THE PORT AUTHORITY OF NY & NJ
Press Release Article
GOVERNOR DELIVERS FOR NYC WITH PORT AUTHORITY LEASE EXTENSION
Date: Oct 15, 2003
Press Release Number: 9998-2003
Port Authority, City of New York Reach Multi-Billion Dollar Agreement For Lease Extension Through 2050 for John F. Kennedy International, LaGuardia Airports
STATE OF NEW YORK
GEORGE E. PATAKI, GOVERNOR
Governor George E. Pataki and Mayor Michael R. Bloomberg today announced the Port Authority and City of New York have reached an agreement that means approximately $700 million to the City when the deal closes, and significantly raises annual payments on John F. Kennedy International and LaGuardia airports through 2050.
The $700 million includes a $500 million lump sum and a $90-million-per-year increase over the present annual lease payment of $3.5 million. This is a minimum of $5 billion in minimum total value of the lease to the City through 2050. The agreement still must be approved by the Port Authority Board of Commissioners before it is finalized.
The Governor and Mayor also announced that the Port Authority will increase its future Payment In Lieu Of Taxes (PILOT) for the World Trade Center site.
Governor Pataki said, \"Today\'s agreement promises hundreds of millions of dollars to the City in the short term and billions of dollars over the life of this lease for New York City. We will continue to do everything we can to help New York, and I’m delighted we were able to make this happen for the people of this Great City, while extending the proud tradition of the Port Authority operating these world-class airports for more than 55 years.\"
Mayor Bloomberg said, \"In my first State of the City address, I pledged to establish a revitalized relationship with the Port Authority to ensure that New York City, and particularly Queens, receives fair compensation for the airports within our borders. This proposed agreement will give Kennedy and LaGuardia airports the sound financial foundation and governance structure worthy of these vital entryways to the world’s greatest city, and ensures that the Port Authority will make the appropriate investment in our airports going forward. And for the first time, the City will have a substantial role in making sure that our airports are managed properly. I want to thank Governor Pataki and the Port Authority for their hard work and cooperation. The investment we are making today will benefit the entire region for decades to come and secure New York City’s status as a premier international City.\"
Port Authority Vice Chairman Charles A. Gargano said, \"Governor Pataki recognizes what lies at the heart of this agreement: As economic engines, JFK and LaGuardia airports are unrivaled. Together, these airports contribute more than $28 billion in economic activity in the New York metropolitan area. More importantly, they provide about 50,000 on-airport jobs while supporting more than 270,000 additional jobs in the region, generating in excess of $9 billion in wages. The PILOT agreement for the World Trade Center Site also will act as an economic stimulus for the city, state and region.\"
Port Authority Executive Director Joseph J. Seymour said, \"This is a great day for the City and State of New York, and for the Port Authority, but most of all, it\'s a great day for the tens of millions of people who use JFK and LaGuardia. Under the Port Authority\'s stewardship, the airports have enjoyed tremendous growth, in large part because the Port Authority and its airport partners have invested more than $10 billion in improvements and enhancements over the years to ensure the vibrancy of these two historic facilities. And today, after a decade of stops and starts in negotiations, I\'m proud to say we have reached an agreement with the City that makes everyone a winner.
\"It\'s also important to note the significance of the new PILOT structure for the World Trade Center site. The agreement establishes a fair and equitable payment to the city that will increase as the renaissance in Downtown Manhattan progresses.\"Highlights of the airports\' lease extension agreement include:
Highlights of the World Trade Center site PILOT agreement include:
- Approximately $700 million total due from the Port Authority to the city at closing. (A $500 million lump sum plus 2002 and 2003 rents with interest.) A new $93.5 million minimum annual rent payment, commencing January 1, 2002, and representing an increase of $90-million-per-year over the previous minimum.
- $10 million in Port Authority funding per year, for five years, for capital projects in Queens.
- Establishment of an Airport Board to review airport standards, operations and performance. Board is comprised of city and Port Authority officials, and is funded by the Port Authority and the city using a small percentage of rent payments plus an additional contribution from the Port Authority. This deal provides a more stable environment for private sector investment.
- Funding for feasibility studies of one-seat rides from Downtown Manhattan to JFK International and Newark Liberty International airports.
- Formula for annual minimum PILOT based upon net lease revenues received by the Port Authority and $14 million annual minimum PILOT based upon current net lease revenues.
- PILOT payment is either the annual minimum, or a base amount that increases as the site is developed and as tax rates and commercial property values increase.
- $55 million annual PILOT after World Trade Center site is fully built out (as per office and retail space in Libeskind Plan and 7 WTC), plus a factor representing growth in tax rates and property values over a 2002 base year.
- Port Authority pays equivalent of full property taxes on Deutsche Bank and Millstein sites until site is developed. When developed, PILOT for Deutsche Bank and Millstein sites equals $9 per square foot, plus a factor representing growth in tax rates and property values over a 2002 base year.
The Port Authority has operated the two commercial airports in New York City for more than 55 years. The original 50-year lease was signed in 1947 and extended to 2015 under an agreement struck in 1965. Today\'s agreement culminates negotiations between the Port Authority and the city that began about a decade ago. All pending litigation and arbitration matters related to the NY airports and the World Trade Center are being dismissed with prejudice, and without payment by the Port Authority.
The Port Authority of New York and New Jersey operates some of the busiest and most important transportation links in the region. They include John F. Kennedy International, Newark Liberty International, LaGuardia and Teterboro airports; the George Washington Bridge; the Lincoln and Holland tunnels; the three bridges between Staten Island and New Jersey; the PATH rapid-transit system; the Downtown Manhattan Heliport; Port Newark; the Elizabeth-Port Authority Marine Terminal; the Howland Hook Marine Terminal on Staten Island; the Brooklyn Piers/Red Hook Container Terminal; and the Port Authority Bus Terminal in midtown Manhattan. The agency also owns the 16-acre World Trade Center site in Lower Manhattan. ###