Jay Walder

Jay Walder has tendered his resignation as MTA CEO and Chair, effective October 21, 2011, the MTA announced this afternoon. Walder, who has served as head of the MTA since October 2009 and has led a remarkable effort to trim internal costs and improve the authority’s bureaucracy, will be joining the joining the MTR Corporation — a publicly-traded company based in Hong Kong that operates rail services in Asia and Europe — as Chief Executive Officer and a member of the Board of Directors.

Walder’s controversial Golden Parachute provisions will not be triggered as he is ostensibly departing the MTA on his own. This is, however a big blow to the authority, and one that seems to be a complete surprise to those in both the transit community and the upper echelons of New York government.

“I want to thank Governors Cuomo and former Governor Paterson for the honor of serving the people of New York State,” Walder said“The MTA’s transportation system is the foundation of the metropolitan region and we are fortunate to have thousands of dedicated men and women who work so hard to provide these critically important transportation services to millions of people each and every day. I believe that we have accomplished quite a lot in a short period, with the support of two Governors, the Mayor, a hard-working Board and many others.”

In an internal memo circulated to his colleagues at the MTA, Walder, a 52-year-old New York native, said he made this decision with “mixed emotions” but has faith that the MTA will continue on its slow upward trajectory. “I believe that this path that we have collectively set forth on together as a company, to amke every dollar count, deliver the best possible customer benefit is one that will serve the MTA and the region well today and in the future,” he wrote. Sources tell me that he sent a similar note to the MTA Board.

Walder will leave New York to head up the Hong Kong-based MTR Corporation which operates commuter rail in Hong Kong and intercity rail services from Hong Kong to Beijing, Shanghan and Guangdong in China. It is also building new rail lines in Hong Kong and China and operates rail systems in London, Stockholm and Melbourne. MTR consults in Asia, Australia, the Middle East and Europe as well and has become a leader in transit-oriented development. The company had total revenues of $3.8 billion and $1.1 billion in underlying profit.

“This is an exciting opportunity for me to lead a publicly-traded, multi-national corporation with a broad set of business activities,” Walder said. “The MTR Corp. is widely recognized for its world-leading rail systems and the innovative property developments that are built around stations.”

MTR’s revenue figures, as The Wall Street Journal posited, may have been a motivating force. According to The Journal, the current CEO of MTR made approximately $1.78 million in 2010, not including stock options. Walder makes $350,000 as head of the MTA with a housing subsidy.

During his two years as CEO and Chairman, Walder has led a successful turnaround in the way the MTA does business. He has cut nearly $1 billion in annual expenses from the MTA’s operating budget and recently unveiled a plan that would cut capital expenses by a total of $4 billion over five years. These savings helped stave off financial doom for the MTA. Meanwhile, Walder pushed through a customer service-focused agenda that included train countdown clocks, real-time bus tracking projects, a commitment to open information and two redesigns of the website. He was also amidst a project that will see the MetroCard phased out within the next few years.

“In challenging times, we brought stability and credibility to the MTA by making every dollar count, by delivering long overdue improvements and by refusing to settle for business as usual,” Walder said.

My Take: For the MTA, Timing Could Not be Worse

As the news sinks in, I’m finding little good in this announcement. The next few months are going to be of paramount importance for the MTA as it must figure out how to close a $10 billion capital funding gap and negotiate a new contract with the Transport Workers Union Local 100. Walder had been a vocal part of both of those efforts, and it appears as though he likely won’t be around to see either through. Gov. Andrew Cuomo will likely appoint an interim CEO at a time when the authority can ill afford to suffer through turmoil at the top.

I also can’t help but feel as though Walder is leaving before the job is done. The MTA is very much in transition as it has tried to cope with an austerity budget, major capital projects and technological innovation. The job isn’t done yet though as funding isn’t in place and projects are in flux. Will the next leader push through countdown clocks and better fare payment technologies? What will happen with the bus tracking projects and the authority’s commitment to providing datasets for developers? What happens with the labor negotiations and the capital budget wrangling?

Walder was the best and most knowledgeable MTA head during the past few decades, and his departure is clearly a blow to the MTA and those fighting for better transit in the New York City area.

