Tappan Zee federal loan: How much will it really be?
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A U.S. Department of Transportation spokesman told Newsday on Wednesday that the program that would grant the loan for the Hudson River span won't finance more than 33 percent of the cost of state infrastructure projects.
Because the price of the Tappan Zee Bridge has been pegged at about $3.9 billion, the long-term, low-interest federal loan under the Transportation Infrastructure Finance and Innovation Act, or TIFIA, could be no more than $1.287 billion, according to the department's 33 percent policy.
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Dan Weiller, spokesman for the State Thruway Authority, which is overseeing the bridge project, said the loan could partially cover costs beyond construction.
Cuomo has not discussed expenses beyond the initial $3.9 billion, which includes $3.1 billion for construction and $800 million for other expenses.
"The cost to build the new New York bridge is $3.9 billion. The Thruway [Authority] sought the maximum amount of federal support for which the project is eligible, which under the TIFIA program includes a broader definition that goes beyond construction costs," Weiller said.
Cuomo's office did not respond to repeated requests for comment.
On Friday, Cuomo announced that the state had secured a $1.5 billion loan to help build the new Tappan Zee Bridge, less than the $2 billion he had been seeking for the span but more than any other public works project has ever received under the TIFIA program.
The governor made the announcement after Newsday used the Freedom of Information Law to obtain copies of emails exchanged in the course of negotiations for the loan.
Cuomo officials said they hope to find other sources of funding to make up for the $500 million shortfall in the TIFIA loan, including grants from other federal programs.
It's possible the state might find more cash somewhere, but given the budget woes in Washington, lawmakers are not optimistic.
A federal Department of Transportation spokesman who did not want to be named said Wednesday that the terms of the loan are still being finalized, potentially leaving the door open for the state to receive more, or less, money. The DOT must conduct a credit review of the state's application before signing off on the loan.
"Final details about the exact cost of the project and size of the federal portion would be determined over the course of the ongoing evaluation and then application process," the spokesman wrote in an email.
LOAN KEY TO TOLL INCREASE
The loan is important because it will be a key factor in determining toll rates on the new bridge. Ultimately, debt incurred to finance the bridge must be repaid from toll revenues. State officials and experts agree that the bridge's current $5 tolls will increase when the span opens. How much remains in doubt.
The Thruway Authority is expected to float bonds to cover costs not covered by the federal loan. Because the interest rate on the federal loan is sure to be lower than the rates on Thruway Authority bonds, bridge tolls likely will go even higher if the federal loan is smaller.
Last summer, one of the governor's top aides, Larry Schwartz, mentioned that tolls on the new bridge could be $14. Schwartz's statement sparked a firestorm of resistance, however, and the governor soon announced that, in his view, that figure was too high.
When the $14 toll was mentioned, the bridge cost was anticipated to be around $5 billion. The price tag dipped to about $3.9 billion when bids came in lower than expected. The low bidder, Tappan Zee Constructors, is expected to start on the five-year construction project sometime this year.
Cuomo has pledged to appoint a task force to study toll options.
"The task force will examine a series of options to keep tolls low once the final financing on the project has been established, including expanding discount programs, seeking a financial mechanism that will lower the cost of credit and borrowing, and ensuring that any increase in tolls goes solely to the bridge and regional transportation," the governor's statement said Friday.
COMPETITION FOR FUNDS
The DOT spokesman confirmed that President Barack Obama signed legislation in July that allowed TIFIA to grant loans covering as much as 49 percent of project costs. Federal transportation officials nonetheless have decided to keep the proportion to a maximum of 33 percent, the spokesman said.
More than two dozen major transportation projects nationwide are now competing for $17 billion in available loans.
"In the past, the share of a project that could be funded by a TIFIA loan was limited by statute to 33 percent," the spokesman said in an email. "However, the DOT intends to maintain that principle in the future, in order to limit risk to taxpayers and stretch the available funding to help as many projects move forward as possible."
In the emails obtained by Newsday, federal officials told the state in September that it had failed to provide compelling evidence that it should receive a loan covering 49 percent of the bridge's price tag.
Correction: An earlier version of this story had an incorrect dollar figure for state expenses.