For MTA Chief, Fixing Transit Is Just a Start
Posted May 22, 2018 9:06 p.m. EDT
Updated May 22, 2018 9:13 p.m. EDT
Gov. Andrew M. Cuomo was in a bind.
The New York City subway system was falling apart and taking the governor’s approval rating down with it. Looming construction at Pennsylvania Station was provoking fears of a “summer of hell” for commuters. And the job of overseeing it all had been vacant for six months, with no clear candidate for the post.
Cuomo finally found a regional transportation chieflast June, tapping Joseph J. Lhota, a respected manager with a spotless résumé, including a widely praised stint in the same position in 2012.
But there was a catch: Lhota would agree to return to lead the Metropolitan Transportation Authority only on the condition that he could keep his full-time job as the chief of staff of one of the state’s biggest hospital networks — and also retain the prerogative to join any other paid board that he wanted.
Eleven months later, an examination by The New York Times has found that Lhota’s reach as a power broker has grown with new board appointments in Manhattan and on Long Island, giving him extraordinary sway over some of the most important aspects of New York life. But while Lhota remains a respected official, his growing web of jobs has led to potential conflicts of interest and competition for his time, complicating the still-flailing effort to resuscitate a transit system used by millions of people every day.
Nobody has ever led the MTA while balancing as many other leadership posts as Lhota, according to a review of previously unreported calendars and disclosure statements and interviews with more than two dozen authority employees, advocates and experts, including four past transit chiefs.
Lhota’s primary employer, NYU Langone Health, is a vast network of 230 hospitals, clinics and outpatient facilities that has been aggressively working to expand. Despite Lhota’s saying that he had not lobbied for the hospital network while leading the MTA, disclosure records show that in recent months he has lobbied city officials for better traffic access and talked with state officials about regulations.
Another prominent institution, Madison Square Garden, hired Lhota as a paid board member last December — just as it was entering negotiations with the MTA and the state about the future of Penn Station, which sits below the Garden. The negotiations could lead to hundreds of millions of dollars’ being paid to the company in return for the removal of a theater from the site, three people familiar with the talks said.
And Lhota also actively helps lead several other boards that have their own visions for public transit, including the Brooklyn Chamber of Commerce and the Healthcare Association of New York State. One board, the Friends of the Brooklyn Queens Connector, is seeking support for a city-run streetcar line.
In all, Lhota earned more than $2.5 million in 2017 for his work at NYU Langone and on eight different boards — nearly $1 million more than the previous year, before he took the MTA job, his financial disclosures show.
Lhota’s predecessor, Thomas F. Prendergast, like almost all other transit chiefs in the history of the MTA, worked exclusively at the transit authority and did not serve on outside paid boards.
In an interview, Lhota said that his other jobs did not pose conflicts because he was not actually an MTA official. He said he had forfeited the $300,000 MTA salary he was entitled to and delegated his responsibilities to several other executives, except for chairing the authority’s board of directors and setting its high-level mission.
“The day-to-day operations of the MTA are in other hands,” he said. He compared himself to Peter S. Kalikow, a developer who led the MTA board in the early 2000s and hired a separate chief executive to manage operations.
But records and interviews cast doubt on that comparison. The MTA’s own organizational chart lists Lhota as “Chairman and CEO.” It also shows that 10 different authority employees report to Lhota; only one reported to Kalikow. Lhota’s calendar shows that he holds two daily conference calls and a weekly meeting with top officials, and several people said that he is the one who made key decisions, like whether to suspend train service during storms.
In fact, a 2009 state law — written partially in response to concerns about the structure championed by Kalikow — requires the MTA chairman to also serve as the authority’s chief executive.
The governor’s press secretary, Dani Lever, said Lhota was selected over multiple other candidates “because of his unparalleled expertise running the nation’s largest public transit system.”
“Mr. Lhota is a tested leader who’s widely respected for his policy acumen and commitment to public service and has formed a new leadership structure that includes world-class talents,” Lever said. “We’re lucky to have him at the helm of the MTA.”
A Call for Help
When Cuomo decided he wanted Lhota to run the MTA — shortly before declaring a state of emergency on the subway — he did not call him. Instead, he called Kenneth G. Langone, the billionaire co-founder of Home Depot who is chairman of the board of NYU Langone.
