2013 ANNUAL REPORT Comprehensive Annual Financial Report for the Year Ended December 31, 2013 FOCUS FORWarD ABU O T THE PORT AUTHORITY The Port Authority of New York and New Jersey builds, operates, and maintains many of the most important transportation and infrastructure assets in the country. The agency’s network of aviation, rail, surface transportation, and seaport facilities moves hundreds of millions of people and goods throughout the region annually and supports more than 550,000 regional jobs, more than $23 billion in annual wages, and $80 billion in annual economic activity. 2 THE PORT AUTHORITY OF NY & NJ TB A LE OF CONTENTS IT N RODUCTORY SECTION 2 Select Facilities 3 Letter of Transmittal to the Governors 5 The Port District 6 Board of Commissioners 7 Leadership of the Port Authority and Governance Initiatives 8 Officers and Executive Management 9 Letter from the Executive Director 13 Focus Forward 44 Letter of Transmittal to the Board of Commissioners FINANCIAL SECTION 49 Independent Auditors’ Report 53 Management’s Discussion and Analysis (Unaudited) Basic Financial Statements 65 Consolidated Statements of Net Position 66 Consolidated Statements of Revenues, Expenses, and Changes in Net Position 67 Consolidated Statements of Cash Flows 69 Notes to Consolidated Financial Statements 106 Required Supplementary Information (Unaudited) Financial Statements Pursuant to Port Authority Bond Resolutions 107 Schedule A – Revenues and Reserves 108 Schedule B – Assets and Liabilities 109 Schedule C – Analysis of Reserve Funds STATISTICAL SECTION 111 Statistical Section Narrative 112 Schedule D-1 – Selected Statistical Financial Trends Data 114 Schedule D-2 – Selected Statistical Debt Capacity Data 116 Schedule D-3 – Selected Statistical Operating Data (Unaudited) 117 Schedule E – Information on Port Authority Operations 118 Schedule F – Information on Port Authority Capital Program Components 119 Schedule G – Port Authority Facility Traffic (Unaudited) 120 Selected Statistical, Demographic, and Economic Data (Unaudited) CORPORATE INFORMATION 121 Top 20 Salaried Staff The Port Authority of New York and New Jersey Comprehensive Annual Financial Report for the Year Ended December 31, 2013 Prepared by the Marketing and Comptroller’s departments of The Port Authority of New York and New Jersey 225 Park Avenue South, New York, NY 10003-1604 www.panynj.gov FOCUS FORWARD 1 S ELECT FaCILITIES The Port Authority of New York and New Jersey’s facilities include America’s busiest airport system, the Port of New York and New Jersey, the PATH rail transit system, six tunnels and bridges connecting New York and New Jersey, and the Port Authority Bus Terminal in Manhattan. The Port Authority also owns and manages the 16-acre World Trade Center site, home to the iconic One World Trade Center, the tallest building in the Western Hemisphere. Each of these facilities plays a key role in supporting the region’s transportation infrastructure and economic livelihood. AVT IA ION PORT COMMERCE John F. Kennedy International Airport Brooklyn-Port Authority Marine Terminal LaGuardia Airport Elizabeth-Port Authority Marine Terminal Newark Liberty International Airport Greenville Yard-Port Authority Marine Terminal Stewart International Airport Howland Hook Marine Terminal Teterboro Airport Port Jersey-Port Authority Marine Terminal Atlantic City International Airport1 Port Newark Red Hook Container Terminal T SUNNEL , BRIDGES & TERMINALS Holland Tunnel PORT AUTHORITY TRANS-HUDSON Lincoln Tunnel PATH Rail Transit System Journal Square Transportation Center Bayonne Bridge George Washington Bridge WORLD TRADE CENTER Goethals Bridge Outerbridge Crossing 1In July 2013, The Port Authority of New York and New Jersey George Washington Bridge Bus Station and the South Jersey Transportation Agency entered into a Port Authority Bus Terminal management agreement for the provision of general management services by the Port Authority at the airport. 2 THE PORT AUTHORITY OF NY & NJ TEH HONORABLE TEH HONORABLE ANDREW M. CUOMO CHRIS ChRISTIE Governor, State of New York Governor, State of New Jersey L ETTER OF TRANSMITTAL TO THE GOVERNORS Dear Governors: On behalf of the Board of Commissioners, I am pleased to present to you and to the Legislatures of New York and New Jersey, the 2013 Comprehensive Annual Financial Report of The Port Authority of New York and New Jersey. The following pages highlight the agency’s accomplishments in pursuing its mission of providing critical transportation, terminal and other facilities of commerce and economic development in the Port District, supporting the nation’s largest regional economy. In early 2014, as the culmination of significant planning efforts undertaken during 2013, the Board of Commissioners approved a $27.6 Billion 10-year Capital Plan representing a return to this agency’s core mission with a plan to invest billions of dollars in our