Fears of a downgrade that prompted the Port Authority of New York and New Jersey into raising tolls and fairs last year, took place on Monday. This is a result of the high construction costs of the World Trade Center in Lower Manhattan.
The Wall Street Journal reported that analyst from Moody's Investors Service downgraded the bond for the Port to Aa3 from Aa2. The downgrade is said to affect $18.2 billion in consolidated bonds. This could add millions of dollars to the borrowing costs of the Port, even as the final stages of the WTC development approaches.
The WTC has cost the authority approximately $2 billion, according to the Wall Street Journal, raising its debt to revenue ratio.
Recent completed audit of the authority's finances would cost as much as $17 billion over the next 10 years and the authority is looking to turn to toll payers to cover its debts.
Moody's told the Wall Street Journal that so far, the authority has demonstrated fairly inelastic demand for its strategic transportation facilities in the densely populated Metropolitan New York service area, despite large recent toll and fare rate increases and the economic recession.
"However, the additional stepped roll rate increases over the next four years, coupled with a slower economic recovery, or higher fuel prices, could depress traffic and revenue and weaken financial margins."
In a meeting last week, the Port Authority board of commissioners said they would begin re-prioritizing their outstanding construction projects, and also announced new projects aimed to improving infrastructure.
"The Port Authority's fiscal health remains strong," authority spokeswoman Lisa MacSpadden told the Wall Street Journal.
"Further, the agency's rating, with a revised outlook from negative to stable, remains among the highest given by Moody's to transportation agencies. Moody's noted the agency's principal role in the region's critical transportation infrastructure, its strong financial results, and historically steady growth in usage at most of its facilities. The agency is committed to continuing its extensive reform initiatives to cut costs, find additional sources of non-toll revenue, and move forward with its core mission of building and maintaining the region's extensive transportation network."
