New York Governor's commission proposes bridges for P3 availability payment concessions

A commission appointed by New York State Governor David Paterson says there's major potential in  a state program to develop availability payment concessions for bridges. Chaired by H Carl McCall, 72, a former state comptroller and politician the panel titled the Commission on State Asset Maximization (SAM) says there are major advantages in raising private equity capital for building and operating infrastructure and in letting business apply fiscal discipline and assume risks.

The report says that despite the present financial crisis there is an opportunity to do public private partnerships (P3s) to finance infrastructure projects but offers no suggestions on funding. In all the pages on road projects there is hardly mention of the word 'toll' or any other specific funding, as opposed to financing.

In availability contracts the state contracts obligations to pay the concessionaire for new or improved road facilities over 30, 50 years or whatever the specified term, and the private sector finances the projects by raising equity and loan money upfront based on the state's promise to pay the availability payments quarter by quarter or year by year.

The Commission suggests the following transport projects as suitable for availability concessions:

- Buffalo Harbor Bridge

- highspeed rail service

- replacement of Gowanus Expressway (I-278) in Brooklyn

- replacement of Kosciuszko Bridge of Brooklyn Queens Expressway

- bundling of 290 short span  (less than 30m or 100ft) bridges

- rehab or replacement of Robert Moses Causeway bridge over Fire Island Inlet on Long Island

- Tappan Zee Bridge replacement

see the SAM report, 86 page pdf:

http://nysamcommission.org/pdf/SAM_FINAL_REPORT.pdf

COMMENT: Availability contracts are fine for improving efficiency of project delivery, but they don't generate any revenue. They require revenue. They involve the state taking on an obligation to make availability payments in the future. They are a form of public debt.

The crisis in the public sector in New York and other states is primarily a lack of revenue relative to spending obligations - budget deficits and growing debt and growing debt service costs. A bunch of availability concession projects would worsen the situation, being just another vehicle for increasing public sector indebtedness.

The McCall SAM Commission avoids even a discussion of tolls or other user fees to generate revenue. States like New York need projects that will be self-funding - with tolls, fares and other user fees. McCall and his colleagues are in Lala Land or is it Lulu Land:

"Where innocent promises turn into bad debts

"Where things that you do you live to regret

"Your life is a movie and the world is a set

"In Lulu Land

 - from song by Camper Van Beethoven

TOLLROADSnews 2009-06-01