WTC Project Cost Overruns? Fraud? Noooo... Really?

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Report: Port Authority needs to be overhauled
February 09, 2012|By Chris Dignam, CNN

A scathing audit of the Port Authority of New York and New Jersey calls for "top-to-bottom overhaul" of the agency, because of mismanagement and out-of-control costs in the wake of an estimated $3.8 billion overrun on the World Trade Center project.

"The report's Executive Summary describes an agency that is 'challenged and dysfunctional,' and where poor management 'obscured full awareness of billions of dollars in exposure' to the Port Authority," New York Gov. Andrew Cuomo and Gov. Chris Christie of New Jersey said in a joint statement.

The gross project costs for the site in lower Manhattan have ballooned to $14.8 billion, according to an interim audit report released by the authority board on Tuesday.

The Port Authority last publicly reforecast its WTC gross project costs at $11 billion in 2008, according to the report.

"This record of historic failure must be reversed," the governors said in their joint release. "Steps have already been taken in the last two years, but much more must be done to restore the Port Authority to a responsible, highly transparent, well-managed organization."

Scott Rechler, vice-chairman on the Port Authority's Board of Commissioners, challenged the report, saying it doesn't clearly factor in third-party reimbursements, which bring the transit system's net WTC project costs to $7.7 billion -- not $14.8 billion.

"The authority owes only $1.7 billion of that additional $3.8 billion stated in the report," said Rechler. "That's still a lot of money, but we plan to recover as much of that as possible."

The Port Authority will turn to private partners to cover the $1.7 billion in costs, including The Durst Organization and shopping center operator, Westfield Group, according to Rechler.

"We are still pursuing ways, and other potential private partners, to fund what we owe to the project," he said.

The Port Authority will seek to recover the other $2.1 billion from third-party partners like the National September 11 Memorial Museum, the Metropolitan Transportation Authority, and the City of New York.

Rechler admitted in a conference call with reporters that some costs won't be recoverable.

Cuomo and Christie initially called for the audit in August, when they approved The Port Authority's proposal for big toll hikes for its buses and trains.

"This is, unfortunately, a testimony to the mismanagement of the Port for years," Christie said in August. "And it's a testimony ... to their unwillingness to budget effectively."

David Samson, the chairman of the Port Authority board, said that the rush to open the September 11 memorial before the 10-year anniversary contributed to some of the increased costs.