Bebeto Matthews, File, Associated Press
FILE- This July 25, 2014, file photo, shows the Port Authority bus terminal in New York. The Port Authority of New York and New Jersey, who operates the overcrowded and dilapidated terminal, approved a plan, Thursday, Oct. 22, 2015, to move ahead toward replacing the structure, with a goal of deciding on a final design by fall 2016.

NEW YORK — The operator of the nation's busiest bus terminal approved a plan Thursday to move ahead toward replacing the overcrowded, dilapidated 65-year-old facility, with a goal of deciding on a final design by next fall.

The vote, hailed by Port Authority of New York and New Jersey board members as a major step forward, comes roughly two years after the agency commissioned its own master plan for the bus terminal that yielded a variety of configurations for a new facility, later winnowed to five and then three by a working group.

Thursday's vote authorized the Port Authority to hold an international design competition and choose a winner by September 2016. The project is expected to cost from $7 billion to $10 billion and take several years to complete. The Times Square bus terminal was finished in 1950 for $24 million.

Executive Director Patrick Foye called it "an unbelievably complicated project, with construction being done at the crossroads of the world, at the site of some of the most important and expensive real estate in the world."

"I think the time has served the project well," he said when asked about how long it took for the Port Authority to decide to farm out the design for the terminal.

Port Authority Chairman John Degnan was more blunt.

"I'm not happy with how long it took, but I understand why it had to take that long," he said. "My hope now is that we have made a giant step forward and we can now move forward on an accelerated basis toward completing a project that's so desperately needed."

The board endorsed a site a block west of the current terminal that was recommended by the working group. But the entrants in the design competition will be allowed to come up with alternative sites.

The Port Authority will hire an outside consultant to study ridership projections over the next few decades and review the terminal project in the context of other transit projects in the region.

"It can't just be about making it bigger," commuter Keith Frederick said as he waited for a bus at the terminal Thursday.

The Montgomery resident said he has been riding the bus two hours each way to his job as a construction project manager for the last nine years.

He worried about the congestion a bigger terminal could create, a challenge the Port Authority says it's keenly aware of. The agency has taken steps in the last several months to improve bus flow in the terminal, but the adjacent Lincoln Tunnel is a frequent chokepoint.

"The complex being bigger is really not the biggest thing, it's really the traffic getting into the tunnel and getting out of the tunnel, whether it's a dedicated bus lane," Frederick said.

Concurrent with developing plans for the new terminal, the Port Authority will explore financing options including selling off the land the existing terminal sits on and selling other parcels of land the agency owns in the neighborhood, vice chairman Scott Rechler said.

Associated Press writer Deepti Hajela contributed to this story.