“'Would it be possible for Joe to help out?'” Cuomo asked, according to Langone, who had long been a campaign donor to the governor. “We said, ‘It’s fine with us, as long as it doesn’t compromise his responsibilities at the medical center.'”
Activists applauded the pick, citing Lhota’s experience as a deputy mayor under Mayor Rudy Giuliani and as MTA chairman in 2012, when he won so much praise for quickly restoring the subway after Hurricane Sandy that he ran for mayor. After losing to Bill de Blasio, Lhota joined NYU Langone in 2014. Even in the private sector, Lhota has long been seen as a competent manager and a straight shooter.
At Lhota’s confirmation hearing on June 21, which was hastily conducted via Skype just after Cuomo made the nomination, state Sen. Liz Krueger was the only lawmaker to raise concerns.
“I worry that the NYU job and this job perhaps is too much for one person," Krueger, D-Manhattan, said. Lhota vowed to spend 40 hours weekly at each job. He once said he slept only four hours a night.
In his first month, as Lhota crafted an emergency plan to fix the subway, he largely upheld that promise. Calendar records show that he worked an average of 38.2 hours per week at the MTA and 31.3 hours elsewhere, not including unscheduled work at home.
By winter, Lhota had hired a new management team, and he scaled back his work at the authority. In March, he worked 22.1 hours per week at the MTA and 32.5 hours on other obligations, records show.
Lhota said his calendar was an incomplete record of his MTA work and that he often sacrificed family time and other interests. “I haven’t played a game of golf since I became chairman,” he said.
Records indicate that Lhota’s private work has occasionally interfered with his MTA responsibilities. Lhota has a 7:30 a.m. daily conference call with the officials who report directly to him, but his calendars show that he has had another commitment during that call 29 of the last 50 times it has been held. Lhota also has met with MTA officials at NYU Langone on at least two occasions.
When a crisis has struck, Lhota has sometimes been elsewhere. Last July, he was at NYU Langone when a track fire at a subway station in Harlem injured nine people; last December he was at a meeting at Madison Square Garden when snow snarled service; and last week, he was driving to a Greater New York Hospital Association meeting when a major storm forced the suspension of Metro-North trains.
Lhota also angered the City Council when he missed a hearing and left another early. “I think if he wants to ask us for funding, he should be here and ask himself,” Jumaane D. Williams, a City Council member, said at an August hearing.
Transit activists have questioned Lhota’s independence from the governor and complained that he does not have time for them. Nick Sifuentes of the Tri-State Transportation Campaign provided emails showing requests for meetings that he said were ignored. “Lhota is totally the ghost in the machine,” Sifuentes said.
Still, Lhota has plenty of supporters who believe he is making the subway a priority. Several praised him for making smart hires, including installing Andy Byford as the leader of New York City Transit, the division of the MTA that oversees the subway.
“I marvel at his energy,” said Kathryn S. Wylde, president of the Partnership for New York City, a business group. “The governor put him in to rebuild trust in the MTA, and he’s doing a very good job of that.” Dovetailed Priorities
NYU Langone’s main campus is in midtown Manhattan, occupying a cluster of office buildings overlooking the East River. Access is provided by East 33rd Street, which is a one-way street — for now.
For months, records show, NYU Langone has been pushing the city to make the street a two-way road. And the charge has been led by Lhota, a registered lobbyist whose job at the health network includes serving as a “representative and ambassador to external constituents, including government and elected officials.”
The street change is just one of NYU Langone’s priorities. The team that Lhota helps lead also has lobbied the state regarding funding for stem cell biology research, school health centers and community health centers, according to disclosure forms. Lhota said he personally had talked with the state health commissioner about regulations and building construction, although a spokesman said Lhota had not discussed funding.
Lhota said he had registered as a lobbyist “out of an abundance of caution.”
Lhota’s lobbying has occurred quietly. Even the governor’s press secretary said she was not aware of it. “Mr. Lhota is not required to provide us with the details of his matters regarding NYU Langone as long as they are not in conflict with the MTA,” she said.
State law bars public officials from lobbying other public officials, and ethics experts have warned that any lobbying by Lhota could be particularly problematic because it could lead to horse-trading with lawmakers seeking better transit access for constituents.
