The Port Authority of New York and New Jersey is considering using public-private partnerships to replace bridges that connect Staten Island to New Jersey, executive director Christopher Ward said yesterday.
"Given our financial situation, we're looking at the P3 model throughout the agency," Ward said. "The pressing need remains the Staten Island bridges, but then we'd use it as a larger analysis of how you might leverage private money for the Port Authority."
The Port Authority is looking at greenfield P3 models under which a private partner would design, build, and operate a new project that would come under the control of the authority once a long-term lease had ended.
The Port Authority operates the Goethals, Bayonne, and Outerbridge Crossing bridges which connect Staten Island to the mainland. Ward said that the authority could use P3s for one or all three bridges.
"Here you have a variety of assets that are reaching the end of their useful life but nonetheless have a user base which is fairly constant and also has an existing toll structure which is at a level that long-term financing could prove attractive to some sovereign funds," Ward said. "We would look to see if the market sees a response for that type of framework."
One P3 approach the authority is not considering is a long-term lease on an existing asset.
"The monetization model is not really of interest to us," Ward said. "To capture a revenue stream and bring it back into present dollars to fund a gap, I think is not appropriate for the Port Authority."
The three bridges were opened between 1928 and 1931 and carried 33.5 million vehicles in 2006. The authority plans to replace the Goethals Bridge at an estimated cost of $1.6 billion. An environmental review process is underway.
The authority's 2007-2016 capital investment plan called for $46.5 million of capital investment in maintaining the Bayonne Bridge and $25 million to study the possible raising or replacement of the bridge to accommodate larger seagoing vessels than were anticipated to cross under the bridge when it was built.
Though Ward characterized the authority's look at P3s as preliminary, he said that by the middle of the year he expected there would be more active discussions.
"I think we'd start with just testing the market and see who might be interested in partnering with us," he said.
Ward said the Port Authority would also consider P3s for individual terminals at its airports. The Port Authority operates five airports and in the 1990s did two P3 financings to build new terminals.
Ward made his remarks at a panel discussion on infrastructure in New York City hosted by the Greater New York Construction User Council, a trade organization.
A P3 approach "would alleviate some of the debt that they would have to issue on their consolidated revenue pledge, potentially, if these were done as standalone project financings with private participation," said Moody's Investors Service analyst Maria Matesanz.
"They have to entertain a lot of different types of financing options for the vast array of capital projects they have," she said. "Whether it's a viable option or not depends on the specifics of the plan and which assets they're looking to finance this way."
New York is considering the P3 approach as well. Gov. David Paterson formed the New York State Commission on State Asset Maximization in October to study the possible use of P3s as the state wrestles with massive budget deficits.
The commission issued a preliminary report in December that stated that P3 strategies could be used to accelerate the build out of certain projects with costs savings to the state while reallocating risk to the private sector. The final report is due on April 2.
