Second Ave. Sagas

Tag: Jay Walder

  • Post: Cuomo must ‘find an equally talented replacement’

    In the aftermath of Jay Walder’s resignation, nearly everyone — except the TWU — seems to think that the MTA is losing a solid and effective leader. The Daily News praised him as the most effective civic leader in New York State right now and ran down his accomplishments while The Post said he did “reasonably well” over the last few years while dealing with uncertain finances and obstructionist politicians.

    With Walder on the way out, the question then becomes one of succession. Who’s next? It’s unclear who the candidates will be, but it doesn’t sound as though Gov. Andrew Cuomo will have an easy time finding a successor. As the News said, “Executives who have full managerial, financial and political skills are few and far between.” The Post meanwhile called upon Cuomo to find an “equally talented replacement.” Between the capital budget and the TWU negotiations, the MTA has a lot on its plate this fall. Cuomo should make sure his candidate is more than just a political crony as the next MTA CEO will set the tone for a much of the next decade if he or she doesn’t stick around all that long.

  • Jay Walder: Escape from New York

    For two years, Jay Walder was literally and figuratively the center of attention at the MTA. (Photo by Benjamin Kabak)

    When Jay Walder made his return to New York, everyone wanted to talk about money. The State Senate, in a fit of legislative revenge, had just ousted Lee Sander and Dale Hemmerdinger as the heads of the MTA, and then-Gov. David Paterson wanted to ensure that his guy stuck around. So Walder and Paterson negotiated a Golden Parachute provision that would have given Walder a nice severance package had New York legislators decided to again remove the MTA head before his term expired.

    As the confirmation hearings dragged on, everyone had a say about Walder’s compensation. He would be overseeing an organization that spans 12 counties and hundreds of millions and employs tens of thousands of workers. Still, the $350,000 he would earn annually as well as a housing subsidy drew raised eyebrows, and even billionaire Mayor Bloomberg spoke out against it. In the end though, it was all for naught.

    Yesterday afternoon, Walder announced his resignation, effective Oct. 21, 2011, and all of a sudden, the Golden Parachute disappeared. Walder is leaving on his own accord, and the money — a pittance compared to his future earnings — doesn’t matter. While I don’t know the finer points of the decisions Walder had to make, I do know that his salary will enjoy a nice bump in Hong Kong, and as I’ve thought more about his departure, I realized it all boils down to a few key themes.

    To me, Walder was an effective leader willing to take hard steps to cut staffing levels and reorganize the MTA. He wasn’t perfect, and he has his critics both in and outside the authority. I believe he’s going to be very, very tough to replace both in his willingness to make those hard decisions and in his knowledge of and love of New York City and its transit system. That said, it’s worth analyzing a few of the driving forces behind his departure.

    Money, Money, Money

    As the MTA had to come to grips with its own finances, Walder’s money often took center stage. The TWU constantly protested against his salary while its members were let go. They protested with post cards; they stood in front of his house. It was one barrage after another, and he wasn’t, in the grand scheme of things, making all that much. A CEO of a private company the size of the MTA would make significantly more than $350,000 a year, and that’s exactly what’s happening.

    As Bloomberg News reported tonight, Walder is going to make $924,000 with “an undisclosed discretionary bonus and interest in shares.” If the United States’ great infrastructure minds can be lured to Asia by the promise of significantly more money, how will America’s cash-strapped transit agencies attract top talent and leadership? New York can’t pay the MTA head $1 million a year for reasons of politics and economics, but Hong Kong’s MTR, of which 76 percent is owned by the government, can.

    Investing in Infrastructure or Shunning It

    As the fallout from Walder’s departure lands, one sentiment runs through it all: Walder’s job in Hong Kong will be much better than his job in New York. Kathryn Wylde of the Partnership for New York summed it up perfectly for Transportation Nation. “He told me he regrets he has to choose between the job he loves here, and a much better job,” she said.

