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Top Christie Port Authority appointees devised toll-hike plan to bolster image of NJ, NY governors
Sunday, March 2, 2014
BY SHAWN BOBURG
North Jersey.com
Years before they resigned amid a scandal over politically motivated lane closures at the George Washington Bridge, Governor Christie’s top two executives at the Port Authority led a secretive campaign to quickly push through controversial toll hikes on the Hudson River bridges and tunnels by drowning out criticism, limiting public input and portraying the governors of New York and New Jersey as fiscal hawks who reined in an out-of-control agency.
At its heart was a plan to have the Port Authority, an independent bi-state agency, propose an enormous toll hike — a $6 increase that would bring the E-ZPass toll to $14 by 2014 — so that the governors could then scale it back. The smaller increases that were ultimately approved in 2011 — $4.50 over four years — allowed both governors to claim credit while they set the stage for each state to claim hundreds of millions of dollars to fund pet projects not directly related to the Port Authority.
Tolls are collected for round trip when entering New York.
It was a sleight of hand that began with a campaign-style operation that, according to interviews with more than a half-dozen people familiar with the operation, was run out of a conference room on the southwest corner of the 15th floor of the Port Authority’s Manhattan headquarters.
It was referred to as the “war room.”
Running the campaign were former Deputy Executive Director Bill Baroni and his aide, David Wildstein, both central figures in the bridge scandal and its first political casualties.
Hanging from the door of the war room was a sheet of paper that warned: “Do Not Enter.” The room was accessible to very few of the agency’s senior staff, but not the New York-appointed executive director, who had fallen out of favor with Christie and New York Gov. Andrew Cuomo.
Some of the more than one dozen people regularly inside the room — mostly Christie loyalists placed at the agency — were instructed not to reveal its secrets.
One outsider was granted access.
Maggie Moran, then an employee of a large regional labor union led by a Port Authority commissioner, helped mobilize hundreds of union workers who flooded public hearings that were scheduled at times and places that made it difficult for the general public to attend. Drawing from scripted messages, laborers wearing orange T-shirts spoke favorably of the toll hikes at the hearings, providing Christie with a talking point.
“There were more people who spoke in favor of the toll hike than against it,” Christie said after the hearings, not mentioning the union workers.
Weeks earlier, Christie held a meeting in his office where he instructed his aides at the Port Authority to float the higher number, a knowledgeable source said. And Christie and Cuomo’s top Port Authority commissioners — David Samson for New Jersey and Scott Rechler and Jeffrey H. Lynford for New York — also discussed the toll-hike plan with Wildstein and Baroni before it was released.
The findings by The Record, based on detailed interviews with eight people familiar with the operation, cast doubt on claims that the governors had no prior knowledge of the toll-hike proposal and suggest that it was intentionally inflated. The sources were varied, each with independent knowledge of the events that took place and were interviewed separately, providing similar accounts. They included people involved with the Port Authority and politics in New Jersey and New York. Cuomo’s office didn’t return requests seeking comment. Christie’s office declined to comment.
Toll hikes have always been politically sensitive, especially in New Jersey and in Bergen County, which sends a large number of commuters across the George Washington Bridge. Because of this, making a proposal seem more palatable by first floating an extreme alternative is not new. But all of the people interviewed, some of whom were familiar with multiple toll increases going back decades, said they had never seen such a secretive campaign by the Port Authority, one that excluded many of the agency’s professional staff and manipulated the public hearing process.
A New Jersey legislative investigative committee has issued subpoenas for records related to the toll increases as it looks into whether the Port Authority, an independent regional transportation agency with a $8.2 billion annual budget, was used as a political tool. The committee is primarily focused on the lane closures that gridlocked Fort Lee for five mornings in September and led to the resignations of Baroni and Wildstein in December.
There are commonalities in the circumstances surrounding the lane closures and the toll-hike rollout: a culture of secrecy, rank-and-file employees who feared for their jobs and the sidelining of the agency’s executive director, who is supposed to run the day-to-day operations. In both cases, Christie has said he had no prior knowledge of the planning.
Before Baroni and Wildstein took charge of the secretive campaign, some senior Port Authority staff had made the case internally for toll increases that were closer to the amount ultimately approved by the governors. Instead, what emerged from the war room was a proposal that one senior executive said was “outrageous” — an immediate $4 hike that would have pushed tolls for E-ZPass users during rush hour from $8 to $12 in 2011, and a $2 increase in 2014 that would have brought them to $14. The governors ultimately decided on a $4.50 increase achieved with incremental increases through 2015. Tolls would increase immediately by a $1.50 increase with annual 75 cent jumps through 2015.
“This notion that the organization had come up with this outrageous toll-hike proposal that the governors had to reject was nonsense,” said one former senior official from the agency.
Debt over WTC
The Port Authority, taking on growing debt due largely to construction of the World Trade Center, had been asking Trenton and Albany for the go-ahead to propose toll hikes as far back as late 2010, sources said. It seemed to agency officials like an ideal time: New Jersey had a popular governor who could afford to absorb the political backlash and New York had an incoming governor who could claim no ownership of the agency’s financial troubles.
