Tappan Zee progress and New York’s continuing infrastructure ‘crisis’

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The Tappan Zee on Thursday. (via newnybridge.com)
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Andrew Cuomo announced yesterday that the state had begun construction on a new Tappan Zee Bridge, representing, in the words of the governor, "the largest infrastructure project New York State has undertaken in decades."

Left unsaid amid the fanfare: Cuomo still doesn't know how he's going to pay for it, and that's emblematic of a larger crisis in infrastructure funding, according to Chris Ward, the former executive director of the Port Authority.

"So [Cuomo has] done everything that he possibly can in order to finance that project, and you're potentially looking at $14 tolls, which are unacceptable for a bridge which really functions as a regional commuter bridge," said Ward yesterday, at a forum on infrastructure hosted by law firm Stroock & Stroock & Lavan in lower Manhattan.

Cuomo says that the new Tappan Zee bridge will cost $3.9 billion, far less than the initial $5.4 billion estimate, something he attributes in part to a cost-slashing agreement he reached with labor unions. He also argues that the state's awarding of the bridge project to a "design-build" team of designers and contractors working together will keep construction costs in check.

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But as the Associated Press reported in late September, "financial uncertainties" mean that tolls on the new bridge could actually exceed that $14 number:

That's because the state stands to receive a federal loan for much less than Cuomo originally sought. He asked a year ago for a loan that would cover 49 percent of the project, but the federal government told the state this past week that the biggest loan it would get would be 33 percent.

At the same time, the state Thruway Authority's credit outlook, which can affect borrowing costs, recently received a "negative," in part because of its $3.7 billion debt and its refusal to reveal a plan for toll hikes.

All of that mean the state will have to finance more of the project with traditional loans at higher rates than the low-interest money offered by the government. And other sources—such as bridge tolls, statewide Thruway tolls and state money—could be tapped to cover those higher borrowing costs.

"Through all innovation, through all the creativity, we still don't have enough money to end up building that project," said Ward, who was replaced as head of the authority by Cuomo shortly after the governor took office. "And again, it's the paradigm."

"The very things that we have taken for granted, which were the foundation for building infrastructure, we have probably lost within this region," said Ward. "If you look at the great notion of the Port Authority as an independent authority. You look at the M.T.A., you look at even the way the City of New York functions with how it builds infrastructure, that model today, unfortunately, is broken."

The Port Authority's LaGuardia Airport, for example, remains "a crap airport," according to Ward.

"The Port Authority faces probably a $7 billion infrastructure gap on what it would like to do and what it can afford to do," he continued. "The M.T.A. is probably in a somewhat worse position and we've realized and the governor has realized we are not going to be able to fund the capital plan off fares and tolls on the M.T.A."

Ward, a former commissioner of the city department of environmental protection, also talked about this week's other feel-good infrastructure announcement, that the city has, after more than four decades, finally completed a new water tunnel down to lower Manhattan.

"If you look at where water rates are for the outer boroughs and homeowners in Queens and Brooklyn, water rates have now been in consistently double digit increases," he said. "And I think again you've reached a maximization in terms of how far that funding can go. So you have this tremendous mismatch between the pragmatism of building large-scale infrastructure and the very institutions that you've created to do that, which require funding."

"So you put that all together," said Ward. "I think we face a crisis of the moment."

Update: "Any claim that the new bridge will have a $14 toll is not accurate," said Dan Weiller, a spokesman for the Thruway Authority, in a statement. "In fact, the Governor explicitly said last year that a $14 toll would be too high and called on the Thruway Authority to create a toll/financing task force in order to keep tolls below that level. Exaggerated political claims regarding the new bridge tolls ignore the fact that Thruway signed a design-build contract for the new bridge that is more than a $1 billion under earlier cost estimate, and we are on track to receive the largest federal TIFIA loan in the history of that program."