    So outside of the salary, what makes the job in Asia so much better? For one, MTR is a leader in transit expansion. It is currently working on a line that will connect Hong Kong to China’s high-speed rail network while the U.S. is currently canceling commuter rail tunnels and running into obstructionist road blocks when it comes to high-speed rail. While environmental and labor standards are deep concerns in China, a significant number of projects are ongoing. New York’s two subway expansion projects seem positively wimpy in comparison, and even now, the state is hesitant about investing $10 billion into a capital project that would, by and large, maintain our current decrepit system.

    So with MTR, Walder doesn’t have to read about his own money in the press, and he doesn’t have to deal with a broken down state apparatus. Who wouldn’t take that deal? It could very well signal the start of a brain drain to Asia, and that’s a problem politicians must address.

    A Resistant and Rambunctious Albany

    Finally, Walder’s relationship with the state could be another factor. In an interview with The Times, former Assemblyman Richard Brodsky — who is already using Micah Kellner to promote his own MTA candidacy — said Walder may have grown tired of the politicking. “I don’t think Jay has ever been comfortable in a highly political environment,” he said, “and with the budget scarcity that’s coming down the road, it’s likely to get more so.”

    Basically, Walder — and the next MTA head and the next one after that — has to go to Albany and sit there while politicians who never ride the subways and often are from areas of the state a good six hours away from New York City, berate him for what they perceive as the shortcomings of the MTA. They don’t offer solutions, funding or help; they just sit there and yell. It’s tiring for me writing a blog to listen to Albany respond to it all, but when the guy they entrusted to lead gets it every day, I’m sure greener pastures of a cooperative government sound great.

    * * *

    By the time Second Ave. Sagas turns five in November, the MTA will have had at least four different leaders — and perhaps five or six if you count Helena Williams’ stint as interim MTA CEO and the eventual interim will-in for Walder. That turnover at the top isn’t good for an organizational strategy, bureaucratic efficiency or an overall growth strategy, and the reasons for that turnover aren’t going away any time soon. I certainly don’t envy the person who will be chosen to replace Jay Walder.

  • TWU ‘won’t miss Jay Walder,’ ‘glad to see him go’

    While the news of Jay Walder’s sudden resignature stunned transit advocates this afternoon and left politicians praising him for his two years of service, his primary antagonists — Local 100 of the Transport Workers Union — had a vastly different take on the departure. They aren’t sorry to see him go in the least.

    In a statement issued this evening, the union waved their goodbyes. “Transit workers won’t miss Jay Walder and quite frankly will be glad to see him go,” they said. “He has been antagonistic to the union and the workers from his first day on the job. His attempt last year to blackmail the union into major pay and other concessions led to gratuitous layoffs. He ushered in unprecedented service cuts in both subway and bus service, with particular insensitivity to already underserved areas of Queens, Brooklyn and the Bronx.”

    Walder and the TWU did not get along from Day One. Walder came to the MTA amidst a legal challenge against the TWU’s arbitration-awarded raises, and he fought them to the greatest extent of the law, losing at each level. Walder also instituted sweeping changes in staffing levels that led to the axing of many TWU members and had vowed to keep labor spending at current levels during the upcoming contract negotiations. That obviously would have meant more layoffs or no wage increases.

    The TWU really let Walder have it in their statement. It continued: “He never grasped the notion that our bus and subway systems are the most basic and vital service afforded to New York’s working class. And he was ineffective in dealing with Albany to not only secure new funding for public transportation to avoid service reductions, but to protect the dedicated sources of transit revenue. He attacked his blue collar workforce and his own lower level white collar employees. But never looked to upper management on his “quest” for cost savings.

    “He leaves New York City transit in worse shape than when he arrived less than two years ago. We will urge the Governor to appoint a new Chair who will view his workers as allies not the enemy, and a person who fully grasps the magnitude of the contribution of our public transportation to the economic vitality of New York.”

    These are strong words from the TWU which just saw the biggest impediment to its next three-year contract resign. I’ll be discussing this and other Walder developments in a bit on the 11 p.m. news on NBC 4, and I’ll have more thoughts on the resignation later this evening.

  • Jay Walder to resign as MTA CEO and Chair

    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.”

  • Grading Jay Walder

    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.

