1 World Trade Center.

The Phase I Interim Report, arranged by the Port Authority's Special Committee of the Board of Commissioners and co-prepared by Navigant Consulting and Rothschild Group, depicted the Port Authority as an agency “at a crossroads, one that is in need of a comprehensive overhaul of its management structure,” said David Samson, Port Authority Chairman, in a conference call with reporters yesterday.

The 51-page report also identified the bi-state agency as one that let costs escalate as it rushed to complete the September 11th Memorial in time for the tenth anniversary of the terrorist attack while suffering from “a lack of consistent leadership.”

There have been seven executive directors since Robert Boyle took the position in 1997.

“With such turnover at the executive director level, it is difficult for any significant strategic initiatives, goals and objectives to be realized,” the report reads. “Organizations typically become inwardly focused and tend to run adrift in the absence of leadership continuity.

Former executive director Chris Ward stepped down from his post last October to eventually become executive vice president at Dragados, an international construction firm. His successor, Patrick Foye, a former deputy secretary for economic development for Governor Andrew Cuomo, became the agency’s fourth executive director since 2004.

Mr. Ward did not return a voicemail message requesting comment.

Other organizational problems within the Port Authority have also affected the agency. Capital planning and project delivery has had five different “owners” in the past ten years, according to the report.

“Capital planning and project delivery, a critical area of focus within the Port Authority, has suffered from a lack of consistency in management and leadership,” the report reads, while “non-appointed senior career services professional of the Port Authority have an unusually long tenure, averaging 24 years of service.” This kind of infrastructure has turned the Port Authority into a “siloed” organization, the report said.

Redevelopment costs for the World Trade Center site grew from $11 billion in 2008 to $14.8 billion today, according to the report, with the memorial playing “a key role in the escalation of these costs,” said Mr. Sampson. The estimated net cost to The Port Authority after third party reimbursement has grown from approximately $6 billion to an estimated $7.7 billion.

Gross compensation at the Port Authority has also grown in the last 5 years by 19 percent, from $629 million to $749 million.

“Much of the reason for this is the result of add-on compensation such as overtime, unused vacation exchange, and so-called longevity programs,” said Mr. Samson.

The Special Committee said it will introduce new financial and management controls that will limit the $1 billion of cost exposure detailed in the report, added Mr. Samson.

“Given that enormous burden, we are committed to taking the steps necessary to properly complete the project and to mitigate exposure to the World Trade Center cite,” he added.

Drosen@Observer.com

Chris Ward. (Photo by Daniel Neuner)

Mr. Ward, credited with helping to devise and implement plans that put the rebuilding of the World Trade Center site back on track, will be involved in helping the company identify and compete for major construction and infrastructure projects he said.

In an exclusive conversation with The Commercial Observer, Mr. Ward identified several high profile bids that he will likely be involved in helping the company make, including the expansion of Boston’s Green Line street car system, the replacement of Calaveras Dam in California and the replacement of the Tappen Zee Bridge in Westchester.

“There’s probably $36 billion of projects out there and we could honestly compete for probably $15 billion of that,” Mr. Ward said.

The company is a major construction firm that has handled complex projects in the city. It is currently building the East Side Access tunnel that will connect the Long Island Rail Road from Penn Station to Grand Central Terminal.

Public private partnerships will likely figure into the Dragados’s pipeline of business in the future, arrangements where private investors contribute funds to public infrastructure in return for a slice of the revenues that the infrastructure generates. Mr. Ward said the company had billions of dollars it could invest into such ventures and that the partnerships would be the way of the future for infrastructure development in the U.S.

“It’s the way governments do infrastructure in Europe,” said Mr. Ward. “It’s about selling creative solutions to government to get projects done. We need to be able to build roads and bridges and infastructure in a way that guarantees a reliable schedule and saves money. There’s not enough government resournces anymore to get projects done any other way.”

Mr. Ward’s first day at Dragados was yesterday, he said. Although his tenure as the Port Authority’s executive director was widely viewed as successful, Mr. Ward was replaced late last year by Governor Andrew Cuomo. Gov. Cuomo placed former Empire State Development Corporation head Patrick Foye in the executive director slot in what was viewed as a bid by the governor to put his own stamp on the agency and exert control by using his own appointee.

