Wanna buy a bridge? No, but we’ll build it for you…
The Port Authority of New York and New Jersey is the latest public agency to see the wisdom of a public–private approach to major infrastructure projects.
Last week, the Authority announced that the NYNJLink consortium — led by Omaha-based Kiewit Corp and Australia’s Macquarie Group — will design, build, finance and maintain a $1.5 billion cable-stayed bridge designed to replace the 84 year old Goethals Bridge linking New York’s Staten Island to Elizabeth, New Jersey and Interstate 95.
An article in the April 25 Wall Street Journal outline’s key elements of the structure of the deal which sees the Port Authority retain ownership and control of the new bridge while paying off its construction over a 35-year period. NYNJLink will assume the construction risk over the first five years of the deal and then the day-to-day operational risk until the end of the 40-year contract.
Here’s another example of a design build/P3 deal making a lot of sense. The Port Authority of NY/NJ operates all of the bridge crossings between New York and New Jersey as well as all the airports in the metro area. It also owns and operates the bus terminal in New York, the PATH train system and is responsible for the World Trade Center redevelopment in Lower Manhattan. The authority has an annual budget of more than $2.5 billion and is almost $20 billion in debt.
Spreading the cost and risk, of what is the region’s largest public transportation project, over 40 years rather than five years of construction will be much easier on the pocketbook in both the short and long term. In fact, in its 2011 budget report, the authority admitted that it could not afford the $1.5 billion cost of replacing the bridge. How many similar situations do we currently have here in California?