A precedent-setting public-private partnership (PPP or P3) to design, build, finance and maintain a cable-stayed upgrade of the aging and flimsy Goethals Bridge has been decided.
The Port Authority of New York and New Jersey said a consortium teaming Macquarie Group with Kiewit Corporation has been named private partner for the $1.5 billion P3, which will replace the 85-year-old bridge spanning from New York to New Jersey.
Macquarie fund arm Macquarie Infrastructure and Real Asset (MIRA) and Kiewit Development Corporation will maintain and operate the successor bridge as ‘NYNJLink Partnership’ via a 40-year availability payment structure (APS).
The Port Authority in a press announcement called its P3 ‘innovative,’ noting the agency would be able to ‘maintain control of the asset, while having access to private sector construction and maintenance expertise as well as private capital’.
The port-district agency also said choosing a PPP will save ‘an estimated 10 percent’ in construction and maintenance cost, and noted the project has secured a $500 million loan from TIFIA, or the Transportation Infrastructure Finance and Innovation Act of 1998.
“”The replacement of the Goethals Bridge is a historic undertaking for the Port Authority, said Port Authority chairman David Samson in a statement. Samson went on to hail the “groundbreaking PPP structure” of the project.
The current Goethals Bridge is a 7,100-foot steel truss cantilever edifice running from Staten Island, New York, to Elizabeth, New Jersey, that was completed in 1928 for $7 billion.
The Port Authority said the envisioned bridge will include a ‘mass transit option,’ as well as a bicycling lane and pedestrian path. Construction is expected to begin in 2013, with ‘initial service’ starting in 2016.
Long-maligned as muddled and slow, the Port Authority is also $19 billion in debt and subject to high personnel turnover. In addition to Goethals Bridge, the agency has earmarked LaGuardia Airport and Newark Liberty International Airport for privatisation.
Within the Tri-State Area of New York, New Jersey and Connecticut, the P3 is the second bridge project set for 2013: a $3.9 billion deal to swap out the Tappan Zee Bridge is in progress.
Macquarie and Kiewit partnered on the $530 million Autoroute-25 (A-25) P3 in Quebec, a cable-stayed bridge concession completed in 2011.
Joining Macquarie and Kiewit in NYNJ Link Partnership are Kiewit Infrastructure, Massaman Construction and Weeks Marine, along with lead engineer Parsons Transportation Group and legal adviser Gibson Dunn.
MIRA is putting up 90 of the private equity, with Kiewit Development providing the remaining 10 percent. Macquarie Capital is the financial adviser.
Port Authority began procurement in 2010. A final request for proposal (RFP) was issued last April and was due in January.
In addition to NYNJ Link Partnership, ‘Goethals Bridge Development Group’ and ‘Metro Bridge Partners’ were also shortlisted as preferred bidder.
Goethals Bridge Development included ACS Infrastructure Development, Dragados, Gannett Fleming Engineers and Architects, Granite Construction Northeast, John Laing Investments, and T.Y. Lin International.
Metro Bridge Partners teamed Meridiam Infrastructure, Skanska Infrastructure Development, Parsons Brinckerhoff Americas and Traylor Brothers.
Commercial and financial close is expected by year-end.
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