The Port Authority of New York and New Jersey voted Wednesday to use a public-private partnership to replace the Goethals Bridge between New York and New Jersey.

The authority’s board of commissioners awarded a 40 year design-build-finance-maintain contract to NYNJ Link Partnership. The award is part of a $1.5 billion P3 to replace the bridge.

This is the first time the authority is building a new bridge since it opened the George Washington Bridge between the New York City borough of Manhattan and Fort Lee, N.J., in 1931. The Goethals Bridge runs between Elizabeth, N.J. and the borough of Staten Island, N.Y.

Use of the P3 will allow the agency to maintain control of the asset while gaining access to private-sector construction and maintenance expertise and private capital, the authority said in a press release. In addition to the Goethals project, the authority voted to award a $743 million contract to Skanska Koch, Inc./Kiewit Infrastructure Co. as part of a $1.29 billion program to raise the Bayonne Bridge.

These projects “will put thousands of hardworking men and woman to work, secure the Port of New York and New Jersey’s role as the premier port and economic engine of the East Coast, and provide New Jersey residents with modern bridge spans that will improve safety and benefit commuters for years,” N.J. Gov. Chris Christie said, according to the release.

The authority expects that the P3 will reduce construction and maintenance costs for the Goethals project and limit the impact to the authority’s debt capacity.

The project is expected to benefit from a low cost loan of as much as $500 million under the U.S. Department of Transportation Transportation Infrastructure Finance and Innovation Act and the sale of private activity bonds.

A private contractor would raise the needed capital and lend the funds to the agency. The agency would repay the funds over time with interest.

The private contractor plans to issue about $450 million in private activity bonds, according to the Port Authority.

In 2010 authority deputy executive Bill Baroni explained the planned P3 for the bridge, saying: “It is not a privatization project … We run the tolls, we run the bridge, we maintain it, it’s ours. It is a financing mechanism.”

Additionally, the private firms are expected to design and build the bridge.

For projects of this type, private activity bonds are usually not the first choice but are a possibility, said Bank of America manager of municipal research John Hallacy.

The Federal Public Transportation Act of 2012 was enacted for only two years, Hallacy said. It is good that the authority will apply for a TIFIA loan now because it takes time to get through the TIFIA process.  The “window is about to shut again,” he said.

“This is the first time a P3 is being used to build surface transportation infrastructure in the Northeast and we believe it will serve as a model moving forward,” authority vice chair Scott Rechler said.

NYNJ Link Partnership consists of Macquarie Infrastructure and Real Assets Inc., Kiewit Development, Kiewit Infrastructure, Weeks Marine and Massman Construction.

The Bayonne Bridge crosses between Bayonne, N.J., and Staten Island.

Building a roadway 64 feet above the existing deck will allow larger cargo ships to pass beneath. The cargo boats travel the Kill Van Kull waterway under the bridge to get to the Port Newark-Elizabeth Marine Terminal. The terminal is the largest container port in the eastern United States.

The authority is doing the project partly to coincide with the widening of the Panama Canal, which is expected to be completed in 2015. This widening will make larger “Post Panamax” container ships more common in trade. Raising the bridge roadway will accommodate these ships.

Port Authority plans to finance the Bayonne Bridge project out of consolidated bonds and cash reserves.

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