Daniel Geiger can be reached at DGeiger@Observer.com

Mr. Foye’s nomination coincides with Mr. Cuomo’s call for the Port Authority to take over the long-delayed conversion of the Farley Post Office building into a new rail station named for the late U.S. Senator Daniel Patrick Moynihan. The Moynihan Station project has been kicking around since Moynihan was still in office. All these years later, his vision of a suitably grand station to replace the awful pit known as Penn Station remains unrealized.

But that’s not the only task awaiting Mr. Foye. The Port Authority needs to modernize the region’s transportation infrastructure and retool the agency for the 21st century. But these improvements have to be managed properly—the agency simply cannot rely on periodic fare increases to subsidize waste and inefficiency. The recent toll hikes on Authority tunnels and bridges produced a justified backlash against the agency—Mr. Foye, with any luck, was paying attention to the outcry.

Like so many other managers in both the public and private sectors, Mr. Foye has to figure out how to be creative and efficient with his assets. The Port Authority remains, in theory anyway, a model of interstate cooperation and regional planning. But fulfilling the Authority’s mandate requires more than a budget. It requires reform and innovation.

Mr. Foye will be judged not by what he builds, but how he builds it.

He means business.

As has been rumored since talk began that Chris Ward would be departing the Port Authority some time this year, the Cuomo administration is poised to announce Patrick Foye will be taking over the bi-state agency as executive director, The Journal reports.

Mr. Foye's most recent time in government was as downstate director of the Empire State Development Corporation, to which he was appointed by Governor Eliot Spitzer. He followed the governor out the door, and spent the past few years working for a Long Island law firm, before joining the Cuomo administration as an adviser on economic development.

The move should brighten the hopes of some who feared a return to an earlier era, when the agency was run by political appointees with limited development experience. During his time at ESDC, Mr. Foye oversaw projects ranging from Moynihan Station to the Javits Center expansion, though as The Observer noted at the time of Mr. Foye's departure, he "in many ways struggled to get projects off the ground in his first year." (For more on the man, we recommend reading that great profile by Matt Schuerman.)

Mr. Foye had been in favor of scaling back some of the grandiose projects of the Pataki era, not necessarily a bad thing, but a contrast from the pro-infrastructure Mr. Ward. “We want to be able to convince ourselves and the governor and the Legislature and the taxpayers that we are getting the highest return on the resources that are made available to us," Mr. Foye told The Observer in a 2007 interview, a few months after taking over.

Both governors Cuomo and Christie have brought a bean-counting sensibility to public works, so Mr. Foye, who used to be a member of the state's Conservative Party, could be just the man for the job.

Update: And The Times' Michael Barbaro tweets that James Rubin, formerly of Bloomberg View and before that the State Deparment, is, at the behest of Governor Cuomo, joining the board of the Port and advising the administration on economic development matters.

Update 2: In an email, Vishaan Chakrabarti, who used to head Moynihan development for Vornado and Related, gives a vote of confidence to Mr. Foye: "I have worked with Pat for years and know his tireless dedication to the New York region. I look forward to our continued work together to build Moynihan Station and the other critical infrastructure we will need to remain globally competitive in the coming decades."

Update 3: Transportation Alternatives executive director Paul Steely White released the following statement after Governor Cuomo made the announcement official, which basically called on Mr. Foye to follow in Mr. Ward's shoes: “We hope Patrick Foye continues his predecessor’s record of accomplishments. Chris Ward’s work evidenced a strong commitment to the New York City metropolitan area, our environment and our quality of life. Investing in infrastructure is the foundation of the region’s economy and an engine for job creation. As a member of the MTA’s board, Patrick Foye knows first-hand the perils underfunded infrastructure present to the metropolitan area.”

mchaban [at] observer.com | @MC_NYC

Looks like the former state economic development czar has had a relapse.

Mr. Foye, who was the downstate chairman of the Empire State Development Corporation in the Spitzer administration, has joined Rivkin Radler, a law firm based in Long Island, with offices in Manhattan and New Jersey, the firm announced today.

Mr. Foye, who was a partner at Skadden Arps before he entered the public sector, intends to focus on real estate, energy issues (he was once the vice-chairman of the Long Island Power Authority) and restructuring.

Mr. Foye oversaw the bulk of the Spitzer administration’s signature economic development efforts, some of which are continuing—like the planned Javits Center renovation and modest expansion—while others, including Moynihan Station, have fallen apart or stalled. He resigned shortly after Eliot Spitzer's downfall.