  • Some thoughts on the direction of the MTA

    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.

  • Walder on the death of the MetroCard

    A swipeless, credit card-based fare payment system could be in our subway-riding future.

    Since taking his spot atop the MTA hierarchy, Jay Walder has overseen a push to bring 21st Century transit technology into a system that has long been resistant to modernization. It was that drive that led Gov. David Paterson to appoint Walder to the authority’s top spot, and while many headline-generating projects — the MetroCard replacement program, the countdown clocks — have been in the works for a few years, Walder has seen them move from concept to reality.

    In a few years, we could be mourning the death of the MetroCard as transit agencies around the world look to move toward an international fare payment standard. For the past six months ending on Tuesday, the MTA conducted a pilot program with Mastercard’s PayPass and Visa’s payWave technologies. In the final segment of my interview with him, Walder discussed the future of fare payment technologies and the eventual end of the swipe.

    Second Ave. Sagas: Improving the fare technology has been a major push of yours over the last year. Where do things stand now? People ask me all the time about improving bus loading times, getting rid of MetroCards, what the next-generation fare payments are going to look like. How soon do you see that technology coming online and what will it look like?

    It may well be that the single most demonstrative benefit of a new fare collection system would be on the buses.

    Jay Walder: I’m glad you raised bus loading times because it may well be that the single most demonstrative benefit of a new fare collection system would be on the buses. The loading times are horrific on buses, and it’s due, in a large extent, to the fare collection system. The difference is that a MetroCard can take several seconds to dip and an Oyster Card in London is 200 miliseconds. We’re talking about a fundamental shift if we’re able to do it.

    The good news out of the pilot program that we’ve had running along the Lexington Ave. line and eight connecting bus routes and express buses is that the system has technologically proven to be satisfactory and has met the objectives that we set out to achieve. It operates off of a standard payments technological platform which I think is beneficial to us going forward. There are some wrinkles that are exactly the sort of thing you would get in a pilot process so better to be doing it in a pilot than otherwise.

    The pilot will end at the end of this month, and that’s important because the history of some of the technology pieces is that we did a pilot to get to the next pilot and then we did the next pilot to get to the pilot after that. The point of the pilot ending is that we are concentrating on moving out into the production phase of getting this done, and I think you will see contracts early-to-mid next year that will be moving this forward for the subway and bus system. They will be done in a way that can and should work with the Port Authority and New Jersey Transit. So we can potentially break down the barrier of the Hudson River that way. Also, we’re moving forward with some tests on how we can incorporate some of this into the commuter rail environment as well so that we might think of changing our fare collection process there.

    Second Ave. Sagas: Do you anticipate that it will look pretty similar to the Pay Pass system as it’s been set up for the trial?

    Walder: There are two parts of it. The actual technology of how this looks will be pretty similar. It might be slightly different, but again we’re trying to stay with standard technology. We’re not trying to build something that’s a custom fit. The second part is that there are elements of what we need to do that are not the norm of what Pay Pass does and we need to find ways to be able to do that as well.

    You’ve also seen, if you look at some of what we’re doing on bridges and tunnels right now, we’ve entered into a pilot program there with Visa at a number of stores across the metropolitan region that may well be a model for how we might use the retail environment to refill cards as well. We’re looking at a whole range of things that are involved in that. I think you’ll see us moving to production phase next year.

    One of the things we have to work out is the degree to which we do this to a parallel, sort of a side-by-side to the MetroCard or do the degree to which we really do this and have it implemented in a wider range of places but don’t really look to turn it on until we know we can take away the MetroCard. We’re trying to figure that out right now.

    Second Ave. Sagas: When will this come online? Is there a year?

    Walder: I’m staying away from giving you a year for the moment because we really need to take all of the results of the pilot into account. We need to develop firm plans for the way we’re going to roll this out, and I’m a little worried about being a hostage to fortune unless I give our people time to look at that.

