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Back to Basics: Get the Port Authority out of the real estate business - sell WTC site
Saturday, July 27th, 2002

When more than 4,000 participants gathered eight days ago at the Jacob Javits Convention Center and soundly rejected the redevelopment plans for Ground Zero, Port Authority officials wisely concluded that it was time to go back to the drawing board. Better yet, they should go back to first principles — get out of the real estate business and back to their basic job.

After he took office in 1995, Gov. Pataki realized that the Port Authority had not completed a major capital project in two decades. As executive director of the PA at the time, I found myself running not only airports, bridges and tunnels, but also a hotel, industrial parks and a language school.

Unnecessary layers of Port Authority management had created a bloated bureaucracy. Staff activities drained resources.

Pataki and the PA's board of directors made it clear that they would accept nothing less than fundamental change. They wanted greater efficiency and a return to the Port Authority's core mission of transportation.

The mission statement the board officially adopted directed the agency "to identify and meet the critical transportation infrastructure needs of the bistate region's businesses, residents and visitors."

With the governor's blessing, the agency responded forcefully to carry out these principles. We made the first operating budget cuts since 1943, at a saving of $105 million. We avoided toll and fare increases that once seemed inevitable. Yet customers saw improved service everywhere, from newly scrubbed, brightly lit tunnels to more courteous, better trained staff at the airports. We preserved the multibillion-dollar capital plan and reduced the time needed to deliver key projects.

To make the agency leaner and more responsive, we stripped away management layers, consolidated departments and redirected resources from staff to line departments. The size of the bureaucracy shrank by 15%. And when challenges arose, the reenergized staff responded magnificently to emergencies such as the blizzard of '96 and the crash of TWA Flight 800 — just as they did on 9/11.

It was during this period of adjusting the workforce to the right size and privatizing the Vista Hotel, the Yonkers and Elizabeth industrial parks, the World Trade Institute and the Brooklyn grain terminal that the PA began studying options for the World Trade Center.

When this process ended in 2001, six weeks before 9/11, real estate developer Larry Silverstein took over the Trade Center in a partial privatization deal by leasing the buildings for 99 years. The Port Authority maintained ownership of the land. New Jersey opposed an outright sale. Further, a complete sale was considered unwise because the Trade Center complex was exempt from the city fire code. A private owner would lose that exemption, and engineers informed the PA that it would be extremely difficult and costly to make the structural changes necessary to comply with the code.

Others argued that an outright sale would cost the Port Authority too much money. State government buildings are exempt from city property taxes and can purchase cheap electricity — about half the price of Con Edison's rates — from the New York Power Authority.

Because these substantial savings were factored into existing Trade Center leases, a private owner would have had to reduce the purchase price to make up for these lost privileges. The value lost to the Port Authority on the sale could have totaled several hundred million dollars. Thus, the 99-year lease was created.

The buildings that eventually rise at Ground Zero, whatever their exact size and configuration, really should comply with the city's fire code. What's more, the city is entitled to full real estate taxes on the site.

So why not get the Port Authority out of the real estate business altogether and get it back full time as a transportation engine for the region?

Remember, when it was completed in the early '70s, the World Trade Center was for years a white elephant whose economic viability was saved only when the state government became a primary tenant.

Also, independent studies have concluded something that the business community already knows: Government bureaucrats are not suited to be in the competitive real estate market.

With a fragile economy, the city doesn't need another downtown development flop. Until last week, the Port Authority proved it was heading down that road again — until the public vociferously objected.

Once Pataki and Mayor Bloomberg agree on an appropriate memorial for the victims of Sept. 11, the remaining land should be sold to private developers who have the market experience and risk capital to determine the proper residential and commercial mix. Silverstein could be given a first option to buy as part of the renegotiation of his lease.

If the Port Authority gets back to first principles, the public will be the winner. Hallowed ground will be preserved. Land values will be maximized by revitalizing downtown. The cash-strapped city will receive full property taxes on the WTC site. The PA can pay down bonded debt with the sale proceeds. Another boondoggle will be averted.

And lower Manhattan will no longer be under the thumb of government social engineers.

Marlin, who was executive director of the Port Authority of New York and New Jersey from 1995 to 1997, is the author of "Fighting the Good Fight: A History of the New York Conservative Party.


© Copyright 2002 New York Daily News

Sally Regenhard,

P. O. Box 70
Woodlawn Station
Bronx, NY 10470

Monica Gabrielle,

P. O. Box 70
Woodlawn Station
Bronx, NY 10470