Did The MTA Board Fully Review NY Crossings Contracts — Including $100M Decorative “Gateway” Towers — Before Approving Them?


On September 7, 2017, Reinvent Albany asked the Authorities Budget Office to investigate whether the MTA board met its fiduciary duty, and was fully informed, before approving contracts related to the governor’s NY Crossings program on MTA bridges and tunnels. Our formal complaint is centered around whether the MTA board knew what it was doing when it approved a series of contract amendments that had salted within them $47m worth of expenses for decorative towers at the entrance to the Battery and Queens Midtown Tunnels. The context for Reinvent Albany’s complaint about the decorative Towers and MTA board oversight was news in July that Governor Cuomo intended to compel the MTA to spend upwards of $200m on decorative Harbor Lights on MTA bridges. Under the law, the MTA is a public authority governed by a board that has a duty to the organization and public to promote the MTA’s mission, not the governor’s whim.

The letter is below.


Jeffrey​ ​Pearlman

Director,​ ​New​ ​York​ ​State​ ​Authorities​ ​Budget​ ​Office
240​ ​State​ ​Street​ ​#2076
Albany,​ ​NY​ ​12220

September​ ​7,​ ​2017

Re:​ ​​Complaint​ ​alleging​ ​that​ ​the​ ​Metropolitan​ ​Transportation​ ​Authority​ ​Board​ ​of Directors​ ​did​ ​not​ ​meet​ ​its​ ​fiduciary​ ​duty​ ​when​ ​it​ ​approved​ ​components​ ​of​ ​the​ ​New​ ​York Crossings​ ​Initiative,​ ​including​ ​$42m​ ​in​ ​decorative​ ​towers​ ​at​ ​bridge​ ​and​ ​tunnel entrances,​ ​in​ ​accordance​ ​with​ ​Public​ ​Authorities​ ​Law​.

Dear​ ​Director​ ​Pearlman:

Reinvent​ ​Albany​ ​writes​ ​to​ ​request​ ​that​ ​the​ ​Authorities​ ​Budget​ ​Office​ ​determine​ ​whether board​ ​members​ ​of​ ​the​ ​Metropolitan​ ​Transit​ ​Authority​ ​(MTA)​ ​have​ ​fulfilled​ ​their fiduciary​ ​duty​ ​by​ ​undertaking​ ​adequate​ ​oversight​ ​of​ ​activities​ ​and​ ​expenditures​ ​for Governor​ ​Andrew​ ​Cuomo’s​ ​ongoing​ ​New​ ​York​ ​Crossings​ ​Initiative​ ​on​ ​the​ ​MTA’s​ ​bridges and​ ​tunnels.

Specifically,​ ​we​ ​ask​ ​the​ ​ABO​ ​to​ ​investigate​ ​the​ ​following​ ​five​ ​matters​ ​related​ ​to​ ​the​ ​MTA board’s​ ​fiduciary​ ​duty:

  1. Determine​ ​whether​ ​the​ ​MTA​ ​board​ ​​fully​ ​examined​ ​and​ ​understood​ ​what​ ​it​ ​was funding​ ​before​ ​approving​ ​contract​ ​amendments​ ​for​ ​approximately​ ​$42.8​ ​million for​ ​decorative​ ​towers​ ​at​ ​bridge​ ​and​ ​tunnel​ ​entrances.​ ​​​Determine​ ​whether​ ​these contracts​ ​​fulfill​ ​the​ ​MTA’s​ ​mission​ ​or​ ​key​ ​performance​ ​indicators,​ ​or​ ​are​ ​part​ ​of any​ ​planned​ ​historical​ ​restoration.
  2. Review​ ​whether​ ​large​ ​NY​ ​Crossings​ ​or​ ​MTA​ ​Bridge​ ​and​ ​Tunnel​ ​expenditures were​ ​lumped​ ​into​ ​other​ ​expenditures​ ​and​ ​approved​ ​by​ ​the​ ​MTA​ ​board​ ​without​ ​a project​ ​budget,​ ​spending​ ​cap,​ ​or​ ​task​ ​or​ ​project​ ​ID.
  3. Examine​ ​whether​ ​the​ ​MTA​ ​board​ ​fulfilled​ ​its​ ​fiduciary​ ​duty​ ​by​ ​approving​ ​projects in​ ​a​ ​piecemeal​ ​fashion​ ​via​ ​a​ ​series​ ​of​ ​contract​ ​amendments​ ​without​ ​having​ ​a project​ ​budget​ ​that​ ​effectively​ ​establishes​ ​a​ ​spending​ ​limit​ ​for​ ​the​ ​project,​ ​as appears​ ​to​ ​be​ ​the​ ​case​ ​with​ ​the​ ​decorative​ ​towers.
  1. Investigate​ ​whether​ ​the​ ​MTA​ ​board​ ​and​ ​staff​ ​approve​ ​contracts​ ​related​ ​to​ ​NY Crossings​ ​in​ ​a​ ​manner​ ​which​ ​is​ ​consistent​ ​with​ ​the​ ​MTA’s​ ​procurement​ ​rules. The​ ​Board​ ​may​ ​have​ ​violated​ ​MTA​ ​procurement​ ​rules​ ​by​ ​ignoring​ ​Article​ ​III​ ​part B5​ ​of​ ​the​ ​rules,​ ​which​ ​requires​ ​a​ ​resolution​ ​by​ ​the​ ​Board​ ​when​ ​a​ ​Rider​ ​is​ ​made​ ​to an​ ​existing​ ​General​ ​Contract,​ ​and​ ​a​ ​determination​ ​by​ ​the​ ​Board​ ​that​ ​includes​ ​the reasons​ ​why​ ​it​ ​is​ ​in​ ​the​ ​public​ ​interest​ ​to​ ​amend​ ​an​ ​existing​ ​contract​ ​instead​ ​of securing​ ​a​ ​service​ ​or​ ​product​ ​through​ ​a​ ​competitive​ ​process.
  2. Determine​ ​whether​ ​the​ ​MTA​ ​contract​ ​amendments/riders​ ​are​ ​“competitively” awarded.​ ​​​The​ ​MTA’s​ ​own​ ​procurement​ ​rules​ ​recognize​ ​that​ ​contract amendments/riders​ ​are​ ​not​ ​considered​ ​competitive​ ​awards.​ ​In​ ​the​ ​attached spreadsheet,​ ​we​ ​document​ ​eight​ ​contract​ ​amendments​ ​that​ ​include​ ​tasks​ ​related to​ ​fabricating​ ​and​ ​installing​ ​the​ ​decorative​ ​towers​ ​that​ ​are​ ​completely​ ​unrelated to​ ​the​ ​deliverables​ ​in​ ​the​ ​original​ ​contract.​ ​All​ ​eight​ ​of​ ​those​ ​amendments​ ​appear to​ ​be​ ​misleadingly​ ​listed​ ​by​ ​the​ ​MTA​ ​as​ ​competitively​ ​bid.

New​ ​York​ ​Crossings​ ​was​ ​announced​ ​by​ ​Governor​ ​Cuomo​ ​on​ ​October​ ​5,​ ​2016​ ​and​ ​is​ ​the umbrella​ ​name​ ​for​ ​a​ ​wide​ ​range​ ​of​ ​capital​ ​expenditures​ ​on​ ​MTA​ ​Bridges​ ​and​ ​Tunnels centered​ ​around​ ​Open​ ​Road​ ​Tolling,​ ​but​ ​also​ ​including​ ​seismic​ ​and​ ​flood​ ​measures​ ​and decorative​ ​elements​ ​including​ ​Harbor​ ​Lights​ ​and​ ​art​ ​deco​ ​towers​ ​at​ ​bridge​ ​and​ ​tunnel entrances​ ​(“Towers.”)​ ​Based​ ​on​ ​MTA​ ​documents,​ ​we​ ​estimate​ ​that​ ​the​ ​total​ ​combined cost​ ​of​ ​the​ ​components​ ​of​ ​NY​ ​Crossings​ ​will​ ​exceed​ ​over​ ​a​ ​billion​ ​dollars​ ​in​ ​public​ ​funds.