Top agency officials decided they would pitch a $2 increase followed by another $2 increase in 2014, one source said.
Despite briefings sent to both administrations, the source said, it was difficult to get the governors on board. The agency’s executive director at the time, Christopher Ward, also had trouble selling the idea to Cuomo’s staff, who blamed him for sinking too much money into construction at the World Trade Center site, two sources said. Ward was appointed by Cuomo’s predecessor, David Paterson.
Then, in March 2011, a Wall Street ratings agency downgraded the agency’s financial outlook, a development that had the potential of leading to higher borrowing costs. A report by Moody’s Investors Service noted that Christie had proposed taking $1.8 billion from the Port Authority that had been destined for a cross-Hudson rail tunnel plan that Christie had killed. “This request raises concerns,” analysts wrote. The Christie administration was also in the middle of a patronage hiring binge, placing about 50 Christie loyalists, campaign contributors and Republican operatives at the Port Authority.
By late spring, financial pressure was building at the Port Authority.
Its top appointees, Baroni and Samson, met with Christie advisers on April 12, 2011, to discuss toll and fare increases, according to a source. Baroni, Wildstein and Samson also met in the governor’s counsel’s office to discuss increases again on July 13 of that year, the source said.
That summer at the Port Authority offices, Baroni and Wildstein set up the war room.
The small conference room has a long table, ringed by black-and-white photos of old Port Authority facilities, including one of the New Jersey entrance to the Holland Tunnel during the Depression. It is a rarely used space next to Baroni’s office and across the hall from two color photos of the governors hanging from a wall. Its position in the corner of the 15th floor means there is little foot traffic outside its door. Two desktop computers were brought in, along with a handful of laptops.
Senior staff groused at the secrecy around the room.
“All the Port Authority regulars who would have been included in the preparation of a toll increase, based on having prior experience with the process and the legal requirements, were excluded until their inclusion was absolutely necessary, and even then, only for discrete tasks like running financial models,” one former official said.
Another longtime senior executive recalled asking a subordinate, who had been called to the room, what he was working on. The subordinate answered that he was instructed not to tell his boss or anyone else. And a longtime janitorial worker who tried to get into the war room over a weekend to reach a leaky pipe was so forcefully admonished that he told others that he feared he would lose his job as a result, the same senior executive said.
Cuomo’s two new commissioners, Rechler and Lynford, however, were dispatched to the 15th floor and charged with digging into the numbers, a source said. They met with Baroni and Wildstein and, in turn, briefed two of Cuomo’s top aides, Larry Schwartz and Howard Glaser. Ward, the executive director, was cut out completely, although his name would appear on press releases touting the proposal. One former longtime senior executive said that the exclusion of the top executive was unprecedented.
Records show the two governors met for dinner at the Beacon Restaurant in Manhattan on Friday, July 29, 2011, one week before the proposal’s release. Christie has said he didn’t know the magnitude of the Port Authority proposal until after the dinner.
Days later, on Aug. 3, a knowledgeable source said, Christie held a meeting in his office with about five top advisers and Samson, Baroni and Wildstein. The source said Christie instructed the Port Authority officials to float the immediate $4 hike, and that he and Cuomo would reduce it to $2. Baroni, Wildstein and Samson declined to provide comment for this article.
Additionally, multiple sources said the governors would typically have been told about a toll-hike proposal from the Port Authority prior to its release.
“You are going to get sign-off from the governors before you go public with a proposal,” said one former senior official who was familiar with multiple past toll hikes at the Port Authority. “Anything gets pre-cleared with Trenton and Albany.”
The proposal was released late in the afternoon on the following Friday. Days before, according to one senior Port Authority executive, Baroni told the person, “We know we’re going to take heat for it, but it’s what the governors want.”
Baroni, who made it clear to staff that he was leading the effort to build support for the toll hikes, told several agency officials that it would be run like a political campaign. Unlike past toll-hike proposals, which were proposed months before they were approved, the vote was set for two weeks later.
Three days after the release of the proposal, Christie described his reaction to it as surprise: “I said, ‘You’re kidding, right?’ and they said ‘no,’ ” he said. “This is, unfortunately, a testimony to the mismanagement of the Port for years. We shouldn’t have to be in this kind of situation.”
Orchestrated backing
An intensive campaign began at the Port Authority.
Among those allowed in the war room was Dominick Fiorilli, a political operative who was installed at the authority by the Christie administration and given the title director of new port initiatives. Fiorilli worked in Christie’s office, as of Dec. 31 of last year as an aide to the governor, according to payroll records. Hunter Pendarvis, a former Christie aide; Jamie Loftus, a former campaign aide to Sarah Palin; and Andy Hawthorne, a director of marketing, were also allowed in the room, sources said. All were among the 50 Christie loyalists placed at the agency by 2011.
Long-term agency employees, such as general counsel Darrell Buchbinder, deputy general counsel Christopher Hartwyk and chief financial officer Michael Fabiano, also appeared in the room from time to time.
