IN­SIDE

A new state law will shake up the gov­er­nance struc­ture of New Jer­sey Transit as it im­ple­ments pos­i­tive train con­trol.

The Bond Buyer - - Front Page - BY AN­DREW COEN For more con­tent about this re­gion, visit the Re­gional News tab on BondBuyer.com.

New Jer­sey Transit will be­gin 2019 hav­ing met an im­por­tant safety-law dead­line and with changes to its gov­er­nance de­signed to im­prove trans­parency and re­quire bet­ter bud­get plan­ning.

The na­tion’s largest statewide pub­lic trans­porta­tion sys­tem met a mile­stone set by the Fed­eral Rail­road Ad­min­is­tra­tion to keep it on track to­ward im­ple­ment­ing a pos­i­tive train con­trol safety sys­tem.

The agency in­stalled the equip­ment two weeks be­fore the Dec. 31 dead­line, af­ter be­gin­ning the year way be­hind sched­ule. The cash-strapped agency was star­ing at daily fines and shut­downs in ser­vice start­ing Jan. 1 if the PTC mile­stone was not achieved on sched­ule.

“Ap­prox­i­mately four years of work has been com­pleted in less than one,” said New Jer­sey Gov. Phil Mur­phy dur­ing a Dec. 17 press con­fer­ence where he noted that the PTC in­stal­la­tion process was only 12% com­pleted when he took of­fice in Jan­uary. “NJ Transit can now fo­cus its en­er­gies on im­prov­ing com­mu­ni­ca­tions and con­di­tions and on on-time re­li­a­bil­ity and ser­vice.”

On the same day, the state leg­is­la­ture ap­proved a NJ Transit re­form bill that re­flects rec­om­men­da­tions is­sued in an au­dit Mur­phy man­dated shortly af­ter he as­sumed of­fice in Jan­uary. The bill, which Mur­phy signed Thurs­day, ex­pands the agency’s gov­ern­ing board with new seats for com­muters and trans­porta­tion pol­icy ex­perts. The agency will also be re­quired to hold pub­lic hear­ings be­fore en­act­ing any ser­vice changes or fare hikes and pro­cure­ment rules would be up­dated in an ef­fort to im­prove ef­fi­ciency with fu­ture projects.

“It will def­i­nitely be a cul­ture shock to those who work at NJ Transit, but in a good way,” said Janna Ch­er­netz, se­nior New Jer­sey pol­icy an­a­lyst for the Tri-State Trans­porta­tion Cam­paign, who spent two years ad­vo­cat­ing for the re­form leg­is­la­tion. “It is now up to NJ Transit, the leg­is­la­ture and gover­nor to make sure that pa­ram­e­ters of the bill are lived up to.”

The FRA re­quired NJ Transit to in­stall PTC equip­ment along 326 miles of track and in 282 lo­co­mo­tives and cab con­trol cars be­fore Dec. 31. The agency will next in­stall equip­ment on its re­main­ing 158 lo­co­mo­tives and cab cars, train em­ploy­ees to use PTC, and con­duct field tests be­fore full sys­tem im­ple­men­ta­tion by Dec. 31, 2020.

The drive to in­stall PTC was un­der­scored by a deadly Septem­ber 2016 col­li­sion at the Hobo­ken train sta­tion that some trans­porta­tion ex­perts said could have been pre­vented by PTC’s au­to­mated brak­ing sys­tem.

NJ Transit’s scram­ble to meet the FRA’s year-end re­quire­ments re­sulted in dras­ti­cally re­duced ser­vice late in the year, in­clud­ing halt­ing its At­lantic City route in Septem­ber. The At­lantic City line, which runs from Philadel­phia, will re­main down at the start of the new year un­til NJ Transit re­ceives fed­eral ap­proval to re­open it.

“There were some dif­fi­cult de­ci­sions that had to be made as we ramped up our ve­hi­cle and way­side in­stal­la­tion sched­ule to meet the fed­eral PTC re­quire­ments, de­ci­sions that we know had an im­pact on our cus­tomers,” said NJ Transit ex­ec­u­tive di­rec­tor Kevin Cor­bett, who Mur­phy ap­pointed in Fe­bru­ary. “When I first ar­rived the chances of mak­ing this mile­stone looked ex­tremely slim and frankly nearly im­pos­si­ble.”

