Front Cover 2014 ANNUAL REPORT A clear path forward Comprehensive Annual Financial Report for the Year Ended December 31, 2014 remove this page for final printng - different paper stock Mission Mission Meet the critical transportation infrastructure needs of the bistate region’s people, businesses, and visitors by providing the highest-quality and most-efficient transportation and port commerce facilities and services to move people and goods within the region, provide access to the nation and the world, and promote the region’s economic development. 2 PORT AUTHORITY OF NEW YORK & NEW JERSEY Table of Contents INTRODUCTORY SECTION INTRODUCTORY SECTION 2 Select Facilities 3 Chairman’s Letter of Transmittal to the Governors 4 Board of Commissioners 4 Leadership of the Port Authority 5 Governance Initiatives 6 Officers and Executive Management 7 Letter from the Executive Director 9 The Port District 11 A Clear Path Forward FINAnciAL sectionI 46 Chief Financial Officer’s Letter of Transmittal to the Board of CommissionersTORY SECTIO 49 Index to Financial Section corPorAte inforMAtionINTRODUCTORY SECTION 115 Selected Statistical, Demographic, and Economic Data 116 Top 20 Salaried Staff as of December 31, 2014 The Port Authority of New York and New Jersey Comprehensive Annual Financial Report for the Year Ended December 31, 2014 Prepared by the Marketing and Comptroller’s departments of The Port Authority of New York and New Jersey 4 World Trade Center, 150 Greenwich Street, 23rd Floor, New York, NY 10007 www.panynj.gov A CLEAR PATH FORWARD 1 Select Facilities Select 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. AVIATION 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 TUNNELS, 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 George Washington Bridge Bus Station 1In July 2013, The Port Authority of New York Port Authority Bus Terminal and New Jersey and the South Jersey Transportation Authority entered into a management agreement for the provision of general management services by the Port Authority at the airport. 2 PORT AUTHORITY OF NEW YORK & NEW JERSEY Chairman’s Letter of Transmittal to the Governors CHAIRMAN’S LETTER OF TRANSMITTAL TO THE GOVERNORS THE HONORAblE THE HONORAblE ANDREW M. CUOMO CHRIS CHRISTIE Governor, State of New York Governor, State of New Jersey 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 2014 Comprehensive Annual Financial Report of The Port Authority of New York and New Jersey. This report highlights some of the agency’s signature accomplishments achieved during 2014 in pursuing its core mission of supporting the region through investments in critical transportation infrastructure, terminals, and at the largest port on the East Coast. The Board has begun to implement the recommendations of the Special Panel on the Future of the Port Authority, which you jointly appointed last year, to refocus the Port Authority on its core transportation mission and recommit the agency to the highest standards of ethics, accountability, and transparency. Even before the Special Panel’s recommendations were received, this Board acted in 2014 to increase transparency by restructuring our monthly meetings to encourage public comment on issues before the Board, minimizing the use of nonpublic executive sessions, and conducting roll-call votes on all Board actions. We also adopted a new Freedom of Information policy mandating the disclosure of any record that would be available from a public agency under the law of either New York or New Jersey, as well as establishing a two-tiered appeals process. We have also undertaken a comprehensive review and updating of the Port Authority’s Code of Conduct for employees, Commissioners, and contractors, to ensure that we are observing the most stringent ethical standards in our operations. Of course, even as we address these important issues of governance, the Board remains focused on our key strategic and operational priorities, including modernization of our region’s airports and port facilities, refurbishing and ultimately planning for replacing the obsolete Port Authority Bus Terminal, and ensuring that each part of our vital trans-Hudson transportation network, from the PATH system to our bridges and tunnels, operates as dependably and efficiently as possible. While much work remains to be done, I am proud to be associated with the hardworking men and women of this agency, and can assure you that we will spare no effort to earn the trust and confidence of the public in the days ahead. Sincerely, John J. Degnan Chairman June 29, 2015 A CLEAR PATH FORWARD 3 Board of Commissioners Leadership of the Port Authority CHAIRMAN VICE CHAIRMAN RICHARD H. BAggER GEORGE R. LAUFENBERG KENNETH LIPPER JEFFREY H. LYNFORD JOHN J. DEGNAN ScOTT H. RECHLER Sr. Vice President Administrative Manager Chairman President and CEO Chief Executive Officer Corporate Affairs New Jersey Carpenters Lipper & Co. LLC Educational Housing and Chairman, RXR Celgene Corporation Funds Services, Inc. JEFFREY A. MOERdlER RAYMOND M. POCINO ROSSANA ROSADO WIllIAM “PAT” ScHUBER DAVID S. STEINER Member Vice President/Eastern Publisher Emeritus Professor Chairman Mintz, Levin, Cohn, Ferris, Regional Manager El Diario-La Prensa Fairleigh Dickinson Steiner Equities Glovsky and Popeo, P.C. Laborers International University Group, LLC Union of N.A. Board Of Commissioners Leadership of the Port Authority John J. Degnan, Chairman1 The governor of each state appoints Scott H. Rechler, Vice Chairman six members of the agency’s Board of Richard H. Bagger Commissioners for overlapping six-year terms; George R. Laufenberg2 each appointment is subject to the approval Kenneth Lipper of the respective state Senate. Commissioners Jeffrey H. Lynford serve as public officials without remuneration. Jeffrey A. Moerdler The governors retain the right to veto the Raymond M. Pocino actions of the commissioners from their Rossana Rosado respective states. An executive director and a William “Pat” Schuber deputy executive director*, elected by the Board, are responsible for managing the operation of David S. Steiner 1 John J. Degnan joined the Board on July 14, 2014, the Port Authority in a manner consistent with and became Chairman on July 23, 2014. the agency’s policies, as established by the 2 George R. Laufenberg joined the Board on Board. The agency undertakes projects and July 18, 2014. activities in accordance with the Port Compact The following also served on the of 1921, and amendatory and supplemental Board of Commissioners during 2014: bistate legislation. Basil A. Paterson† David Samson * The report by the Special Panel on the Future of the Anthony J. Sartor Port Authority that was issued to the Governors on December 26, 2014, included a recommendation that † Commissioner Paterson passed away April 16, 2014. the positions of Executive Director and Deputy Executive Director be replaced with a single “Chief Executive As of December 31, 2014 Officer” appointed by and accountable to the Board. A nationwide search for qualified candidates is currently in progress. 4 PORT AUTHORITY OF NEW YORK & NEW JERSEY Governance Initiatives Governance Initiatives The Port Authority is committed to the highest standards of accountability and transparency. In 2014, the agency made significant advancements to PATRICK J. FOYE Executive Director bring greater transparency to the manner in which it conducts business. Based on the recommendations of the Special Oversight Committee created by the Board of Commissioners in February 2014, the agency instituted the following reforms to enhance transparency in the conduct of Board meetings: (1) replaced the “consent calendar” method of voting with individual roll-call votes in public session; (2) modified the Commissioner recusal process to inform the public of recusals prior to Board action; (3) rearranged the schedules for Board and Committee meetings, so that public Committee meetings are held consecutive to public Board meetings; (4) scheduled the public comment DEBORAH L. GRAMIccIONI* Deputy Executive period to be held prior to Board action on pending agenda items; and (5) Director limited nonpublic executive sessions of Board and Committee meetings strictly to exceptions recognized in the open public meetings laws of both states. In May 2014, Governors Cuomo and Christie created a bistate Special Panel on the Future of the Port