PRECIS: You can’t say you weren’t warned: A year ago, The Observer’s Marcus Baram sat down with Peter Kalikow, chairman of the Metropolitan Transportation Authority. While a strike seemed hard to imagine in December 2004, Mr. Kalikow’s comments were a warning of hard times for city straphangers.
Peter Kalikow’s legacy is about to take another left turn.
The white-haired, dapper-suited chairman of the Metropolitan Transportation Authority has long dreamed of expanding the transit system through high-profile projects such as the Second Avenue Subway and the East Side Access plan connecting the Long Island Rail Road and Grand Central Terminal. Those schemes would have ensured his legacy as a civic leader, leaving in the dustbin those memories of the mercurial real-estate developer who went bankrupt in the early 1990’s. But the current M.T.A. budget crisis—an $11 billion budget gap in the capital program to finance those projects—may force Mr. Kalikow to put those dreams on hold and just pray for survival, keeping the system intact without reaching too deeply into straphangers’ wallets.
With a nasal honk more appropriate to a Forest Hills haberdasher than a billionaire power broker with a fleet of 50 cars, Mr. Kalikow remains ever the feisty tough guy. “I love a challenge. When a guy tells me I can’t do something, I say, ‘Damn it, then I’m going to do it,” he said in a telephone interview. Still, the outcry over proposed increases in some MetroCard fares clearly is getting to him.
At a recent hearing, he blasted protesters. “I wish that the public would listen to what we say as much as we listen to what they say …. Nobody listens,” he said, explaining that there was no more fat to cut. And he insists that the fare increase is fair, preferring to call it a “fare adjustment” (“When I call it a ‘fare adjustment’ on the subways, it is. A fare adjustment is where half the people are affected—those with weekly and monthly MetroCards. The single fare remains at $2.”) He even recommends using the six-for-five discount (where riders pay $10 and get a ride free), citing his college-student daughter’s transit habits.
“She’s a big subway rider,” he said. “I keep offering her a monthly card, and she prefers the six-for-five. She says, ‘First of all, I’m afraid of losing it, and second, I can swipe my friends.’ She and all her friends—they don’t buy anything but the bonus cards.”
That option will be more attractive if Mr. Kalikow’s agency goes through with its proposed changes in subway and bus fares. Beginning next year, the cost of a weekly MetroCard may increase from $21 to $24, and the monthly card from $70 to $76.
Mayor Michael Bloomberg has made his disapproval known. “I have four representatives on the [M.T.A.] board and they will vote against [a fare hike], because I’ve not seen the M.T.A. try to do more with less,” Mr. Bloomberg said recently. And State Comptroller Alan Hevesi recently issued a report decrying the M.T.A.’s army of lawyers and overstuffed offices.
Mr. Kalikow seems to understand where the re-election-conscious Mayor is coming from and insists that they have a friendly relationship. “I like the Mayor very much, but I don’t agree with him on everything. I like my wife very much, but I don’t agree with her on everything,” he said. “[The Mayor] says, ‘I don’t want a fare increase,’ and I say, ‘Neither do I.’ He understands, even if he doesn’t agree.”
The Mayor and the M.T.A. chairman’s fortunes are also bound together with Mr. Bloomberg’s West Side revival, which is contingent on the M.T.A. selling the air rights to the rail yards stretching from 31st to 33rd streets between 10th and 11th avenues, and on the extension of the No. 7 train. “They’re funding the [No. 7 train] project, and if we have a cost overrun, then we have to take up the slack,” Mr. Kalikow explained. He added that the Mayor has assured him the city will pay “nothing less than fair value” for the air rights, despite speculation that the city would like to get them for a bargain.
Mr. Kalikow has a more complicated relationship with Governor George Pataki. He helped former Senator Alfonse D’Amato pluck Mr. Pataki out of obscurity to win the State House in 1994. As a result, he’s been criticized for going easy on the Governor and not pushing for more state funding.
“He’s definitely the Governor’s guy,” said one longtime transit advocate. “If the critics say that Pataki should be funding this, he’s the first to jump up and defend the Governor.”
Mr. Kalikow has heard it all before and contends that he’s his own man. “I do take a tough stand [with the Governor]—that doesn’t mean I have to stand on the turret of a building with a bullhorn,” he insisted, explaining that he has met with Mr. Pataki in recent months to discuss the capital budget and press for more funding. “It can’t be bully-pulpited; it has to be coerced—uh, I mean cajoled.”
Mr. Kalikow has surprised some Pataki critics with his seriousness of purpose. “I have come to respect his commitment to the system so far,” said Westchester Assemblyman Richard Brodsky, a Democrat who chaired the current round of public hearings on the M.T.A. budget, which provide one of the only forums where Mr. Kalikow and other officials of the quasi-public agency are grilled on the specifics. “He’s kept his word. In most public authorities, the leaders have been incredibly secretive, but he’s out there. He’s keenly aware of the problems he’s got, and he cares about the system.”