According​ ​to​ ​press​ ​accounts,​ ​public​ ​records,​ ​and​ ​public​ ​statements​ ​by​ ​MTA​ ​board members,​ ​Governor​ ​Cuomo​ ​proposed​ ​the​ ​New​ ​York​ ​Crossings​ ​initiative​ ​with​ ​little​ ​or​ ​no review​ ​or​ ​comment​ ​by​ ​the​ ​MTA​ ​board.​ ​Based​ ​on​ ​our​ ​review​ ​of​ ​the​ ​minutes​ ​of​ ​MTA​ ​full board​ ​and​ ​committee​ ​meetings​ ​since​ ​the​ ​governor’s​ ​October​ ​5,​ ​2016​ ​announcement,​ ​we see​ ​no​ ​evidence​ ​that​ ​the​ ​MTA​ ​board​ ​reviewed​ ​or​ ​approved​ ​an​ ​overall​ ​budget​ ​for​ ​the​ ​New York​ ​Crossings​ ​initiative,​ ​or​ ​reviewed​ ​or​ ​approved​ ​budgets,​ ​or​ ​expenditure​ ​caps,​ ​for​ ​any of​ ​its​ ​component​ ​elements.​ ​Additionally,​ ​we​ ​see​ ​no​ ​evidence​ ​that​ ​the​ ​MTA​ ​board​ ​or​ ​staff clearly​ ​defined​ ​the​ ​component​ ​elements​ ​of​ ​NY​ ​Crossings,​ ​or​ ​large​ ​sub-components,​ ​and assigned​ ​them​ ​any​ ​form​ ​of​ ​unique​ ​identifier.

Despite​ ​not​ ​having​ ​individually​ ​identified​ ​the​ ​components​ ​of​ ​NY​ ​Crossings​ ​or​ ​approved budgets​ ​for​ ​them,​ ​the​ ​MTA​ ​board​ ​has​ ​approved​ ​hundreds​ ​of​ ​millions​ ​of​ ​dollars​ ​worth​ ​of contracts​ ​for​ ​NY​ ​Crossings​ ​expenditures.​ ​Among​ ​these​ ​expenditures,​ ​the​ ​MTA​ ​board approved​ ​eight​ ​separate​ ​contract​ ​amendments​ ​worth​ ​$42.8​ ​million​ ​at​ ​three​ ​board meetings​ ​in​ ​April,​ ​May​ ​and​ ​June​ ​2017​ ​to​ ​fabricate​ ​and​ ​install​ ​decorative​ ​Towers​ ​at​ ​the entrances​ ​to​ ​all​ ​MTA​ ​bridges​ ​and​ ​tunnels.​ ​​​According​ ​to​ ​page​ ​115​ ​of​ ​the​ ​April​ ​24,​ ​2017 minutes​ ​of​ ​the​ ​MTA​ ​Bridge​ ​and​ ​Tunnel​ ​Committee,​ ​the​ ​“​Towers​ ​will​ ​be​ ​installed​ ​at​ ​all nine​ ​B&T​ ​facilities​ ​in​ ​order​ ​to​ ​create​ ​a​ ​unifying​ ​theme​ ​for​ ​the​ ​various​ ​bridges​ ​and tunnels.​”

Yet,​ ​despite​ ​an​ ​aggregate​ ​cost​ ​of​ ​$42.8​ ​million,​ ​nowhere​ ​are​ ​the​ ​Towers​ ​assigned​ ​a unique​ ​identifier​ ​by​ ​the​ ​MTA​ ​and​ ​designated​ ​as​ ​a​ ​“Project”​ ​or​ ​“Task”​ ​for​ ​budgeting​ ​and contracting​ ​purposes.​ ​This​ ​is​ ​important​ ​because​ ​it​ ​means​ ​the​ ​Towers​ ​essentially​ ​do​ ​not exist​ ​in​ ​MTA​ ​Capital​ ​Tracking​ ​documents.​ ​Not​ ​assigning​ ​the​ ​Towers​ ​a​ ​project​ ​ID​ ​is​ ​very odd​ ​because​ ​the​ ​Towers​ ​cost​ ​far​ ​more​ ​than​ ​the​ ​average​ ​MTA​ ​Bridge​ ​and​ ​Tunnel “Project”​ ​or​ ​“Task.”

Based​ ​on​ ​the​ ​tables​ ​included​ ​in​ ​the​ ​​MTA​ ​Bridge​ ​and​ ​Tunnel​ ​Capital​ ​Projects​ ​Milestones in​ ​the​ ​January​ ​2017​ ​committee​ ​minutes​ ​(p.54)​ ​​​the​ ​average​ ​Bridge​ ​and​ ​Tunnel​ ​“Project” costs​ ​$18​ ​million​ ​and​ ​the​ ​average​ ​“Task”​ ​costs​ ​about​ ​$2.4​ ​million.​ ​(Tasks​ ​are​ ​elements of​ ​Projects.)​ ​​​Thus,​ ​the​ ​expenditures​ ​the​ ​MTA​ ​board​ ​approved​ ​for​ ​the​ ​Towers​ ​cost​ ​more than​ ​three​ ​times​ ​what​ ​the​ ​average​ ​project​ ​cost​ ​and​ ​close​ ​to​ ​eighteen​ ​times​ ​what​ ​the average​ ​“Task”​ ​cost.