Politicians, Advocates Respond: ‘An inopportune time’ for a departure

As the news develops, transit advocacy groups and New York State politicians are readying their statements. “MTA Chairman and CEO Jay Walder has been an effective, innovative leader. He helped restore the agency’s credibility and changed the way it does business, finding billions of dollars in savings during his tenure,” Kate Slevin, Tri-State Transportation Campaign Executive Director, said.” But his departure comes at an inopportune time. New York’s regional transit system faces a capital funding gap that could be as large as $9 billion, and which needs to be addressed in the coming months. Straphangers are at risk. Governor Cuomo must quickly fill this vacancy with an effective leader who has a deep understanding of the transit system.”

Paul Steely White, executive director of Transportation Alternatives, echoed those sentiments. “Jay Walder steered the MTA through its toughest challenges since the bad old days of the 70s,” he said. “Facing a daunting fiscal situation brought on by the governor and state legislature’s repeated budget raids, Walder kept our trains and buses serving millions of New Yorkers 24 hours every day. His work to bring Select Bus Service and Real-Time updates to transit riders is bringing New York City’s transit system into the 21st Century and will help keep the city and region competitive with other global leaders vying for business,
talent and capital. Mr. Walder’s commitment to the necessity of transit in the lives of New Yorkers has set a high bar, and his successor must come with equal leadership to steer the MTA and the region through the rough terrain ahead.”

The RPA put out its perfunctory statement as well: “Jay Walder has done a superb job at the MTA during the past two years of extreme economic challenge. New York will miss his deep knowledge of and passion for the transportation network that makes the region’s economy possible. That network, of course, is bigger than any one individual. We have every expectation that Governor Cuomo will appoint an outstanding transportation professional to replace Jay and continue his work on modernizing and investing in the future of the subways, buses, commuter railroads, and river crossings.”

While speaking with Albany reporter Liz Benjamin, Senator Martin Golden bemoaned Walder’s departure. Golden called it “a loss to the city and state of New York” but doesn’t believe he was pushed out, sentiments I’m hearing from inside the MTA as well. “I think he was just hitting his stride,” Golden said, “and got an offer he couldn’t refuse. It’s unfortunate for us.”

Governor Cuomo, who will have the chance to appoint a successor, issued his own statement: “For nearly two years, Jay Walder has shown true leadership at the helm of the MTA and been a fiscally responsible manager during these difficult financial times. Riders of the MTA are better off today because of Jay’s expertise and the reforms he initiated will benefit all for years to come. Jay’s departure is a loss for the MTA and for the state, but I thank him for his service and wish him the best in his future endeavors.”

Mayor Michael Bloomberg added his take: “Jay Walder is a world-class transportation professional and any city in the world would have been lucky to have him. He set a new course for the MTA during an extremely difficult period when the agency was not given the resources required to meet the City’s needs. He expertly shepherded major projects like the 7 line extension and new bus rapid transit lines, and by embracing new technology, he made significant improvements to the customer experience – from gateless tolling on bridges to countdown clocks in subway stations – that the public will appreciate long after his departure. I was proud to work with him on these and many more projects. He is a first-rate leader with big ideas, and I will miss collaborating with him. He is the type of person we can’t afford to lose, and his departure is a real loss for New York City, the metropolitan region, the state and the country.”

James Vacca, the head of the City Council’s Transportation Committee, didn’t mince his words. “This resignation comes at a crucial time. A year after the worst service cuts in the MTA’s history and yet another fare and toll increase, the most serious challenges for straphangers may still lie ahead,” he said. “While Chairman Walder deserves credit for taking on many structural issues that previous MTA leaders had delayed for a tomorrow that never came, the MTA continues to face a $250 million operating gap and a capital budget that runs out January 1. It’s getting harder and harder to do more with less, and the MTA needs someone at the helm not only who understands the role mass transit plays in the lives of everyday New Yorkers but who is prepared to get to work on day one.”

Jay Walder has been the head of the MTA with the power of both the CEO and Chairman for 16 months, and it sounds as though he’ll serve out his tenure. New York Gov. Andrew Cuomo has seemingly indicated that he’ll keep Walder on board, and it’s the right decision. So how has Walder performed in his job?