He is the second Spitzer administration official in two days to announce landing a job at a law firm. Sean Patrick Maloney, first deputy secretary in the Paterson and Spitzer administrations, yesterday resigned to take a job at Kirkland & Ellis.

Release below.

The Paterson administration is trekking down the path of a renovation and modest expansion for Javits, with plans for an additional 50,000 square feet of exposition space and a truck storage area. The budget, at least as of a few weeks ago, was $1.3 billion for the whole ordeal, $300 million or so less than the amount approved for a much larger expansion and renovation under the Pataki administration (which the Spitzer folks later found to have a true cost of more than $3 billion).

The Spitzer administration received a flurry of heavy criticism after it announced this plan for Javits via a January New York Times article, mostly due to the previously unannounced intention to sell some adjacent land. The state backed away from its sale of a parcel to the north (the block between 39^th and 40^th streets), though it is unclear what the Paterson administration intends to do with the block between 33^rd and 34^th Streets, which were also slated to go on the selling block.

These most recent plans, along with the above rendering, were presented to Javits’ governing board this morning (we made the mistake of observing via Webcast, which was without sound).

Another item of note: Despite the state chopping down the amount of new exposition and meeting space by more than 450,000 square feet, the project, by and large a renovation at this point, still has starchitect Richard Rogers signed on to its design team, Empire State Development Corporation spokesman Warner Johnston confirmed.

The downstate chairman of Empire State Development, Mr. Foye is a former lawyer (“recovering lawyer,” in his words) who in many ways struggled to get projects off the ground in his first year. The proposed expansion of the Javits Center effectively blew up in his face when he sought to evaluate it, as he found that the cost of building the type of facility the Governor wanted would cost billions more than had been budgeted. The ever-complicated Moynihan Station project seemed weighed down by the tangle of agencies and its multi-billion dollar cost, though in recent weeks the project appeared to be reaching a potential turning point.

Still, there were other positives for Mr. Foye in his tenure. He pushed for reform and accountability in the Empire Zone economic growth program, and he played a role in moving forward the development at the West Side rail yards.

While many of Mr. Spitzer’s inner circle of aides have resigned or intend to resign, departures at the commissioner level last week were minimal. Mr. Foye and other commissioners were said to be asked to stay as Governor-designate Paterson assumed his new role.

Mr. Foye, once a member of the Conservative Party and a Republican donor, was brought in by Mr. Spitzer during his campaign. An acquaintance of both Mr. Spitzer and his wife Silda from his days at Skadden Arps, Mr. Foye joined the governor in his rhetoric of parsimony with state dollars, keeping subsidy amounts to a minimum.

[This post has been changed slightly from its original version.] 

Official statement from the ESDC below.

Warner Johnston, a spokesman for the Empire State Development Corporation, confirmed this afternoon that Patrick Foye, downstate chairman of the state agency, isn’t following Governor Spitzer out the door.

Mr. Foye works at the pleasure of the Governor and has no plans to leave his job, Mr. Johnston confirmed.

A former Long Island Power Authority deputy chairman and once an active member of the Conservative Party, Mr. Foye assumed his role at the start of the Spitzer administration.

State officials have said the redevelopment of Penn Station, part of a grander project known as Moynihan Station, will cost at least $2.2 billion (with emphasis on “at least”), and there’s a whole lot more funding that needs to be secured.

And while the state and other officials deny the plan is falling apart, expressing optimism, we thought a recap of the various funding commitments and potential sources was in order:

• Since early February, the state and city committed to $300 million each for the station. That amount was an increase from late January, according to government officials involved in discussions, when the state and city had only agreed to commit $150 million each.

• The state wants to give an additional $100 million to $150 million, though it wants the city to match its pledge, and the city has resisted.

• The developers, Vornado Realty Trust and the Related Companies, have committed $550 million total (the state wants more) to the rail station, as the project would unlock millions of square feet of development.

• The state is looking to Washington to get somewhere around $800 million, though elected officials including Senator Schumer have expressed concern that such an amount would be “a very heavy lift.”

• At a State Senate hearing on the Javits Center, Spitzer administration development chief Patrick Foye said that the sale of land adjacent to the convention center, estimated to bring in up to $900 million total, would help pay for Moynihan. How much? “Hundreds of millions of dollars, perhaps, subject to approval of the state legislature,” Mr. Foye said.