The New York State Thruway Authority board voted Thursday to issue $500 million in short-term bonds to jump-start construction on a new Tappan Zee Bridge while federal officials decide whether to grant a low-interest loan critical to the $3.1 billion project's financing.
At its monthly board meeting, the board agreed to issue the bonds to cover costs that will be incurred during the next six months as teams set up logistics and lay the groundwork for the main construction project. The money would be paid back with a U.S. Department of Transportation loan the state hopes to secure in the coming months, said Dan Weiller, a spokesman for the authority.
WAITING ON CASH FROM FEDS
The state has applied for a share of $17 billion in low-interest loans the federal government made available in 2012 year through the Transportation Infrastructure and Innovation Act, a program that aids states and cities seeking to repair aging bridges, roads and tunnels.
"We are confident that the new bridge project will receive TIFIA funding," Weiller said. "This is to ensure that there's funding for the next six to eight months."
The bond issue will provide a temporary solution to the complex problem of financing the new bridge, the key remaining obstacle for the bridge project.
Under previous administrations, the bridge project never got past the planning phase. The construction project promises to deliver 45,000 badly needed jobs to the Hudson Valley.
Prospects for a formal groundbreaking have been receding as the state awaits word on whether it has secured a TIFIA loan. In 2012, the state said construction could begin in December 2012. It since has adjusted that timetable to early 2013.
The state still has not received word on whether the U.S. Department of Transportation's Credit Council, which reviews state requests for federal loans, will consider the project at its February meeting.
The project was not on the council's agenda for its January meeting.
It's unclear whether the delay has been caused by the state's attempts to secure a loan to cover as much as 49 percent of the project, the maximum allowed under TIFIA rules. Normally, TIFIA loans cover smaller shares of such projects.
On Dec. 17, the day the Thruway Authority board selected a Texas-based consortium to build the bridge, Executive Director Tom Madison said he was confident the state would receive a loan to cover at least 33 percent of the project's cost. The balance would be paid by issuing bonds.
And both funding streams would be paid back by toll hikes paid by Tappan Zee commuters.
Much hinges on the size of the federal loan that the state is able to secure. Should the loan come in for less than half the project, the Thruway Authority will be forced to issue more bonds at higher interest rates.
TOLLS IN QUESTION
The Cuomo administration has yet to say how high tolls will have to be raised to cover the cost of a state-of-the art, dual-span bridge. The bridge toll is currently $5 ($4.75 with E-ZPass), making it one of the best bargains among Hudson River crossings.
This summer, the administration said tolls would have to be raised to $14 by 2017, making the bridge competitive with tolls at Hudson River crossings in New York City. The administration backed off that proposal after it was roundly criticized.