Looking at privatization to fund cross-Hudson projectsBy
By now, it’s hardly a debate that the New York City region needs more cross-Hudson crossings for all sorts of transportation modalities. Rail access into Midtown from New Jersey is woefully inadequate, and further upstate, the Tappan Zee Bridge is sagging under the weight of age and auto traffic. New York and New Jersey have various plans to replace and expand this infrastructure, but who will pay for it?
Most famous of the recent attempts at bridging the waters is the ARC Tunnel. Canceled by New Jersey Gov. Chris Christie over a mixture of purely partisan politics and legitimate concerns that could have been addressed, the tunnel would have increased capacity across the Hudson River for New Jersey commuters. Instead, New Jersey may get an Amtrak-sponsored tunnel ten years down the road if the stars align right.
Today, New Jersey politicians are united in keeping federal money that should have gone to the project. They argue that returning the funds would jeopardize a future project. “While some of us may differ on whether or not the ARC project should have been cancelled,” a letter sent by the state’s Congressional delegation reads, “we are united in our effort to protect New Jersey taxpayers from harm. We are deeply concerned that forcing New Jersey to pay these funds will undermine efforts for a new Trans-Hudson tunnel, and require the State to postpone or cancel other essential, job-creating transit projects throughout the State. This will only exacerbate the State’s transportation and economic challenges, and impose an unfair burden on taxpayers in New Jersey.”
Of course, the ultimate fate of $270 million won’t determine the future of the Gateway Tunnel or any cross-Hudson improvements. Rather, as lawmakers attempt to struggle with the demand for better infrastructure and the inability to pay for any of it, they are turning to the idea of privatization. As an opening salvo, take this story about the Gateway Tunnel. In it, local businesses around the current Penn Station area talk about how thrilled they would be for a new tunnel and a bigger train station to arrive. “It would be tremendous for our business,” one bar owner said.
That’s the argument for privatization simplified and placed in a nutshell. Cities build great public works because the residents benefit, but at the same time, private interests often derive just as much, if not, in economic value from these projects. Second Ave. businesses are suffering today, but in six or seven years, the area will be booming with better access.
North of the city, lawmakers are even more intrigued by privatization. As the state looks to replace the Tappan Zee Bridge, it simply doesn’t have the money. The project will cost just $8.3 billion without rail and bus lanes and over $16 billion with them. “Unless things change very favorably rather quickly, it’s unlikely that either the federal or state government will be able to finance the changes they’re talking about,” New York State Senator Andrea Stewart-Cousins said to the Journal. “I’m not uncomfortable with finding private partners.”
Andrew Grossman talked more about these efforts last week:
More cities and states are turning to private companies to help fund their infrastructure or plug budget gaps. It’s a practice common in Europe and Asia, but one that has been slower to catch on in the U.S. Now, though, the firms that have done those projects are circling American state and local governments.
But private investors ultimately need to make money and want some control over the ability to set tolls. New York officials say some of those deals make them wary. Chicago’s sale of its parking-meter revenue—and the rate increases that resulted—have sparked a political backlash there.
“You don’t want to give the government authority away totally,” said Robert Gottheim, an aide to Rep. Jerry Nadler, a Manhattan Democrat who’s active on transportation issues. “While we are certainly interested in it, the devil’s in the details.”
Those details include a range of possible deals, from the unlikely option of entirely privatizing the bridge to simply contracting with a company to manage the entire construction process. Currently, different pieces of state projects are bid out to different contractors.
If lawmakers can throw a proper carrot to private investors — in the form of toll oversight or worse — private money will flow toward infrastructure. Of course, the state must retain some modicum of control over its infrastructure, and as funds are tight, it’s the right to ask about how these private deals will take shape. Can they lead to better rail access and new bridges without exacting too high a cost on taxpayers? If history is any guide, it’s tough to see just how this will play out across a region straining at its infrastructure seams.