    But the direction of travel is very clear, the benefits are very clear. It will be something that is simpler for customers and provides more flexibility in the way we utilize our fare structures. I expect a lot more flexibility in the way that you may be able to get cards, reload cards, and do anything like that, including using the Internet in much different ways in which we do right now. We’ll be using the retail environment in much better ways than we’re able to do it right now. We’ll be potentially moving much more of the payments process away from the MTA and into the payments industry which may be a beneficial thing for us to do. Finally, I think it provides a degree of service, customer service, that people will appreciate. I think anybody who uses a cross-town bus will immediately appreciate it.

    This wraps up my interview with Jay Walder. In only 30 minutes, he and I discussed many topics, and hopefully, I’ll be able to sit down with him again in the near future to probe some issues that wasn’t able to cover. In case you missed it, in Part I, I looked at the MTA’s fiscal state; in Part II, we talked about labor relations and alternate revenue sources; and in Part III, I quizzed Walder on the Second Ave. Subway and various other construction plans.

  • Walder talks 2nd Ave. Subway and weekend work

    Jay Walder fields questions while standing in front of the Second Avenue Subway tunnel boring machine. (Photo by Benjamin Kabak)

    On day one, Jay Walder, MTA CEO and Chair, and I talked about the fiscal state of the authority. On day two, I presented his views on labor relations and alternate revenue sources. Today, we start with a topic near and dear to my heart: the Second Ave. Subway.

    We all know the story of the Second Ave. Subway. Eight decades in the making, the MTA is finally building part of the badly-needed line. Phase 1 of the SAS, one of the MTA’s three ongoing megaprojects, is due to be completed at the end of 2016 and at a cost of $4.5 billion. I quizzed Walder on the future of the rest of the project. Today’s is a longer segment so let’s dive right in.

    Second Ave. Sagas: One of the main thrusts of my site is the Second Ave. Subway and the capital expansion plans. I know there’s still some funding needed for Phase One, but I have to assume it’s too far along for the plug to be pulled. The political ramifications from Washington, from the City, from the MTA would just be too great to stop the project. What do you see as the future of the Second Ave. Subway? Do you realistically see a Phase 2, Phase 3, Phase 4? How long should we expect that to take?

    Jay Walder: My focus almost exclusively has been on the fact that we have three megaprojects that we’re doing right now. These are the first megaprojects that we have been doing for a generation — we’re really talking about 70 years depending upon how you count the stuff that has happened. My focus has been on ensuring that we’re able to deliver these projects on the budget and the schedule that we’ve laid out. As you note, our capital program is not funded with all of the money necessary to complete these projects right now, and that remains a concern. We need to find a way to ensure that we are completing these projects.

    At the same time, my other concern is that the mantra of this organization has been that we have to bring our existing system back to good repair, and we need to keep it in that condition. There’s much to be proud of in that regard. I started in this organization in 1983. When I started, the mean distance between breakdowns on subway trains was 7000 miles. It’s about 150,000 miles today. That’s a startling difference. You go around and you look at our station environment, and your jaw drops. Some of the station work is so nice and it’s been brought back — either bringing back the existing stuff and some of the artwork we’ve put in, and other things like that.

    But in fact, what this system is is a huge system that in essence is composed of lots of unseen hidden infrastructure that’s depreciating and deteriorating all the time. We need to continue to invest in that. The scarier thing is not the trains and the station. The scarier things are the signals and the pumps and the track and the shops and the other things that continue to need huge amounts of investment.

    We have a subway system today that has one line — exactly one line — that has modern technology for signals. The L train is the only line on which we’re using communications-based train control. We’ve now awarded a contract for the second line on the Flushing Line. But really, this is the type of technology that we need to be using across our system now. We are fortunate that we don’t have the red tags and the track problems and the other things that were going on in the late 1970s and early 1980s but we don’t have that because we invest hundreds of millions of dollars every year in the normal replacement of tracks. So that’s where I’ve been focused so far.

    If you look at the Second Ave. Subway piece, to their credit, the planners with the way they set this up are achieving a very usable segment of a railway so that when it opens in 2016, you will have something that will connect into the rest of the system, is a usable railway and will make an immediate difference in what happens. You’re well-placed point is that if we don’t stop there, where do we go from here? The intent is that it goes south from there, and funding-available, that is exactly what everyone’s objective will be. We also have pieces of preexisting tunnel north so you may well have the opportunity to pick up both ends of that.