A few weeks ago, Theresa Juva, amNew York’s transit beat writer, asked me to serve on a panel of transit-minded folk who would judge Walder’s tenure so far. Juva asked us to grade Walder in seven categories, and overall, we gave him a B. I, however, was one of two panelists to give him an A-. A. Scott Falk, a CB8 member, joined me in that grade, and Gene Russianoff gave him a B+. Bill Henderson of the Permanent Citizens Advisory Committee to the MTA gave Walder a B while Lindsey Lusher Shute of Transportation Alternatives also gave him a B. Peggy Morales from CB 11 gave him a C for reasons that are seemingly out of his control.

Juva asked us to assess Walder on seven measures: cutting administrative costs, reducing service cuts, speeding up bus service, providing bus and train arrival updates, adding new fare technology, improving subway stations and communicating with riders on service changes. The grades I assigned to Walder diverge greatly across categories.

In the first category, I assigned Walder a B+. He’s managed to find over $500 million in annual administrative savings, but it seems as though the MTA could still be trimmed administratively. The authority has layers of management atop layers of managements, and it could still streamline back-office functionality.

In the second category, I gave Walder only a B-. Since coming into office, he has not made friends with labor, but he’ll have to in order to reduce the MTA’s costs of providing subway and bus service. Later this year, collective bargaining negotiations will take center stage, and Walder will have to work with a group of employees who do not like him. While transit advocates and those who want to see the MTA modernize are appreciative of Walder’s work, unionized workers hold him in contempt. To them, he is just another fat cat who collects a paycheck and does not understand the plight of his employees. How he leads negotiations later this year will determine his legacy.

Speeding up bus service has been one of Walder’s crowning achievements, and there, I gave him an A-. He has overseen the expansion of Select Bus Service into Manhattan, and the MTA, during his tenure, will help bring this service to 34th St. and to Brooklyn as well. Select Bus Service is not, however, solely his work as NYC DOT has spearheaded the effort and Walder has inherited a lot of the work. Still, buses are slowly improving across the city.

Where Walder has excelled — and where we expected him to excel — has been in the field of technology, and again, he earned an A- in this category. While the MTA has long tried to get real-time bus and subway tracking measures in place, under Walder, the MTA has stopped spinning its wheels. It recently unveiled an in-house bus tracking system that will soon spread from Brooklyn to Staten Island, and it will equip 200 subway stations with countdown clocks by the end of 2011. Walder hasn’t developed these plans, but he’s pushed them through toward completion.

In a similar vein, I gave Walder a B in new fare technology category. He has committed to a program that will lead to the death of the MetroCard, but although other transit systems have used contactless fare payment cards for half a decade or longer, the MTA won’t be ready to institute a replacement plan for three or four years. He has moved from a pilot program to a replacement program, but the time-to-live is longer than we would hope it to be.

I honored the MTA Chairman with his lowest grade when asked to assess how he improved subway stations. By and large, the MTA’s infrastructure has suffered as the authority has had to cut costs. To keep train service at least steady, the authority has cut back on cleaning costs, and we have dirtier trains and stations as well as more and more rodents to show for it. Walder has a plan to target high-volume stations, but areas from which most riders start their trips are dirtier. I gave him a C+ here but could have scored him lower.

Finally, Walder got a B+ when it came to communicating with riders — or at least attempting to — on MTA service changes. He has led a London-inspired redesign of the MTA’s weekly service advisory posters, and the website attempts to present service changes in an easier-to-understand format. He can’t, however, make more people read the signs, and until straphangers take those signs seriously and read the, the authority can only do so much in that regard.

So why then did I give the Chairman an A- when his average grade is closer to a B? Mostly, it’s a matter of circumstance. Then-Gov. David Paterson brought Walder back to New York with the promise of a fully-funded authority that needed to be ushered into the 21st Century. Instead, the former Transport for London official met his new job with word of a $300 million budget gap followed shortly by the theft of $143 million in dedicated funding by the legislators that approved his appointment. He went from enjoying a $0 balance to presiding over a $500 million deficit before his first three months on the job were out.

Since then, Walder has tried to minimize the service cuts while pushing forward on the capital investments. He has seen rider-oriented technology arrive in a system allergic to innovation, and he has cut costs in ways his predecessors had never been able to. Still, he hasn’t worked well with labor, and the next eight months could be just as important as the final 44 he has left in his tenure. The capital budget has a $10 billion gap, and the MTA’s arduous labor contracts are up for renegotiation.