When questioned in the past, Lhota has denied lobbying while leading the MTA, but he has also claimed, nevertheless, that he could lobby without running afoul of any laws because he was not an MTA official. He also has said that the state’s Joint Commission on Public Ethics had determined that lobbying would be permissible.
Lhota declined to release the ethics determination to The Times, saying it was “personal.” But he acknowledged that it had come in an email, not through a formal determination. Ethics commission officials said they could not release the email because of confidentiality rules.
The MTA said that in the past 11 months, it had not made any decisions affecting NYU Langone that required Lhota to recuse himself.
(A few months before joining the MTA, Lhota wrote an op-ed arguing that improving transit access to neighborhoods like Sunset Park, Brooklyn, that had been “underserved by good medical care” — and where NYU Langone now has a hospital — should be a “critical city priority.” It is unclear whether the MTA has addressed that issue.)
Over the winter, NYU Langone bought hundreds of ads at subway stations, but Lhota said he played no role because the MTA’s ads are handled by a contractor, Outfront Media. An Outfront spokesman declined to say whether NYU Langone was charged the regular rate.
NYU Langone paid Lhota between $2.35 million and $2.45 million in 2017, up from about $1.7 million in 2016, according to disclosure statements. Lhota and an NYU Langone spokeswoman both said the raise was “bonus-related.” Neither would elaborate.
Kenneth Langone said Lhota had never missed a meeting at NYU Langone. He compared him to President Donald Trump.
“When they asked Trump’s doctor, ‘How does he do it?’ What did he say? He said ‘genes.'” Langone said. “And that’s Joe Lhota too.”
The Garden and Penn Station
To critics, Lhota’s biggest conflict involves The Madison Square Garden Co. and an affiliated entity, MSG Networks.
MSG Networks hired Lhota as a board member in 2016 and The Madison Square Garden Co. hired him to its board last December. He had previously worked as the executive vice president for The Madison Square Garden Co. The two posts are expected to pay about $300,000 combined annually.
The December hire, which was first reported by Politico, stunned transit activists because of the Garden’s reliance on the MTA — Penn Station has six subway lines and houses the Long Island Rail Road, which is also operated by the authority.
Talks have been going on for years about remaking Penn Station into a site that is better for travelers and also takes advantage of the opportunity for development in a thriving real estate market. But negotiations started heating up again late last fall, according to three sources familiar with the process who spoke on the condition of anonymity because they were not authorized to discuss the issue publicly.
One of the options, the sources said, is the removal of the 5,500-seat Hulu Theater to make room for a grand entrance to Penn Station from Eighth Avenue. That would require compensating the Garden, and the size of the compensation is a major point of contention.
The Garden’s top executive, James L. Dolan, is a longtime donor to Cuomo, but advocates said it could not hurt to hire Lhota during the talks.
Lhota said he had recused himself from any discussions about the overhaul of Penn Station. A Madison Square Garden spokeswoman said in a statement, “We believe Joe is a valued, independent member of our board who acts with the highest integrity.”
On Friday, the MTA disclosed it was involved in a “planning process” regarding the terminal. The terminal is not the only conflict involving The Madison Square Garden Co. The company is also an investor in a project to build an arena for the New York Islanders at Belmont Park on Long Island, and project leaders have said the site needs better transit access to be successful.
Lhota said he had recused himself from that issue, too. But when asked about the proposed arena at a budget hearing in Albany in January, he answered at length.
Though Lhota said he had avoided talks about renovating Penn Station, he has not hesitated to participate in decisions about improvements to two subway stations that serve the stadium, which arguably would also benefit Madison Square Garden.
In February, he voted for a package before the board that included funding for renovations to the stations. Lhota said his participation was approved by the MTA’s general counsel.
As a whole, Lhota said he saw no conflicts in discussing transit improvements near any of the entities that he is involved with, including NYU Langone.
“Let’s assume the Subway Action Plan is successful, and more people can get to an appointment at the hospital on time,” he said. “Is that a conflict of interest, because I work at a hospital — that I allowed citizens in the city to get there more efficiently? That’s hard to imagine.”
Asked whether it would be a conflict if a subway station near the hospital got increased funding at the expense of other stations, Lhota paused before answering:
“We’ll have to disagree.”