    Will future sections of the Second Avenue Subway see the light of a day? (Click to enlarge the map)

    Second Ave. Sagas: The people I’ve spoken of say Phase 2 would be easier to build out than the other phases, but they wonder what the appetite for a project that’s taken longer than initial thought, that costs more than initial thought. Where will the money come from or the will and drive to see it through? (more…)

  • Interviewing Jay Walder: Labor relations and revenue sources

    A postcard distributed by union leaders earlier this year when MTA CEO and Chair Jay Walder took a summer vacation is indicative of the tense relationship between labor and management at the MTA.

    In yesterday’s excerpt from my interview with Jay Walder, the MTA head and I spoke about the economic pressures which the authority is currently facing. Walder spoke at length about avoiding future service cuts and ensuring that money promised to and raised for the MTA actually finds its way into the authority’s coffers.

    Today, we pick up the thread of the MTA finances but with a different bend. One of Walder’s biggest failings — and he’ll admit it himself — has been management’s strenuous relationship with labor. The TWU, the authority’s largest union which is currently suffering through dissension in the ranks, has not shown a willingness to compromise on benefits, pensions or raises, and with contract negotiations on tap for late 2011, the MTA is searching for ways to rein in runaway labor costs.

    Meanwhile, while maintaining spending levels are a priority, so too are increasing revenues. To do so without service cuts or fare hikes, the MTA has looked to non-traditional sources of advertising. By offering station branding and full train wraps, the authority can drive marketing opportunities and generate more dollars to fill its depleted coffer. Even station names are for sale.

    Second Ave. Sagas: One of the assumptions in the 2011 budget projections, as far as I can tell, is that the labor costs won’t really be increasing over the next two years. Do you think that that’s a realistic and obtainable goal?

    I strongly believe that labor has to be part of the solution. That is a view that has been stated by the governor-elect. It’s a view that has been stated by the mayor.

    Jay Walder: I’m actually very proud of what the MTA has achieved in reducing costs so far, but an area where I’m terribly disappointed that we clearly have not achieved what we’re trying to do is in forming partnerships with our labor unions, to be able to look at this and in essence, say that we’re talking about a historically difficult time in which businesses and families all across the state are struggling. One might have hoped that we might have found the context to stand together with our workforce, shoulder to shoulder and show that we were able to do things differently, that we were able to find different productivity. We recognize that some of the arrangements that had existed for long periods of time, even if you don’t change them for existing employees, need to change on a going-forward basis. We didn’t find a way to be able to do that.

    Having said that, I strongly believe that labor has to be part of the solution. That is a view that has been stated by the governor-elect. It’s a view that has been stated by the mayor. People are saying, “Look, we can’t do this apart from labor. We have to do this with labor.” Some people point to the period in the 1970s when the city was in the midst of its financial crisis, and labor and management did stand together and did try to find a solution to be able to deal with that crisis. It allowed the city to get back on its feet and prosper and grow. I think we’re at that same sort of time.

    Do I believe that it is possible to do it? Yes. It is easy to do it? Obviously not. We haven’t succeeded to this point. I’d be kidding you if I said that. But I do think it’s possible to do it.

    The point that we made is not that our workforce should not be compensated; it’s to say that you really should be tying compensation into the achievement of productivity improvements. Everybody I’ve talked to inside and outside of our organization believes productivity improvements are possible. What we need to do is bring it to the table, to stand together to be able to do this and to say, “Hey, if we’re really trying to figure out how to do this, to protect our transit system, to continue to have jobs for people but to show people that we are really using every dollar wisely, how do we do it together?” I’m not giving up on that. I haven’t given up on that. I believe it is achievable. I think we’ll get there.

