Delaware River Port Authority Weighs Curbs on Nepotism, Interest Conflicts

The Delaware River Port Authority, which has borrowed more than $1 billion to maintain road and rail links between New Jersey and Philadelphia, may end “free rides” while trying to curb nepotism and conflicts of interest.

The proposed actions stem from concerns raised in the past two months by some of the agency’s governing commissioners and the chief executives of Pennsylvania and New Jersey. Last month, Pennsylvania Governor Ed Rendell cited controversy surrounding toll passes and car allowances in calling for the changes.

Among the proposals on the agenda for the Camden, New Jersey-based agency’s board meeting Aug. 18 are audits by state officials, rules on hiring and bidding for authority business, and the elimination of free passes and car payments. Also, the board will consider banning gifts to agency personnel, open meeting rules and limits on political activities by employees.

“This stuff has been going on for a long time and we’re taking some significant steps in a very short time,” New Jersey Governor Chris Christie said yesterday at a press briefing in Trenton. “I’m confident we’re on the path to the right conclusion. We’re not there yet, but we’re on the path.”

One board member, Pennsylvania Treasurer Robert McCord, indicated he wants the agency to suspend economic-development grants and halt making new contracts, conduct a forensic audit and investigate an insurance contract. He said the proposed changes “should be the beginning, not the end, of a reform process,” in an Aug. 13 letter to Chairman John Estey.

Revenue Gains

The authority collected $242.6 million last year in bridge tolls, $22 million in commuter-rail fares and $31.1 million in other revenue, up 8.8 percent from 2008, its 2009 annual report shows. It spent about $54.1 million to operate its four bridges, down 0.6 percent from the previous year, and $47.8 million to run its trains, a 3.7 percent increase.

Recent bond documents list $1.1 billion in debt. Standard & Poor’s said in February that the agency planned to borrow about $1 billion more in the two years through December 2011.

At least one commissioner, John Dougherty, a business manager of the International Brotherhood of Electrical Workers, has openly questioned the board’s public-meetings policies, as well as the agency’s hiring practices and the use of car allowances in calculating the future pension payments of an executive of the authority. Dougherty is one of the commissioners from Pennsylvania.

Christie and Rendell last month called for audits of the agency. They jointly recommended the elimination of free-toll privileges and vehicle stipends, and tougher anti-nepotism and conflict-of-interest policies.

‘Whitewash’ Concern

Commissioner McCord, the Pennsylvania treasurer, said he hasn’t received enough information about the proposed changes to vote on them. McCord said he’s concerned that “the authority may create the impression that political stakeholders are seeking to whitewash the matter” by acting too quickly.

John Matheussen, a former New Jersey state senator who still runs the agency though his contract as chief executive officer expired July 17, has pledged to cooperate with the calls for change.

The agency’s former public-safety director, Michael Joyce, resigned his $180,000-a-year post in July after a three-day suspension for allowing his daughter to use an authority-issued transponder to get toll-free trips over its bridges.

Disclosure, Restrictions

Resolutions also scheduled for consideration this week include requiring all potential vendors to report political contributions for the past four years and restricting commissioners and officers who leave from representing private employers before the agency for two years.

Ed Kasuba, an authority spokesman, declined to comment on the agenda items when reached at his office in Camden yesterday.

The changes will ensure that the agency’s business is “conducted on a fair and impartial basis by removing a source of actual or apparent improper influence,” the resolutions say.

The authority has been active in the market for interest- rate swaps and has lost more than $60 million in derivatives deals, according to financial documents. The transactions were set up to raise cash to support economic-development projects such as a new stadium for professional football’s Philadelphia Eagles and the National Constitution Center in Philadelphia.

Moody’s Investors Service placed the authority’s credit rating on watch for a potential cut in March, citing concerns tied to variable-rate debt. Moody’s rated the debt at A3, its fourth-lowest investment grade.

To contact the reporter on this story: Dunstan McNichol in Trenton, New Jersey, at dmcnichol@bloomberg.net

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