This year won’t determine his ultimate legacy, but it will allow us to see in which direction the MTA is heading. Administratively, the authority on the right track, and I still believe Walder is the right person for the job. Still, as the MTA loses political and economic support, I wonder where our services will be in another 16 months.

Now that I’ve presented my views, how do you feel Walder has done? Vote in my poll below, and feel free to chime in with a comment.

Jay Walder is the center of attention during an April ribbon-cutting ceremony. (Benjamin Kabak/Second Ave. Sagas)

Now that I’ve had an opportunity to run my complete interview with MTA CEO and Chair Jay Walder, I wanted to wrap up the series with my thoughts on the leadership at the MTA. The authority, routinely under fire by straphangers, politicians and everyone in between, has faced some rocky times, and the next legislative session could, as Streetsblog’s Noah Kazis detailed today, lead to more reappropriated and stolen transit funds. It’s not been an easy few years for the MTA.

Yet, despite tough economic times, the agency is currently growing its transit network. Within the next six to eight years, we’ll see part of a new subway line open along Second Ave. We’ll see Long Island Rail Road service into and out of Grand Central. We’ll see the 7 line reach the Far West Side and the Javits Center.

Beyond the expansion of service, we’ve also seen new customer-focused initiatives. Countdown clocks now tell riders exactly how long they must wait for trains, and commutes are less stressful because of it. A better website delivers real-time information about bus locations and service outages. New York City Transit even has its own Twitter account to amuse and inform its 10,000 followers. This is an MTA that has, sometimes kicking and screaming, entered a better era.

That isn’t to say that the authority is problem-free. As funds are tight, services have been eliminated even as capital spending is steady. We lost the V and W trains earlier this year and saw countless bus lines eliminated. We wait longer for off-hours trains and suffer through dirtier platforms that are in desperate need of rehab and renovation. For all of this, we’re getting a fare hike in four weeks. To make matters worse, even the major capital projects are hundreds of millions — if not billions — of dollars overbudget and years behind schedule.

All of which leads to two questions: How has Jay Walder performed as the first leader to act as both Chair and CEO of the MTA? Is he the right person for the job?

By and large, Walder has worked well with what he has, and what he has is not much. Walder came back from London with the promise of a fully funded MTA and a request or even a mandate to modernize the system. Only half of that vision has come to fruition, and his tenure is very much a work in progress. He is still, for instance, amidst an effort to overhaul and discard the MetroCard.

What drives many of Walder’s recent initiatives, even as service is scaled back and fares go up, is the need to, as he puts, make every dollar count. It’s important to replace the MetroCard with something more efficient because those are easy cost savings. By improving fare collection by just a few cents on the dollar, the MTA can generate upwards of a $100 million in added revenue every year. It shouldn’t take an economic crisis to address such an easily solvable problem, but change does not come easy to the MTA’s bureaucracy.

Where Walder has fallen short has been with labor. Right now, labor relations between the MTA and its workers are at a low point. The authority begrudgingly assented to an arbitration award for the TWU that required 11 percent in raises over three years, and Walder has overseen a drastic reduction in the number of personnel staffing stations. Even as modern technology can create a safer environment than a lone agent in his or her station, the appearance of a person can be a strong deterrent.

Soon the labor battle will rear its head again as the TWU’s contract comes due after 2011. Management at the MTA is expected to take a tough stance. It is there goal to maintain the labor spending levels, and that either means far fewer employees or no raises. No matter which path the authority chooses, Walder will have to convince a reluctant union to sacrifice, and if he cannot do that, then costs will continue to climb and climb and climb. Making friends with the workers will be of paramount importance.

Today, we know Walder, as we knew his predecessor Lee Sander, as a politically responsible choice to head a transit agency. His expertise lies in running a transit system and not in operating a real estate empire. He’s learned a lot during his first 14 months on the job, and he’ll be the first to tell you that. As we near the reign of Gov. Andrew Cuomo, Walder’s job could be in danger, but if Cuomo were an astute politician, he would keep Walder on. Flaws and all, he’s one of the stronger allies the MTA has right now.