    The Shuttle, branded for the Major League Baseball playoffs by TBS and MLB, has become a testing ground for the MTA’s expanding advertising opportunities. (Photo by Lorenzo Bevilaquia/TBS)

    Second Ave. Sagas: The Chicago naming rights deal with Apple has gotten a decent amount of attention over the last few weeks. I know the Barclays deal was the first major MTA naming rights deal. Are there other efforts being made to identify naming partners? Is there a push to look out of the box beyond the traditional sources of revenue?

    Walder: I wasn’t here at the time that the Citi Field issues came up, but I gather we didn’t succeed in that. I think the Barclays deal is the first time we have succeeded in doing something of that nature. Should we be thinking out of the box? What are the ways we should bring revenue in? The answer is yes.

    I hope you’ll think of our advertising contracts in that way. What you saw this year were some real efforts to break down some of the barriers. We’ve done some really neat things in terms of advertising that are bringing real money in, and I think that the win-win on this is where you’re doing some things that both improve the ambiance of the subway environment and the bus environment but also raise some money for the transit system. My favorite one was the wrap on the train for TBS with the television screens. I think that’s a great example of breaking down some barrriers. We’re bringing about $100 million in doing that.

    Let me give you another example which I just looked at this morning which I really like. You’ll look at this and say it’s not revolutionary but I don’t think you need revolutionary. We just opened up a Bank of American ATM location inside the subway station at 42nd St. and 8th Ave. in the mezzanine level above the 8th Ave. Line. Why do I like it so much? Because it’s bringing into the subway environment the type of retail presentation that we’re used to above ground. In other words, you look at this and you’ll say this doesn’t look very different from another type of ATM space that I might go into. But that’s exactly my point. What’s that doing is raising money for the subway but it’s also actually making people feel that this is what I see underground, it is the way I do it, it is bringing me that kind of retail that I want to see. I thought it was terrific because it was doing that.

    All of these things come together. Can we make some money on some of these initiatives? Yes. We will make more money if we can improve the retail environment in the subway system, get greater value out of the spaces that we have there, improve the ambiance and the customer satisfaction. We’ll make more money than all of the naming rights deals that you’re talking about.

    These other things are much more valuable to us if we can find a way to do that. The wrap that we did — the Target wrap — was terrific. There are lots of things you’re seeing this year that are breaking down some barriers.

    I also believe that the way we incorporate technology into our stations also provides an opportunity to be able to increase revenue flow. In that case, we might well be able to actually meet three objectives. We can make some money off of the way we bring digital into our stations. We can be improving ambiance, and we may well come up with some ways to be able to provide useful real-time information to customers that follows and is all part of the same goal. If we can do those three things, than we really knock the ball out of the park.

    Still to come, Jay Walder discusses capital expansion plans, the Second Ave. Subway and next-generation fare payment technologies.

  • Interviewing Jay Walder: On the MTA’s fiscal state

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

    When Jay Walder moved his family and career back to New York from London 14 months ago, he did so with the expectation that he would head a fully-funded MTA. Gov. David Paterson had tabbed Walder to head the MTA as its new CEO and chairman because of his background in technological innovation. Walder was to use his expertise to modernize an authority struggling to incorporate 21st century technology into an early 20th century system.

    Instead, Walder had to face head-on the MTA’s greatest economic crisis in a generation. Thanks to lower-than-projected tax revenues and the outright theft of dedicated funds by the state legislature, the authority found itself $800 million in the red. To balance the budget, Walder oversaw an intense effort to trim the MTA’s operating costs that included $500 million in administrative savings and steep service cuts with a fare hike to come at the end of December. Needless to say, it is not, as I noted in August, how he anticipated spending his first year back in New York.

    Before the Thanksgiving holiday, Walder sat down with me for a 30-minute interview on all things MTA — or at least all things MTA we could cram into a half an hour. I’m going to run the Q-and-A in pieces this week. I’ve edited Walder’s answers only for grammar and, at times, removed some words for clarity and brevity. The words are his. I conducted the interview shortly after the MTA unveiled its latest 2011 budget projections and started off with questioning focusing on the authority’s economic outlook.

    Second Ave. Sagas: What do you see as the best hope for avoiding future service cuts?

