Bridges too far
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Gov. Cuomo’s ambitious $25 billion plan to replace aging bridges, buildings and roads across the state by tapping into the deep pockets of private equity firms may be swimming upstream.
He is also hoping to raise money from public pensions and trade unions.
The State Assembly is expected to vote this week on the proposed $132.5 billion state budget — which contains a provision to change state law to allow for public-private partnerships, which the governor is counting on to help fund the construction of a new $5.2 billion Tappan Zee Bridge.
Cash-strapped Albany just doesn’t have the cash to go it alone.
But a look at other New York-area attempts to forge public-private partnerships to help alleviate drastic budget shortfalls shows they are hard to pull off. It seems the returns the PE firms would look to obtain on such investments don’t jibe with the hard terms put forth by budget-busted governments.
For example:
* Mayor Bloomberg last year reached out to private sources as he was considering privatizing meter collection. That yearlong exploration has stalled because City Hall is asking for too much in return — that bidders guarantee the present level of parking-collection revenue and, according to three sources, share any upside cash.
* New Jersey Transit for more than one year has been trying to privatize 81 parking lots. Suitors, including PE giants KKR and Carlyle, have balked, feeling they could not pay the roughly $350 million asking price and make a high enough return, sources said.
* For years, the Port Authority has been saying it will fund a new $1.5 billion Goethals Bridge through a public-private partnership. It had hoped to name a developer by last Dec. 31, but the project has become bogged down because it needs a sizable amount of federal cash. Now, it expects funding by the end of the year.
Frank Rapoport, chairman of the McKenna Long & Aldridge Global Infrastructure practice, said political leaders should name an infrastructure czar to get these jobs done.
“If Cuomo can appoint an infrastructure czar, he can do what Bloomberg tried to do with former Deputy Mayor Stephen Goldsmith,” Rapoport said.
Bloomberg hired Goldsmith in 2010, in part to raise private money for public infrastructure as he had done when he was the mayor of Indianapolis. However, Goldsmith was forced to resign last August, and the idea has been put on the back burner.
A Bloomberg spokeswoman declined to comment.
As for the $350 million NJ Transit parking lot deal, final bids were supposed to be made last fall. The money would have come in handy since the agency, at the time, was staring at a $170 million budget shortfall.
The agency claims the idea is still alive. “This is a dynamic process and due diligence is critical,” a spokesman said.
In New York, the state Senate has already approved Cuomo’s budget, which contains the public-private partnership law change.