From today's New York Times.
The Port Authority of New York and New Jersey paid the City of Bayonne, New Jersey $235 Million for land appraised at about $70 Million.
Why would Christie want to do this? To avoid taking over Bayonne's troubled finances. In other words the inflated price paid was a surreptitious bail out of Bayonne.
A takeover could have forced the state to pour millions into Bayonne to stabilize it. That would have been problematic for Mr. Christie, who was confronting a huge deficit in New Jersey’s budget, while trying to keep a campaign promise to not raise taxes. The Port Authority’s purchase of the land, orchestrated by Bill Baroni, Mr. Christie’s top staff appointee at the agency at the time, spared Mr. Christie from having to confront this dilemma.
Was the land really worth $235 million. No. The Port Authority recognized a loss within a year of the purchase:
The Port Authority wrote down the value of the property in its annual financial statement before the end of 2010; the authority attributed the write-down to an “increase in acquisition costs.”
Could New York Governor Andrew Cuomo have blocked this fraudulent looking deal? Yes:
The governors of both New York and New Jersey have the power to kill most major Port Authority actions, since each appoints six commissioners and can veto the actions of commissioners from his state.
So why would Cuomo's appointees have gone along with this deal? Because they treat the people's interest in this authority as "chits to trade":
But in practice, most major deals specific to one state are used as chits to trade.
Two former Port Authority officials involved in the process, who also spoke on the condition of anonymity in order to preserve relationships at the agency, said that at the time, New York officials knew they would soon need the New Jersey officials to go along with a costly settlement with Larry A. Silverstein, the developer, over the rebuilding of the World Trade Center site. The Bayonne purchase was one of several projects wanted by Mr. Christie that became part of the usual trading between the two states, the former officials said.
Good reporting from the NY Times, usually weak on local coverage - perhaps stronger here because of Christie's prominence.
How does a New Jersey land deal harm New York taxpayers? The Port Authority collects airplane fees and tolls and rent each year of about $4 Billion. So if the Port Authority gives away $100 Million or $200 Million (the land is still vacant) to some town in New Jersey then it will raise tolls and airport fees on New Yorkers (as well as New Jersey residents and anyone traveling through its network of tunnels and bridges and airports) to compensate for the waste.
The Board of the Port Authority is entrusted with the public's interest. Giving away $200 million is not in the public's interest. This all smells corrupt.
I look forward to the reaction of the Attorneys for the States of New York and New Jersey as well as the reaction of the US Attorneys and the state legislatures.
Perhaps it will be fun to speculate on what chits to trade the different prosecutors discover in their possession.