N.Y.'s Port Authority Says It Seeks SEC Bond Probe Accordby and
SEC examining Pulaski Skyway renovations, other road projects
Manhattan DA also investigating Port Authority financing
The Port Authority of New York & New Jersey is seeking to resolve an investigation by the U.S. Securities and Exchange Commission into the agency’s bond statements on the financing of tunnel, bridge and road projects.
Settlement of the probe could spare New Jersey Governor Chris Christie, a Republican, from potentially embarrassing revelations if the SEC were to sue the Port Authority. The regulator has been investigating whether the bi-state agency improperly financed $1.8 billion in renovations to the Pulaski Skyway and three other road projects after Christie pushed the authority to back a funding arrangement its lawyers opposed.
“Discussions have been initiated between the Port Authority and the staff of the SEC regarding a potential resolution of the investigation,” the agency said Wednesday in offering documents ahead of a $475 million bond sale.
SEC spokesman Kevin Callahan declined to comment. Ron Marsico, a spokesman for the Port Authority, said in an e-mail that the agency wouldn’t comment further.
Port Authority lawyers questioned whether the agency could finance improvements to the Pulaski Skyway, which connects Newark to Jersey City. It leads to the Holland Tunnel, and the lawyers argued that the agency isn’t legally authorized to build access roads to that Hudson River crossing, records show.
In internal discussions over several months, lawyers said the agency was permitted to improve access roads only to the Lincoln Tunnel, several miles to the north. After months of debate among officials from the agency, New Jersey’s transportation department and its attorney general, authority commissioners in March 2011 approved the funding as a Lincoln Tunnel improvement.
In April 2014, Christie said publicly that “dozens and dozens of lawyers from both sides of the river reviewed that financing plan and approved it, as did the commissioners at Port Authority. So I relied upon the advice of lawyers from both sides of the river to come to that conclusion and I’m confident that if the SEC reviews it -- that’s what they’re doing -- they’ll come to the same conclusion.”
Manhattan District Attorney Cyrus Vance Jr. has also been conducting a criminal investigation.
In 2010 Christie canceled a project to build a rail tunnel to New York, known as Access to the Region’s Core. The SEC has also subpoenaed documents relating to the ARC tunnel termination, according to the Port Authority bond offering. Money that had been intended for the ARC tunnel was used for the Pulaski Skyway and other improvements.
Christie has said he ended the ARC tunnel, which would have been the country’s largest federally supported infrastructure project, to protect New Jersey taxpayers from billions of dollars in potential cost overruns. The state was to share the expenses with the Port Authority and the federal government.
That decision cost the state $3 billion in federal assistance and, according to the U.S. General Accountability Office, more than 202,000 direct and indirect jobs over a decade.
The project was estimated by the Federal Transportation Administration to cost as much as $12.4 billion, with New Jersey paying 14.4 percent, according to the report. Christie had said state officials estimated the price could reach $14 billion, with New Jersey responsible for 70 percent of the total cost.