Home Brooklyn A successful private-public partnership and one less so

A successful private-public partnership and one less so

by Benjamin Kabak

When it comes to public-private partnerships, transit agencies and those in the private sector willing to participate have often struggled with their projects. We’ve seen some station rehabs succeed, some naming rights efforts falter and some private partners begin to understand why transit operators struggle with the finances.

In New York, one of the more problematic public-private partnerships has concerned the Atlantic Yards project. While more of a direct sale, Bruce Ratner’s obligations involved transit. In a nutshell, the MTA gave Ratner a sweetheart price for the air rights to the Vanderbilt Yards in Brooklyn with the original promise of a new nine-track train yard for $225 million. In 2009, the MTA agreed to a reduction in the size of the train yard. Ratner would have to build only a seven-track facility instead. A sweetheart deal had just gotten sweeter.

Now, we learn that despite a guaranteed delivery date of 2016, Ratner is facing delays in the construction of the train yard. As The Wall Street Journal reported last week, the delays are due to “higher-than-expected costs and a sluggish economy.” These same excuses have been percolating around the Vanderbilt Yards for years.

Brown had more:

Forest City spokesman Joseph DePlasco said the yard will still be completed on time. The developer has already built a portion of the yard, he said, and other related work will continue.

MTA spokesman Adam Lisberg said the developer has agreed to do $10 million of additional work in the interim, and the LIRR is using a temporary rail yard meanwhile. “From our perspective, very little is changing here,” Mr. Lisberg said…

Forest City had previously agreed with the MTA to get construction on the new yard fully underway by June 30. But in recent months, the developer sought to push off that date. They recently reached an agreement with the agency to push off that date until Dec. 31, 2013, the terms of which were disclosed to MTA board members this week.

I’m not quite prepared to draw too many sweeping generalizations here. The economy has indeed been sluggish, and the MTA can’t do any better with projects it oversees itself. For us to expect Ratner, who has been bleeding money for years, to do any better would be foolish. Still, this delay, which clearly risks the target completion date, is just another black eye for a project replete with them.

Meanwhile, in Boston, we learn of a public-private partnership done right. New Balance, the shoe giant, has pledged to fund a rail station in the Allston-Brighton area as part of a $500 million development plan in the area. The company will fund the $16 million commuter rail stop that will service its new headquarters, and this total includes “all permitting, design, construction and annual maintenance costs,” a Boston.com reporter said last week.

Here is a company that recognizes the need for a commuter rail stop and is willing to take the steps to see it through to reality. It’s possible then to form a public-private partnership that works, just like it’s possible to screw one up.

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12 comments

Larry Littlefield June 11, 2012 - 6:33 am

“The company will fund the $16 million commuter rail stop.”

The key figure there is the $16 million.

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Jeff June 11, 2012 - 9:40 am

We can’t even get a new station exit built in NYC with $16 million, let alone a whole station.

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Alon Levy June 11, 2012 - 2:05 pm

It’s at-grade. We’re talking platforms in an ROW that used to have stations nearby (though not, I believe, at the exact same location).

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Larry Littlefield June 11, 2012 - 2:26 pm

The consulting contract for the signs at a new station exit costs $16 million here.

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Clarke June 11, 2012 - 4:45 pm

Comment of the day.

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Bolwerk June 11, 2012 - 8:58 am

I’m wary of the idea. For a public-private partnership to make sense, a project has to be well outside the agency’s core competencies; in the case mentioned here, I would think the MTA would be able to oversee construction of a rail yard better than Forest City Ratner. In most cases, PPPs are a way for connected private companies to get government to give them revenue stream either subsidized by taxpayers or at a loss to taxpayers, which probably explains the popularity of PPPs with the odious types who call themselves conservatives.

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Al D June 11, 2012 - 9:56 am

higher-than-expected costs and a sluggish economy are in direct conflict with one another. a sluggish economy should yield lower than expected costs…that is unless someone intentionally ‘misunderestimated’ costs in the first place for some reason or another.

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Jeff June 11, 2012 - 10:31 am

The problem is that the estimate was done years ago. Before the prices increased as a result of the economic boom (remember that?) which drastically inflated construction costs. The sluggish economy may decrease costs, but doesn’t decrease it enough.

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Bolwerk June 11, 2012 - 10:49 am

One of the first measures governments tend to take in a recession is preventing deflation (roughly, falling prices), so you can expect prices aren’t gonna drop on average and probably won’t drop much in any given area either. Plus, high fuel costs probably aren’t doing transportation any favors, so material costs aren’t likely to drop either. And, for better or worse, unions pretty much make sure labor costs don’t go down, at least in this region.

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SEAN June 11, 2012 - 10:53 am

In Portland Oregon, SF based Bechtel funded TriMet’s airport extention in exchange for development rights along the line in an area that became known as Cascades Station.

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UESider June 11, 2012 - 1:22 pm

a NYC turnstile costs more than $16M

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A successful private-public partnership « Public Authorities June 14, 2012 - 5:18 pm

[…] A successful private-public partnership and one less so […]

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