It​ ​is​ ​also​ ​odd​ ​that​ ​the​ ​decorative​ ​Towers​ ​were​ ​not​ ​flagged​ ​by​ ​the​ ​staff​ ​or​ ​board​ ​for special​ ​attention​ ​and​ ​review.​ ​The​ ​Towers​ ​do​ ​not​ ​help​ ​fulfill​ ​the​ ​MTA’s​ ​mission​ ​or​ ​key performance​ ​indicators,​ ​and​ ​are​ ​not​ ​part​ ​of​ ​any​ ​planned​ ​historical​ ​restoration.​ ​Yet,​ ​the $42.8​ ​million​ ​spent​ ​to​ ​date​ ​on​ ​the​ ​Towers​ ​was​ ​approved​ ​without​ ​any​ ​presentation​ ​from the​ ​MTA​ ​staff​ ​to​ ​the​ ​board,​ ​without​ ​any​ ​discussion​ ​by​ ​the​ ​board​ ​and​ ​without​ ​a​ ​budget line​ ​item,​ ​spending​ ​limit​ ​or​ ​a​ ​competitive​ ​bidding​ ​process.

In​ ​the​ ​Authorities​ ​Budget​ ​Office’s​ ​March​ ​2014​ ​review​ ​of​ ​a​ ​complaint​ ​against​ ​the​ ​Town​ ​of Montgomery​ ​IDA,​ ​the​ ​ABO​ ​wrote​ ​that​ ​the​ ​“failure​ ​to​ ​fulfill​ ​fiduciary​ ​duties​ ​can​ ​include: “not​ ​examining​ ​issues​ ​fully.”​ ​​​In​ ​the​ ​case​ ​of​ ​the​ ​decorative​ ​Towers,​ ​MTA​ ​board​ ​minutes suggest​ ​the​ ​MTA​ ​board​ ​did​ ​not​ ​“examine”​ ​them,​ ​does​ ​not​ ​know​ ​how​ ​much​ ​the​ ​“Towers” will​ ​ultimately​ ​cost,​ ​and​ ​may​ ​not​ ​even​ ​know​ ​what​ ​the​ ​Towers​ ​are.

The​ ​Towers​ ​are​ ​not​ ​among​ ​the​ ​largest​ ​NY​ ​Crossings​ ​expenditures,​ ​but​ ​they​ ​are​ ​a documented​ ​example​ ​of​ ​the​ ​MTA​ ​board​ ​approving​ ​piecemeal​ ​expenditures​ ​worth​ ​tens​ ​of millions​ ​of​ ​dollars​ ​that​ ​are​ ​subsumed​ ​in​ ​larger​ ​contracts​ ​for​ ​unrelated​ ​tasks,​ ​without competitive​ ​bidding,​ ​without​ ​explanation​ ​and​ ​without​ ​any​ ​approved​ ​project​ ​budget.​ ​The Towers​ ​contracts​ ​also​ ​suggest​ ​that​ ​the​ ​MTA​ ​board​ ​is​ ​not​ ​following​ ​the​ ​MTA’s​ ​own procurement​ ​rules,​ ​which​ ​require​ ​an​ ​explanation​ ​of​ ​why​ ​it​ ​is​ ​in​ ​the​ ​public​ ​interest​ ​to amend​ ​an​ ​existing​ ​contract​ ​rather​ ​than​ ​undertaking​ ​a​ ​competitive​ ​bidding​ ​process.

Thank​ ​you​ ​for​ ​acting​ ​on​ ​our​ ​concerns.​ ​We​ ​are​ ​happy​ ​to​ ​further​ ​explain​ ​our​ ​concerns​ ​and provide​ ​additional​ ​information​ ​via​ ​phone​ ​or​ ​email.

Thank​ ​you,

John​ ​Kaehny
Executive​ ​Director

Click here to view the letter as a PDF (includes additional sources).