They all either declined to comment or did not respond to messages.
For nearly two weeks, there were three meetings each day: one in the morning, one in midday and one in the evening, multiple sources said.
“They drafted press releases, endorsement and comments for blogs and comments sections of news websites,” said one source familiar with the operation. “They also orchestrated the public hearings, picked the most inconvenient times and locations for the hearings and prepared testimony outlines for various speakers for the public hearings.”
Moran, the director of business development for Laborers International Union of North America, attended most of the meetings. Port Authority Commissioner Ray Pocino is a vice president for the powerful union, which endorsed Christie for reelection at his first campaign event, and he signed off on Moran’s involvement. Moran was also former Gov. Jon Corzine’s chief of staff and served as an adviser for Cuomo’s 2010 campaign. The union did not deny its inside access.
“LIUNA Vice President Pocino has an entire staff dedicated to supporting infrastructure investment and economic growth, so supporting the Port Authority fare increase was a no-brainer,” a LIUNA spokesman said in a statement Friday.
“Maggie [Moran], along with many other staff at the union, was involved in all aspects of building a coalition in support. We are proud of the role we played in the effort to finance infrastructure investment in our region.”
Their role was most evident at eight public hearings, all scheduled for one day. The hundreds of union workers, many of them organizers, showed up to hearings wearing orange T-shirts with the slogan “Port Authority = Jobs.” They were given talking points beforehand, and many repeated the same refrains, according to a review of transcripts posted on the Port Authority’s website.
Dozens also attended multiple hearings in different venues and posted comments in an additional online hearing, making sure their voices were counted more than once.
The Port Authority commissioners didn’t attend the hearings, scheduled on Aug. 16. Instead some of the Port Authority executives who were shut out of internal deliberations were assigned to run the hearings in out-of-the-way venues.
One longtime executive assigned to one called them “a sham.”
At an evening hearing in Staten Island, where tolls are exceedingly unpopular, former Borough President James Molinaro started the proceedings by standing on the stage of the school auditorium and lambasting the Port Authority.
A public-relations employee assigned to monitor the proceedings for the Port Authority waved to the hearing officer, chief operating officer Ernesto Butcher, and told him, “Bill Baroni is watching. He said to cut the guy off,” a person familiar with the exchange said. When Butcher refused to stop Molinaro from speaking, the public-relations employee approached Molinaro on the stage and asked him to end his comments, incensing the local politician.
“It was an example of the tight control, the electioneering, a campaign that did not speak to the real issues,” a person familiar with the episode said.
A report issued in September by the investigative arm of Congress, the Government Accountability Office, concluded that the Port Authority’s toll hearings “did not provide sufficient, convenient, accessible opportunities for the public to comment on the proposal.”
$942M kitty
On Aug. 18, two days after the hearings and a day before Port Authority commissioners were poised to vote, the governors released a second joint statement saying they would support a smaller toll hike: $1.50 immediately, with 75-cent increases through 2015 for E-ZPass users.
“This is a responsible alternative that balances the infrastructure needs of the region with toll and fare payers’ economic realities,” the joint letter said. There was a hitch: The agency had to agree to bring in outside auditors.
At the hearing, Pocino, the commissioner whose union flooded the hearings, said he had “never been as impressed with any elected officials as I am today with Governors Cuomo and Christie.” He and the other commissioners voted yes without reservation.
“There was absolutely no conflict of interest or appearance of impropriety in Ray Pocino’s vote,” said LIUNA spokesman Rob Lewandowski. “He has always been a steadfast supporter of infrastructure investment, especially to improve the safety and efficiency of the region’s aging transportation system.”
By October, Ward, the executive director was out. Christie said he was responsible for years of mismanagement. The audit described the Port Authority as “dysfunctional” and laid out a series of reforms that officials said would turn the agency around.
What neither Christie nor the Port Authority mentioned publicly at the time of the toll-hike approval was that part of the agreement was that each state would get its own project slush fund out of the future toll money. The agency’s $27.6 billion 10-year capital plan, approved last month, includes $942 million for what is called a “regional bank” for both states to dip into over the next decade.
The regional bank program, used in the past for transportation and economic development projects only loosely related to the Port Authority, had not been in effect since 2008. The specific projects that are to be funded have not yet been identified, according to the plan.
Meanwhile, a motorist advocacy group, AAA New York, is suing the Port Authority to try to overturn the toll hikes. In the early stages of the lawsuit, the motorist group has zeroed in on communications between the governors’ offices and the Port Authority to try to understand the reason for the toll increases.
The Port Authority is, according to court records, refusing to turn over 339 records, including communications between agency officials and the offices of both governors, that it says are protected from disclosure because they were part of discussions that led to a policy decision.
Last month, the state legislative committee investigating the bridge scandal joined the hunt for more information about the toll increases. A subpoena was issued to the Port Authority requesting all correspondence between Christie’s office and the Port Authority from Jan. 1, 2011, to Aug. 9 of that year.