At a recent hearing led by Mr. Brodsky, the M.T.A. chairman revealed that the agency is coming up with a revenue plan to present to the Governor and the Capital Program Review Board, which didn’t accept their previous budget. “We wanted to get it out by the end of Thanksgiving, but this is the plan that needs to be right and not early,” said Mr. Kalikow, who didn’t want to reveal any of the specifics. “We’re still refining the numbers. We should have it within the next 10 days. I don’t want to jump the gun before the leadership sees it.”
The Trust Factor
Although Mr. Brodsky has hammered away at the agency’s plans during the hearings, decrying the effect that they’ll have on low-income and middle-income straphangers, he trusts Mr. Kalikow. “He’s got to go to the same two people who cut funding from the M.T.A.—Governor Pataki and Mayor Bloomberg—and say, ‘Now you’ve got to reverse that position.’ And he’s surely not a shy man,” Mr. Brodsky said.
Indeed, Mr. Kalikow has never been known for his reticence. Soon after getting involved in his family’s real-estate business in Queens, his eyes wandered across the East River and he started buying buildings in Manhattan, including 101 Park Avenue and the Millennium Hotel. But by the summer of 1991, he was stymied by the miserable real-estate market and forced to file for bankruptcy. He lost the hotel and several other properties, in addition to the New York Post, which he sold back to Rupert Murdoch (from whom he’d bought the paper in 1997).
But he’s since resurrected his businesses and his reputation, joining the M.T.A. board in 1994 and becoming chairman in 2001.
The sting of those experiences may have helped steel him for the current crisis, because he acknowledges that some of his dreams, such as the expansion projects, may get shelved. “I love those two projects [the Second Avenue Subway and East Side Access], and I’ve spent countless hours in Albany and D.C. advancing their cause—but I would drop them in a minute if it affected the core program,” he said. “The region would be better for them, but not at the expense of the system.”
And most transit experts agree with that sense of priorities. “It’s absolutely essential to keep the system in a state of good repair before they get caught up in these expansion plans,” said former M.T.A. chairman Richard Ravitch, who thinks that Mr. Kalikow and the agency are making the most of difficult circumstances. “I think it’s a very sound plan—it’s a reasonable proposal, under the circumstances—and they’ve done it very openly and publicly.”
But some people ask: Can a billionaire really understand the concerns of a working-class straphanger forced to dig deeper into his pocket to ride the train every day?
“He still doesn’t seem to get the message that riders don’t want a fare increase and service cuts,” said Neysa Pranger, the campaign coordinator for the Straphangers Campaign. “At one hearing, he made a comment that riders understood the need for an increase—I’ve never heard a single person say that they understood the need for a fare increase.”
Harking back to his childhood, Mr. Kalikow contended that he does understand the needs of the riding public. “I took the subway to junior high school and high school; I lived on the E and the F. Or sometimes the G, to go to the dentist. So I didn’t know much about the Broadway line, but that doesn’t mean that I don’t know what these trains are about.” At times, however, his impressions seem fixed in the past. “When I take people on the train, I tell them about the days when you’d put your elbow on the window sill—you had to turn your jacket out. When people talk about the good old days, I say, ‘You’re in the good old days.’” How many hours a week does he ride the train? “I use the subway three times a month,” he said.
And sometimes he has a hard time balancing his private empire and his public responsibilities. On Nov. 18, Mr. Kalikow was about to conclude the public portion of the M.T.A.’s monthly board meeting with a vote on some new work on the Fulton Transit Center when he announced that he needed to recuse himself, since he owns a building near the site of the construction. “Is it real estate or capital?” Mr. Kalikow asked his aides, unsure of which M.T.A. subdivision was involved. “Real estate,” came the reply. When it came time to vote, Mr. Kalikow appeared to raise his hand with the ayes, despite the fact that he had just announced his recusal from the matter.
And he caught some flak back in 2002, when it was revealed that his friend Mr. D’Amato, whose lobbying firm Park Strategies is located at Mr. Kalikow’s 101 Park Avenue building, was paid $500,000 in 1999 to make a single phone call to secure a loan for the M.T.A.’s landlord at their future headquarters at 2 Broadway.
Although the agency came under fire for that boondoggle—in which the M.T.A. was overcharged millions by crooked contractors—and faced accusations that the agency was hiding assets by keeping two sets of books in 2003, Mr. Kalikow has recently won praise for instituting some important reforms. First, he put a well-respected construction expert, Mysore Nagaraja, in charge of the capital construction program. And he hired corporate-governance expert Ira Millstein to help the agency adopt more transparent accounting procedures.
“He’s been instrumental in making the M.T.A. more transparent—now they’re posting the financial plans on the Web site years before they used to be,” said Andrew Albert, the chairman of the N.Y.C. Transit Riders Council and a nonvoting board member of the M.T.A.
Mr. Kalikow said that the “biggest challenge” he’s had to face is changing the M.T.A.’s culture, “to be more open and forthcoming with all the plans. But I love taking on a challenge.”
In the end, Mr. Kalikow’s legacy and the agency’s fortunes could be determined in the next few weeks, as they offer their revenue plan up in Albany—and see if they can convince Governor Pataki, Mayor Bloomberg and the State Legislature to take a bite, opening the spigot on funding.
Mr. Brodsky put it more succinctly. “This system has recovered from its collapse. Kalikow’s legacy will be as the guy who continued that revival—or who didn’t.”