News that the state governments of New York, New Jersey and the federal government have arrived at a 50/50 funding agreement for the critically-important Gateway project – building two new tunnels under the Hudson River connecting New York and New Jersey – couldn’t have come at a better time for Patrick Foye, Executive Director of the Port Authority of New York and New Jersey.
“The good news is that the two governors – Governor [Andrew] Cuomo and Governor [Chris] Christie, Senator [Charles] Schumer from New York and Senator [Cory] Booker from New Jersey came together with respect to the great news that funding’s been obtained for Gateway,” said Foye addressing attendees at Infrastructure Investor’s LP Summit that kicked off in New York on Thursday.
The agreement between federal and state officials to split the cost of Gateway, which has an estimated price tag of around $20 billion making it one of the largest infrastructure projects in the US, is a milestone for a project that hasn’t been able to get off the ground for several years. It also comes two months after Cuomo and Christie jointly requested from the White House that the federal government contribute 50 percent of the funding.
“From a very provincial point of view I’ll note that the two governors and senators directed that the project be run by the Port Authority, which I think was the right decision and happily good news for the Port Authority,” Foye said.
The agreement also calls for the creation of the Gateway Development Corporation, an idea put forth by Senator Schumer in August. The corporation will be established and chaired by Port Authority, it will have a four-board member representing each of the relevant government stakeholders – New York, New Jersey, the US Department of Transportation (USDOT) and Amtrak.
The new entity will develop a financing plan, identifying and maximizing federal grant opportunities in collaboration with USDOT, and pursuing low interest loans from the Railroad Rehabilitation & Improvement Financing (RRIF) and the Transportation Infrastructure Finance and Innovation Act (TIFIA) programmes.
In addition to reaching a funding agreement, another point Foye highlighted was that the governors and the two US senators will be exploring the option of public-private partnerships to procure the project given its size and complexity.
“That leaves me to be really bullish about the P3 business in the United States and in this part of the country,” Foye said, referring to the Northeast.
Another important component of the agreement, which Foye highlighted is the acceleration of the environmental review and permitting process.
“All parties agree, due to the nature of this project and the urgent need to make it a reality in a timely manner, to work together to expedite all environmental and planning approvals needed to bring this project on-line as soon as possible, including requesting the placement of the project on the federal infrastructure ‘dashboard’ qualifying the project for expedited attention within the federal system,” Governor Cuomo’s office stated in a press release.
Despite the significant development regarding the Gateway project, Foye acknowledged that P3s have not taken off as expected in the US. To illustrate his point, he referred to California’s Gold Rush taught in US high school history class. “Very few gold prospectors made money but vendors of shovels, denim jeans, whisky, […] and gold rush conferences prospered,” he said, noting that while the increase of P3 conferences has been exponential the number of actual P3 transactions in the US remain modest and flat.
But given the role private capital has played in building public infrastructure, Foye remains optimistic.
“Whether you’re talking about Grand Central Station, Penn Station, the Hudson and Manhattan Railroad, the predecessor of PATH, the Amtrak tunnels underneath the Hudson which are still in use today […] the New York City subway, the Long Island Railroad and lots more – they were all constructed with private capital in the last 100 plus years. So there’s a rich history of using private capital and I think we’re at an inflection point where we’ll see a lot more of that.”