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?
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