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New York’s MTA announces first ever PPP

The public benefit corporation seeks out private money to revamp accessibility at 13 New York City Transit stations.

The New York City Metropolitan Transportation Authority announced on Friday that its Construction and Development department would deploy an “innovative tool” to deliver its next capital project – a public-private partnership. Should the Authority find a suitable investor, it will mark the organisation’s first PPP in its 56-year history.

The PPP will be a part of MTA’s Rapid Station Accessibility Upgrade Program, which expects a deployment of over $5 billion between 2020 and 2024. This money will be used to make 19 stations accessible through the installation of elevators, as well as to rehabilitate seven existing elevators at already-accessible stations. The proposed PPP will target 13 station projects, including making eight stations newly accessible and rehabilitating existing elevators at five stations, and will be implemented on a design-build-finance-maintain basis. The PPP will make the system “more accessible at a fraction of the time and cost”, said MTA chief accessibility officer Quemuel Arroyo, in a statement.

While the private partner has not yet been selected, Jamie Torres-Springer, the president of MTA Construction & Development, told Infrastructure Investor that the MTA expects to release a request for qualifications before the end of year. After that, a shortlist of top bidders will be drafted, and proposals shall be expected in late 2022.

When asked what the MTA was looking for in a private partner, Torres-Springer stated: “We are looking for a P3 partner who can finance a project of this significance and scale, with experience delivering P3 infrastructure projects in complex urban environments, who can manage their team to deliver capital projects on time and on budget.” He concluded with the assurance that the upcoming RFQ would give more specifics on which types of companies would be best suited for the project.

Whichever company is selected will be expected to complete the aforementioned accessibility projects and maintain them for a period of 15 years, with two five-year options. Failure to do so will result in a suspension of compensation. Private partners will receive progress and milestone payments during construction, the MTA said in a statement, followed by completion payments and availability-based payments throughout the project’s term.

As for what the MTA will bring to the table, Torres-Springer touted an easy working relationship. “We have significantly professionalised the way the MTA delivers capital projects with the creation of MTA Construction and Development and the centralisation of procurement and delivery. We are a one-stop shop in terms of being a client, very clear and transparent in terms of expectations.”

Torres-Springer divulged that though the construction and development department was created to repackage and bundle capital projects (with the number of capital projects for the MTA going from hundreds to dozens), PPPs were always kept in mind when creating the entity. For this reason, the department itself is staffed with numerous people with private sector expertise.

“There are great advantages to the P3 delivery approach”, Torres-Springer told Infrastructure Investor. “We need to be firing on all thrusters and engaging many players in order to deliver. Now that more money will be flowing through the system due to federal legislation, P3 will be one tool in our toolbox – but not a cure all”.

On the amount of federal funds he thinks the MTA will be able to unlock from the infrastructure bill, Torres-Springer is hopeful as he believes that many of the projects in the MTA’s pipeline meet the legislative requirements of promoting things like equity, inclusion and the green economy.

Multinational law firm Orrick Herrington & Sutcliffe LLP and Goldman Sachs advised the MTA on using the PPP model.