Eyeing private help on NYS infrastructure

The state's roads and bridges need a boost from the private sector, according to Sen. Charles Fuschillo Jr.

The Merrick Republican plans to introduce legislation next week that would allow the Department of Transportation and other agencies to enter into public-private partnerships, or P3s, to finance and build infrastructure projects.

"The needs for infrastructure investment are greater than the traditional funding structures . . . will pay for," said NYS DOT Commissioner Joan McDonald at a hearing convened on P3s by Fuschillo in Albany Monday. "P3s would be helpful tools to have."

In the traditional way of financing road and bridge projects, the state designs the project and then bids out contracts. Under one variety of P3, the state would hire a company to design, build and then operate and maintain the asset on behalf of the state for a set number of years either at a profit through toll collections or under a contract from the state. In this scenario the private company takes on the risk of budget overruns. Some possible P3 candidates are the replacements of the Tappan Zee and Kosciuszko bridges, MacDonald said, though the majority of transportation projects would still be financed in the traditional way.

"The goal here is to provide the department of transportation and other authorities with options on public financing," said Fuschillo, who chairs the Senate transportation committee. "In an economy where the state is facing multibillion-dollar deficits, it's important that we provide options of funding to rebuild and improve our infrastructure."

Former Govs. George Pataki and David A. Paterson pushed for the state to use P3s, but few have been tried in New York. The Port Authority has used them successfully for airport terminals. The mixed success they've had in other states means New York should proceed with caution, First Deputy Comptroller Alexander Grannis said at the hearing.

"The concern we have is there may be tendency of government decision makers to view P3s as a magic bullet, and they're certainly not that," Grannis testified. "There are many important questions that need to be answered, and risks associated with public-private- financing structures must be taken into consideration."

Problems can arise when public assets are not properly valued at the outset of contracts that can be as long as 99 years or when projects have unrealistic expectations for how well they'll perform, he said.

Edward Lucas, executive board member of the New York State Public Employees Federation, fiercely criticized the methods as a boon to investment bankers that he said cost the public more in the end.

"The source of revenue for transportation projects will always be either taxes or tolls," Lucas said. "In the end someone has to pay."