Martin Robins, di­rec­tor emer­i­tus of the Alan M. Voorhees Trans­porta­tion Cen­ter at Rut­gers Univer­sity, said the Mur­phy ad­min­is­tra­tion faced a stiff chal­lenge with PTC be­cause of ne­glect un­der for­mer Gov. Chris Christie. Robins, a for­mer NJ Transit deputy ex­ec­u­tive di­rec­tor, said ac­com­plish­ing the fed­eral dead­line re­quire­ments will al­low the agency to fo­cus on other needs in­clud­ing im­prov­ing op­er­a­tions, in­fra­struc­ture im­prove­ments and gov­er­nance struc­ture.

“Meet­ing the dead­line is im­mensely im­por­tant be­cause oth­er­wise it would have been a never-end­ing cri­sis for New Jer­sey Transit,” said Robins, who helped found the agency in 1979. “It was im­mensely im­por­tant to­ward the process of get­ting New Jer­sey Transit back on track, but is only a start.”

The NJ Transit re­form bill re­quires the agency to sub­mit a two-year bud­get by April 1 of each year. The agency will need to sub­mit rev­enue pro­jec­tions, rid­er­ship data, em­ployee statis­tics and the sta­tus of cap­i­tal projects so that law­mak­ers can de­ter­mine if the agency is ad­e­quately funded and spend­ing its dol­lars wisely.

“This leg­is­la­tion is not a panacea for all of the prob­lems that have plagued New Jer­sey Transit,” Se­nate Ma­jor­ity Leader Loretta Wein­berg, D-Tea­neck, said in re­marks at the bill sign­ing cer­e­mony at the Sum­mit train sta­tion. “But it will help NJ Transit’s new lead­er­ship de­liver the safe, re­li­able, on-time ser­vice its riders have a right to ex­pect by mak­ing it one of the na­tion’s most rep­re­sen­ta­tive, re­spon­sive and trans­par­ent pub­lic transit agen­cies.”

NJ Transit has also been tasked with tack­ling long-range needs such as fi­nanc­ing New Jer­sey’s por­tion of the multi-bil­lion-dol­lar Gate­way project into Man­hat­tan. The NJ Transit board of direc­tors ap­proved a plan in June for the New Jer­sey Eco­nomic De­vel­op­ment Author­ity to is­sue up to $600 mil­lion in bonds for the con­struc­tion of a new Por­tal North Bridge over the Hack­en­sack River as part of the ma­jor in­fra­struc­ture initiative. The bonds will be paid back over a 30year term from the state’s Trans­porta­tion Trust Fund.

New Jer­sey’s abil­ity to pro­vide nec­es­sary fi­nan­cial sup­port for its transit sys­tem is chal­lenged by its sec­ond-low­est bond rat­ings among U.S. states, with only Illi­nois at lower marks. The Gar­den State’s gen­eral obli­ga­tion bonds are rated A-mi­nus by S&P Global Rat­ings, A3 by Moody’s In­vestors Ser­vice and A by Fitch Rat­ings and Kroll Bond Rat­ing Agency.

The NJ Transit au­dit said that the agency lacks sus­tain­able fund­ing and rev­enue streams to over­see $5.3 bil­lion of cap­i­tal as­sets. The au­dit noted that de­spite a $240 mil­lion in­crease in Mur­phy’s first bud­get, the mass transit sys­tem is still suf­fer­ing from dra­matic re­duc­tions in state sup­port from 2009 to 2017. The 179-page re­port urged NJ Transit to seek al­ter­na­tive fund­ing sources through pub­lic-pri­vate part­ner­ships, sales taxes and fees on ride-hail­ing ser­vices that other large mass transit sys­tems have suc­cess­fully im­ple­mented.

“Ma­jor op­er­at­ing and cap­i­tal needs and the Gate­way project are go­ing to be ma­jor ar­eas of con­cern,” said Robins. “This gover­nor re­ally has his hands full with all these is­sues.”

Ch­er­netz cred­its Mur­phy, Cor­bett and New Jer­sey Depart­ment of Trans­porta­tion Chair Diane Gu­tier­rez-Scac­cetti for spear­head­ing PTC to its year-end mile­stone against long odds. She said that while the re­form bill won’t pro­vide im­me­di­ate so­lu­tions to NJ Transit’s fund­ing prob­lems, the mea­sure should lay a foun­da­tion for brighter days ahead.

“If they can im­ple­ment PTC in just 11 months they should be able to ad­dress the many other re­forms NJ Transit needs,” said Ch­er­netz. “It shows what they are ca­pa­ble of when the right lead­ers are in place.” ◽

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