I want to thank the Board of the New York Building Congress and Dick Anderson for giving me the opportunity to speak here this morning. I’m delighted to be back with so many of my friends and former colleagues.

I also want to thank Governor Eliot Spitzer not only for nominating me as Executive Director and Chief Executive Officer of the MTA, but also for his strong support for infrastructure. And without Chairman Peter Kalikow we would not have had the Bond Act, the last Capital Program, and the Lower Manhattan Mobility projects. Peter has been extraordinary in his leadership, guidance, and support for my joining the MTA. I could not have had a better partner in this period. All of our work at the MTA is a team effort and the Board have all been terrific in their efforts. Without all of these people, I wouldn’t be enjoying my work at the MTA as much as I am.

This morning I will discuss some of the MTA’s accomplishments and some of the challenges it faces. Then I will explain four things we have done in the three months since I joined the MTA to address the challenges. Finally I will discuss specific items the MTA and the New York Building Congress and the various interests it represents must address to advance our critically important joint agenda.

The MTA doesn’t trumpet its accomplishments, but it’s done a lot. The biggest accomplishment is the number of people we carry, our track record of getting them there on time with extraordinary regularity, relatively inexpensively, and with great safety. We now move eight million people every weekday on our trains, subways, and buses, plus 900,000 vehicles on MTA Bridges and Tunnels. We are far and away the nation’s largest transportation system, moving 2.4 billion a year. We move more people in three days than Amtrak moves in an entire year. On just one line - the Lexington Avenue line - we move more people than Chicago, Boston, and San Francisco combined.       

MTA ridership has increased 38 percent increase since 1996, from 1.8 to 2.4 billion annually, and crossings on MTA Bridges and Tunnels have increased 16 percent. MetroCard and E-ZPass technologies are primary drivers of the ridership growth. As a result of the discounts they make possible, the average ride on NYC Transit costs about $1.30. Without these technologies the pre-MetroCard $1.50 fare would have grown to over $2.00 by now. Keeping the average fare this low is an extraordinary accomplishment.

We have also kept our controllable costs basically at the rate of inflation, factoring in added items like security, additional service, and the use of newer and more customer-oriented technologies.

We have dramatically improved service reliability. Trains are traveling greater and greater distances before breaking down. Long Island Rail Road has seen a 70\ percent increase in mean distance between failures since 2001, MYC Transit a 42 percent increase, and Metro-North Railroad a 35 percent increase.

And we’ve also improved safety. Since 1996 customer injuries have been reduced by 33 percent and employee injuries by 59 percent through the implementation of an MTA-wide best practices employee safety campaign.

The MTA has also accomplished important things in major new assignments: we’ve created MTA Bus, the nation’s tenth-largest bus system. Among other improvements, we’re adding 759 new express and local buses by mid-2007, a 100 percent wheelchair equipped fleet, and numerous route extensions and schedule adjustments.

There’s a lot more to say about the MTA’s accomplishments, but I want to explain four critical changes the MTA faces. First, due to uncontrollable costs ―debt service, pensions, and new mandates like security and paratransit―we face major operating deficits. In 2008 the deficit will be approximately $800 million and it will grow to $1.8 billion by 2010.  On the capital side, we have a fully funded five-year program, but we face a potential gap depending upon what happens to construction costs, whether Congress passes a transit security bill, and whether we’re able to execute major real estate transactions like the Hudson Yards successfully.

Second, we face major workforce issues, including trying to improve relations on  labor-management front in a manner that is both fair and financially prudent, addressing the needs of a workforce that will be changing due to increased retirements, and ensuring that we can implement new technologies in an effective and cost-beneficial manner.

Third, we need to be doing everything we can, within our financial capability, to secure our system. We know we have been a target, that Al Qaeda and others have targeted transit systems internationally. Working with federal, state, and local law enforcement officials, we need to respond to this critical challenge.

Fourth, with a $21 billion five-year capital budget –unprecedented not just for the MTA but for any individual metropolitan area in the last 50 years, and perhaps before that – the MTA must control construction costs in a booming private and public market.        

Taking action on these myriad projects, programs, and policy agendas is our greatest challenge. And of course, that’s all on top of what some veterans at the MTA like to call the daily miracle – moving 8 to 9 million people a day efficiently and safely.

So that’s a brief picture of the MTA’s key accomplishments and the challenges ahead of it. Now I’d like to talk briefly, about four things we have focused on since we began in January.

First, we’ve dramatically improved our organizational strength through recruitment, retention, and promotion of staff. We will be doing in-depth organizational assessments of all seven of our agencies. We’ve also pro-actively engaged our unions and established a blue ribbon panel focusing on workforce development, led by Dick Ravitch and Hezekiah Brown. And we’re advancing concepts like shared services and actively examining greater integration with our three bus systems.