    Jay Walder: Answer: I think our plan avoids future service cuts. When we looked at this, we felt that the best way to stabilize the finances of the transit system were as follows. We needed to continue to reduce our costs. We’ve saved over $500 million a year this year from cost actions, a portion of which — less than $100 million — is from service cuts but — and I’m not minimizing that — the other $400 million plus was not that. So we need to continue to reduce costs. We need to find ways to really improve productivity. In what you’ve seen us do right now, you haven’t seen that [increased productivity] within the broader work structure.

    Second Ave. Sagas: Does that include the various initiatives announced in May, including consolidating the Bridges & Tunnels shops and ensuring that LIRR maintenance crews can service Metro-North trains and vice versa?

    Walder: It includes any number of institutional arrangements, work rules, other things like that. While respecting the fact that our employees should be well trained and well compensated, we have rules in many different ways that stand in the way of getting the most productivity and efficiency and being the most cost effective. What we really want to be able to do is prove to everybody that we are actually making every dollar count, that we are an efficient and effective provider of public transit services. And I think if we can do that, than that gives you a very very critical plank in protecting the services that people want. That’s the first part.

    The second part is I think we need to accept that periodic fare and toll increases are necessary in supporting the public transit system. I don’t think we should shy away from that. I don’t think there’s anything wrong with that. I think we should build them into a business plan but I think we should recognize that they need to be predictable and they need to be at amounts that we think are fair and reasonable which broadly approximates inflation and things of that nature.

    The third part is that there is no public transit system anywhere in the world — perhaps with one exception — that operates without public support beyond the riders of the system, and there are lots of reasons why that makes sense. The transit system allows a degree of economic development that would not take place otherwise. You do not capture back into the transit system the value of that economic development. It gets captured into state taxes, local taxes. It gets into the tax base. It provides for environmental benefits that come from it, and it provides in terms of our socially conscious elements. It provides for mobility and opportunity with limiting prices as an impediment to doing that. We have to recognize that’s the third leg of the stool.

    The first leg of the stool is to show that you’re an efficient and effective provider of public transit and that you’re meeting people’s needs in doing that. The second leg of the stool is accept the fact fares are part of the picture and what you’re doing, and the third leg of the stool is the fact that we will rely on public support to do this. If we want to be operating in a way in which we’re protecting the services, we have to ensure all three of these things. Many of these things are interrelated. Your best ability to be able to protect subsidies that come to the transit system is actually showing people that we’re using the money well.

    MTA CEO and Chair Jay Walder is hopeful that transit defenders can pressure the state into delivering money that should be dedicated for transit to the MTA. (Graphic via Streetsblog)

    Second Ave. Sagas: You announced recently that the authority is still waiting for a payment from the state, and Gov.-elect Andrew Cuomo recently spoke of the fungible-ness of transit funding. Are there concerns that the state is going to repeat last year and take money away that’s supposed to go to transit to fill their general budget gap? Where does that leave the MTA?

    Walder: The general budget gap for the state is clear. The state is obviously dealing with a very, very difficult financial situation, and I think that’s clear right now. Clearly all we can do is to project that the taxes that have been raised on the basis that they will be supporting our transit system…the only basis we can work on is the view that those monies will be available to and will come to the transit system. That doesn’t mean that we predict that the economy will get better or other things of that nature. It’s only saying that whatever comes into those funds is available for the transit system. It’s the only reasonable basis for which we can work, and I think you’re seeing some public view put forth by a number of people that says the taxes were raised on this basis. In fact, they were very explicitly stated as “We’re raising this tax to be able to support our transit system because we want to have a transit system that prospers, that allows the region to prosper, that provides opportunity and does other things like that.”

    Are there risks that are there? You’d be hard pressed to say there aren’t risks. I think the fact is that there clearly are risks that are there, but the best argument you can make is that the taxes were raised for this purpose. We’re using the money well, and it’s meeting a public objective that we need to meet.

    The next parts of the interview will focus on Walder’s tenuous relationships with the MTA’s various labor unions, the future of the Second Ave. Subway and the authority’s next-generation fare payment technology. Check back this week for more.