Public-private partnerships could offer some new and useful financing options for New York’s infrastructure needs but they come with risks, according to a report released by the state comptroller’s office Monday.
The report released by Comptroller Thomas DiNapoli said that protecting the public from risks could mean limiting private-sector profits, which in turn could make P3 projects less attractive to the private sector. Those risks include underestimating the value of public assets and short-changing the public, including pricing mechanisms that burden the public with excessive fee or toll increases, unrealistic expectations of public benefits, and use of P3s as one-shots that provide short-term benefits while pushing costs into the future.
The state has infrastructure needs of $250 billion over the next 20 years. Gov. Andrew Cuomo mentioned the possibility of public-private partnerships with the State University of New York for economic development projects in his state of the state address last week, but did not provide details. His office did not respond to queries about the report by press time.
The state has limited experience with P3s. In 2000, the state Department of Transportation leased Stewart Airport to National Express Group for $35 million for 99 years. Just seven years later the Port Authority of New York and New Jersey bought that lease for $73.2 million.
A commission established by former Gov. David Paterson recommended in 2009 that the state create demonstration P3 projects, but a board that was to oversee implementation was never formed.
Speaking after his inauguration in Manhattan on Sunday, DiNapoli said that his office had looked at privatization options to help close the budget gap, which is about $10 billion in fiscal 2012, but would not recommend selling assets.