Second, we’re focused on working better and more transparently with our external stakeholders. We’re creating regional transit advisory groups including one for business groups. We’ll be meeting quarterly and it should be a great forum to exchange information, provide input, and share perspectives. We have also involved our elected officials and other key stakeholders more closely in dealing with critical issues like fencing, the LIRR gap, and the diversion plan we instituted for the weekend service changes on the 7 line.

Third, we’re taking an in-depth look at key issues that transcend the seven MTA agencies: controlling construction costs, customer service, workforce development, and increasing security. As we’ve done in security with Operation Direct Patrol, we’ve already begun to implement significant improvements, like changing our deployment of MTA Police and bringing additional resources into the mix like TSA marshals on trains.

Fourth, we’re advancing an extraordinarily ambitious agenda of projects and programs. These include:

• the mega projects,
• other large projects like Hudson and Atlantic Yards, the LIRR third track, the Tappan Zee Bridge
• new signals and communications technologies like communications-based train control and contact less smart cards, and
• programs like transit-oriented development and regional transit interoperability.

I have not listed everything we’ve done in the three busy months since I joined the MTA, but with the support of our board and our great staff, we’ve been making good progress on the items I’ve mentioned.

In this last part of my presentation I want to discuss something that is of great importance to me: the agenda the MTA shares with the New York Building Congress and the industries and functions you represent.

First, a few facts about the MTA’s capital program. Funds from this and past capital programs support over $16 billion of work now underway.  Over the past five years, the MTA has awarded an average of $3.4 billion and completed $3.1 billion a year.  Our expectation for 2007 far exceeds these extraordinary past averages: we plan to award over $4.1 billion in core program investments and over $3.4 billion for the Second Avenue Subway, East Side Access, and the 7 line. I think you’ll be interested in an update on each of the mega projects.

The groundbreaking ceremony for the first phase of SAS is scheduled for April 12th in the SAS tunnel under 99th Street. The scope of this phase includes construction of the tunnel-boring machine (TBM) launch box, construction of shafts at 69th and 72nd Streets, and utility relocations. Work will start on the TBM shaft area in about a month.

The first of two TBMs is scheduled to arrive in May. The TBM will be delivered to the Queens tunnel bell mouth, dragged through the lower level of the 63rd Street tunnel, and assembled in the TBM launch chamber below 63rd Street and 2nd Avenue. The launch chamber is currently being excavated. TBM operations are expected to begin in September.

The 7 line extension, which is being funded by the city of New York, is one of the largest contracts the MTA has ever issued. We expect to award the first contract in midsummer.

Construction on the South Ferry Project started in September 2004 and all contracts have been awarded. The final contract for the finishes is underway. The South Ferry station will be the first project to be completed with the 9/11 Lower Manhattan Development funds from the federal government. We expect the grand opening for this station sometime in summer 2008.

We have made very good progress on the Fulton Street Transit Center. We’ve underpinned NYCT Transit lines to construct new passageways below, we’ve relocated 158 commercial tenants, and we’re installing piles on Broadway and Dey Street to create the underground passageway from the World Trade Center site and the new path station to the Fulton Street Transit Center. We expect to finish our construction by October 2009 when we can have our grand opening. This will be our second mega project to be completed after South Ferry.

I mentioned the Blue Ribbon Construction Panel earlier.  We convened this panel to develop a roadmap for large capital projects so that projects are built on time, within budget, and with high marks from the traveling public. We will also be using this panel for our smaller projects in our core program. The panel is led by John Cavanaugh and James Jones, and had its first meeting on March 15; its next meeting will focus on issues of bonding and insurance.  The panel will pursue opportunities to improve MTA’s contract terms and conditions, an area that the New York Building Congress has also raised with us.

Two MTA task forces, one on retainage another on close-out procedures, are specific offshoots of recommendations that have come from this group.  I am happy to announce that the task force on retainage has already met with some success, having agreed to recommend reducing consultant retainage from 2 percent to 1 percent ― a rate we hope to implement on future projects.

The closeout procedures task force is currently being formed and I know several members of this group have volunteered to work with us on it.
Our work must be a collaborative effort if we are to both control costs―which is a particularly urgent challenge―and deliver the quality product we need and our customers deserve. My hope is that in tone and spirit and in substance, we strengthen the relationship between the MTA and the New York Building Congress in a mutually beneficial manner.

When Governor Spitzer gave his transportation speech at the Regional Plan Association, he underlined the importance of groups like the New York Building Congress and coalitions like ESTA to executing our shared infrastructure agenda successfully. I am hopeful that you will find the MTA’s efforts consistent with the governor’s, and that together, we will advance the region’s economic, social, and environmental agenda in a way that is mutually beneficially, and that we can both be proud of.