In the 1930s, motorists paid 50 cents to drive through the Holland Tunnel, and a night at the Hotel Chesterfield in Jersey City cost $2.50.
Times have changed. Drivers now pay $8 to enter the tunnel, a roughly 1,500% boost from the good old days. And the cost for a New Jersey hotel room has increased by 6,000%, Christopher Ward, executive director of the Port Authority of New York and New Jersey, pointed out Thursday during a Municipal Forum of New York luncheon.
Ward showed a photograph from about 1934 of a Holland Tunnel tollbooth, with nearby advertisements touting Hotel Chesterfield’s dirt-cheap room rate. He used the photograph of an example of how the private sector has raised prices while public infrastructure — roads, bridges, tunnels, mass transit, airports, and other facilities — must operate with limited funding increases.
The difference illustrates where infrastructure development stands within the country’s other needs such as education, health care, and safety, and how difficult it would be to boost that 50-cent toll by the same percentage amount as the privately owned hotel room, Ward told a group of municipal bankers, lawyers, financial advisers, rating agencies, and public officials.
“Today the toleration of the idea that we could take an $8 toll and increase it up to the 6,000% increase from the Hotel Chesterfield — clearly we recognize that as politically untenable because of what society has decided to spend on all sorts of other critical needs within this country,” Ward said. “And [that] has pushed infrastructure down to a level that we no longer have the capacity to end up building it.”
For the executive director of the Port Authority, it’s not just other social programs that contribute to less infrastructure spending. Large-scale projects that leave communities with a much larger than anticipated bill — like the Big Dig project in Boston — have left many skeptical as to whether government is capable of using public funds wisely and in good faith.
Ward called for a new social contract where local governments, states, and bonding authorities are held to higher degrees of transparency when undertaking infrastructure projects. In addition, too many developments have come in over budget and well past the anticipated completion date. To curtail cynicism and regain the public’s trust, a frank discussion of realistic costs and fees are needed when undertaking capital projects, he said.
“Part of the social contract is going to have to be the efficient delivery of municipal state, federal, and Port Authority-like projects, so that when someone does pay the toll, they don’t feel that it’s disappearing deep within some kind of bureaucracy that never ends up building the things that they need,” he said.
And how do cities, states, and the federal government pay to maintain and expand infrastructure? Ward said government entities must find creative ways to finance much-needed capital projects to keep infrastructure sound and expand capacity to bring new economic growth. That includes finding ways to have retailers contribute more to the cost of using ports and roadways when delivering their merchandise and tapping into the airline industry’s ability to implement baggage fees and other charges to help finance airport expansions and upgrades.
While not all capital projects are best built using a public-private partnership model, he highlighted the Port Authority’s plan to construct a new Goethals Bridge by bringing in a private developer to design, build, and maintain the span. He anticipates the project will cost $1.3 billion to $1.5 billion. The authority will retain control over tolling fees.
The current Goethals Bridge opened in 1928. It connects Staten Island to Elizabeth, N.J.
“You need to be creative in terms of financing instruments,” Ward said. “You need to be progressive in terms of taxation. You need to be thoughtful in terms of how labor is paid, how labor works within a project. We need to understand that pension, school care, etc., are all part of that social equation that detracts from building infrastructure.”