facilities. In formulating this capital plan, under the Board of Commissioners’ direction, agency staff conducted a new comprehensive, analytical scoring process to identify and evaluate “State of Good Repair” projects. As a result, the agency has dedicated nearly $13 billion to critical State of Good Repair projects that will modernize and enhance the viability of the Port Authority’s existing assets while lessening maintenance costs in the long term. Most importantly, we instituted a series of checks and balances to ensure that the capital plan is carried out in a disciplined, fiscally responsible manner. Each project will undergo a rigorous process as to its scope, design, and costs, as well as a thorough risk analysis before moving forward into construction. The ten-year plan will serve as a living document that will be continually reviewed and updated to reflect the changing needs of the region and the agency’s financial capacity. The importance of The Port Authority of New York and New Jersey to the region cannot be overstated. With this in mind, the Board of Commissioners created a Special Oversight Committee earlier this year to enhance the Board of Commissioners’ oversight of the governance and operations of the agency and its performance of its statutory and mission responsibilities. In conjunction with the ongoing work of the Special Panel on the Future of the Port Authority, which you formed earlier this year, the Special Oversight Committee will examine a broad range of issues and make recommendations that will enable the agency to meet its responsibilities in and effective, open and transparent manner in the future. FOCUS FORWARD 3 R VE PassaicRI DSON HU ROCKLAND New York ROCKLAND CT SUSSEX Y A Poughkeepsie W U ULSTER R H WESTCHESTER T NEW YORK E T A Long T S K DUTCHESS R O Island Y NEW W E Sound N YORK 84 Beacon Newburgh STEWART BERGEN INTERNAT’L PASSAIC AIRPORT 87 ORANGE PUTNAM West Point BRONX MORRIS ESSEX NEW I also sadly acknowledge the passing Commissioner Basil Paterson in April 2014. Commissioner JERSEY HUDSON Paterson had a long record of service to the City and State of New York. He brought a depth of MANHATTAN NASSAU QUEENS experience and a unique perspective to the work he did on this Board and will be deeply missed. SOMERSET This in many ways is a new era at the agency. Since the beginning of 2011, the agency has seen UNION BROOKLYN 11 new Commissioners added to the Port Authority’s 12 member Board. Under your leadership, this NEW JERSEY Board will continue to reshape the agency into one that meets the high standards that the public ATLANTIC CITY EXPRESSWAY A TL ATLANTIC STATEN AN ATLANTIC CITY deserves and provides the critical transportation and other facilities that the entire region requires T IC INTERNAT’L ISLAND C I T AIRPORT Y E to flourish. X Galloway P R ESSW MIDDLESEX Lower AY Absecon New York Atlantic Egg Harbor AY Township W K Bay Ocean R Yours most sincerely, A P T E A T S ATLANTIC CITY N E D GARDENR STATE PARKWAY A ATLANTIC G OCEAN PORT DISTRICT MERCER MONMOUTH Scott Rechler MONMOUTH BURLI NGTON Vice-Chairman CAMDEN OCEAN GLOUCHESTER NEW JERSEY June 25, 2014 SALEM ATLANTIC ATLANTIC CITY INTERNAT’L CUMBERLAND Atlantic AIRPORT Ocean CAPE MAY 4 THE PORT AUTHORITY OF NY & NJ R VE PassaicRI DSON HU ROCKLAND New York ROCKLAND CT SUSSEX Y A Poughkeepsie W U ULSTER R H WESTCHESTER T NEW YORK E T A Long T S K DUTCHESS R O Island Y NEW W E Sound N YORK 84 Beacon Newburgh STEWART BERGEN INTERNAT’L PASSAIC AIRPORT 87 ORANGE PUTNAM West Point BRONX MORRIS ESSEX NEW JERSEY HUDSON MANHATTAN NASSAU QUEENS SOMERSET UNION BROOKLYN NEW JERSEY ATLANTIC CITY EXPRESSWAY A TL ATLANTIC STATEN AN ATLANTIC CITY T IC INTERNAT’L ISLAND C I T AIRPORT Y E X Galloway P R ESSW MIDDLESEX Lower AY Absecon New York Atlantic Egg Harbor AY Township W K Bay Ocean R A P T E A T S ATLANTIC CITY N E D GARDENR STATE PARKWAY A ATLANTIC G OCEAN PORT DISTRICT MERCER MONMOUTH MONMOUTH BURLI NGTON CAMDEN OCEAN THER PO T DISTRICT GLOUCHESTER NEW JERSEY SALEM The Port Authority was established by the Compact of April 30, 1921, between the states of New York and New Jersey as one of the first ATLANTIC ATLANTIC CITY INTERNAT’L interstate agencies created under a clause of the United States Constitution permitting compacts between states with the consent of CUMBERLAND Atlantic AIRPORT Ocean Congress. The Compact also created the Port District, which comprises an area of about 1,500 square miles in both states, centering CAPE MAY around New York Harbor. The Port District includes the cities of New York and Yonkers in New York State, and the cities of Newark, Jersey City, Bayonne, Hoboken, and Elizabeth in the State of New Jersey, and more than 200 other municipalities, including all or part of 17 counties, in the two states. This Port Compact established a bistate authority to provide transportation, terminal, and other facilities of commerce within the Port District.