8. PA

    A few of you are speaking without knowing what you’re talking about.

    The PA is broken, yes, and the report – which contains neither ground breaking insights nor novel ideas – does an OK job of BEGINNING TO explain why, but it doesn’t even come close to looking under the hood.

    The issue ultimately is politics. The cited “failed business model” isn’t a model at all, but rather an ad hoc approach to Agency spending driven by each Governor’s whim. The Agency is full of qualified professionals who would love to do things the right way, but the politicization of the Agency prevents just that.

    The idea of employee salaries being the issue – except for the PA Police which is an ENORMOUS problem – is a red herring and an easy – and distracting from the larger picture- target. The current administration(s) have done a tremendous job portraying their concerns about the Agency as genuine, but they have done more to destroy this agency in the past several years than those administrations of the past several decades. Any and all of you who were seduced by Cuomo and Christie can thank yourselves.

    Also – The idea of sharing maintenance yards is amusing. Think about how ridiculous that thought is. I suggest that the author of that suggestion take a look at a rail map and/or try to understand how mass transit and rail works.

    Reply
    1. Larry Littlefield

      I know the map and how it works.

      For that to be a workable suggestion, there would have to be place where the 6th Avenue PATH line was at the same elevation of as the local tracks of the 6th Avenue IND, and a switch would have to be installed.

      And the 250 or so PATH cars would have to be modified to run on the different power of the NYC subway as well.

      All of which means that for this to be possible, it has to be thought of and planned for years and years ahead. For example, the replacement of the 6th Avenue signal system is coming in the next decade if ongoing normal replacement doesn’t stop, and the PATH signals are being replaced (again) now.

      By refusing to consider the possible efficiencies of having PATH cars have their heavy work done up at 207th Street, therefore, one continues to make it impossible.

      Reply
      1. John-2

        A PATH/MTA combo of resources really only makes sense if both sides/states get truly serious about the 7 extension to New Jersey (even then, you’d be looking at some type of PATH extension from Hoboken to Secaucus in order to share connections/new yard space with the 7 somewhere near the Lautenberg Transit Center).

        Reply
      2. Michael

        There is a hidden assumption that somehow the PATH subway system is inferior to the MTA’s subway system. Notice the rhetoric – having PATH trains repaired at 207th Street, rather than the idea of MTA subway trains being repaired in say, Newark. Or the consistent transit-fan bias that the IND system is somehow better, so it is better to connect other lines to it.

        Defining whether the proposal is “good or bad” also has to take into account the various “on the surface” as well as the “hidden” assumptions and thoughts.

        For example, exactly why is it better to join the two wholly separate systems? Especially when there’s a discussion about the PATH being a huge “un-manageable” agency, with another huge “un-manageable” agency. The grass on the MTA’s side is not exactly green and plush.

        Mike

        Reply
        1. Larry Littlefield

          It isn’t a question of superior. It’s a question of expensive. The cost per ride, per employee work hour, per revenue vehicle hour, etc. is much higher on the PATH.

          And here is the problem with that. The PATH is a small system in a dense area, like Hong Kong. It gets all these people transferring, and doesn’t have to move them far. Its costs do not include low ridership outlying stations, such as the Rockaways.

          Sandy and 9/11 didn’t help. But the housing booms in Hoboken and Jersey City certainly did.

          So what is going on? I see two possibilities. PATH workers are less productive and/or more highly paid than NYCT workers. Or PATH workers are less productive BECAUSE the system does not benefit from economies of scale. Or is it something else?

          The question needs to be asked, and the answer found.

          Reply
          1. Nathanael

            Apparently the Port Authority is spending 25% of PATH’s budget, both capital and operating, on “security”, which I think points you to the biggest problem at PATH.

            Dissolving the Port Authority Police would seem to make a hell of a lot of sense.

            Reply
            1. Larry Littlefield

              That’s interesting. The Census Bureau data on the Port Authority doesn’t have any employment in the “police” category. I assumed the police was buried in “other and unallocable,” which is by far the biggest category of PA employment.

              But perhaps for budget purposes, the police are spread around as agency costs, and thus reported to Federal Transit Administration as a transit cost.

              Bottom line — the question has to be asked and answered.

              Reply
      3. Bolwerk

        Not really helpful, but the power systems may be similar enough where they could work together. I think some NYC third rails even are the same 600V DC as PATH. I think the PATH car was based on the same design as the IRT’s R143 too.

        I don’t know that sharing a yard is exactly a panacea though. It’s not a bad thing for yards to be near the lines they service, and moving equipment over an active line unnecessarily is probably disruptive. And, well, there is probably more room for yards in NJ.

        They should be reciprocating fares and sharing riders, however.

        Reply
        1. Larry Littlefield

          Not sharing a yard. Sharing maintenance.

          NYCT has yards all over the city. And some maintenance is done at shops near these yards.

          But most of the major maintenance is done in two places: 207th Street for the “North” division and Coney Island for the “south” division.

          If there could be a track connection between the PATH and the 6th Avenue line, PATH trains could be run up to 207th Street for their major scheduled maintenance. NYCT Car Equipment has had major productivity gains over the past 30 years, and as for the quality of their work, MDBF speaks for itself.

          Reply
          1. Bolwerk

            True I guess, but it seems like a hassle when you already have a heavy maintenance facility in NJ. I don’t see the economy of scale or any other advantage like a cash injection by selling a facility to developers. That last bit would be cool, but the IND doesn’t have a viable path to NJ, and I would guess the facility in NJ is inadequate anyway.

            Reply
  9. johndmuller

    Those who wish to integrate PATH into the MTA subway system seemingly have in mind that free transfers would be provided (perhaps along 6th or at the WTC) somehow.

    Unless PATH were subsumed completely into the MTA, PATH would lose up to 50% of its revenue under any reasonably fair arrangement, while the MTA would lose the same dollar amount, but representing a smaller percentage of its revenues. Of course, the same loss would accrue even if the services were combined.

    Under such a scenario, it would be reasonable to charge PATH users somewhat more to board in NJ (sharing this with the MTA if they were still separate). This could provide a foot in the door for those who favor a move away from the single fare system, possibly providing a blueprint for the 7 extension or other expansions like Nassau or Westchester counties.

    Reply
    1. Bolwerk

      They can still be separate agencies even if they honor each other’s transfers. PATH could set fare parity with the MTA, and the MTA could treat PATH transfers as out of system transfers or bus transfers. Assuming they draw some new users because of it, it shouldn’t be too difficult to cover the loss or come out ahead.

      Not saying it would definitely work without wider reforms, but it’s certainly something to study.

      Reply

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