Thomas wrote:So are you saying that even in a damaged economy that the Port Authority would be willing to sell bonds to fund a seven line extension into New Jersey, and could even sell bonds for new Gateway Tunnels?
You mean just as a way of providing funding? Without having any financial responsibility for subsidizing the service once running? Yes they could probably do that. After all they did provide over a billion dollars in funding for ARC.
I think they can do that as long as they don't get involved in operations. In the past the PA has acquired commuter MU cars to be leased to the MTA and transit buses to lease to NJ Transit. I'm not aware if they're still involved in that. There might've been a bondholder suit over it.
The PA has been, in the past, sued by bondholders over potential transit involvement. The bondholders contended that by trying to go "outside" the Port Authority's core mission -- to improve and coordinate the Port of New York -- the Authority would be taking on risks that were not envisioned when the bondholders bought PA bonds. In other words, the PA couldn't sell bonds on the basis it was a port authority and all of a sudden turn around and become a transit operator. The courts upheld the bondholders. One case went all the way to the US Supreme Court.
The PA sought to get around that by earmarking the transit-related bonds. The bondholders objected that no matter how they tried to separate the transit involvement it presented an overall risk to
all PA investors. I think the courts upheld that too.
The bondholders even argued that the transit involvement was unfair as it would distract PA officials from their main mission.
However the PA did provide over a billion dollars for the ARC project so they obviously have some leeway. I don't recall if those were bonds, or an outright grant. I'm not sure how things have changed.
But lirr42 is correct, I'm sure. The PA won't be taking over NYCTA anytime soon!