The need to build bridges

If you’ve lived in or traveled through New York state, chances are you’ve heard of the Tappan Zee Bridge – a massive river crossing about 25 miles north of midtown Manhattan that’s in dire need of replacement.

Due to the size of the undertaking – about $16 billion needed across all phases – the project, formally known as the Tappan Zee Bridge / I–287 Corridor improvement, has been singled out as a poster child for why New York state needs public-private partnerships. After all, $16 billion is more than twice the $7 billion, two-year transportation capital plan former Governor Paterson laid out for all of New York in 2010. Which is to say: the Tappan Zee alone would suck up all of New York state’s entire construction budget for transportation twice over if the state were to attempt the project on its own.

But, as a recent media gathering at Macquarie Group’s New York headquarters demonstrated, the public and private sectors don’t always see eye-to-eye on big projects such as these – which is why it may make sense to first find common ground and structure a public-private partnership around that.

“Sixteen billion is obviously a significant-size project,” Nick Butcher, head of Macquarie’s infrastructure and utilities advisory business, said at the 5 April gathering. “It doesn’t need to be that big if you were more pragmatic around the function of the replacement.”

Chris Leslie, head of Macquarie Infrastructure Partners, Macquarie’s $5.5 billion North American infrastructure fund management business, offered the view that the bridge’s transit component was making it overly expensive. By insisting on running a rail transit on the bridge – which he said would require tunneling to overcome grade escalation on either side – the project cost ballooned to $16 billion, whereas a simple bridge replacement alone would be a more financeable $6 billion to $8 billion.

“If we were in charge, dare we say it, you’d build a new road bridge, stop the existing one falling down and costing $150 million a year to maintain, and you’d build a railroad bridge somewhere else where it made sense, where it’s narrower, where it doesn’t have the grade on the other side. But the political machine has got hold of that,” Leslie said, adding that he offered a similar vision in Albany, the state capital, some 10 years earlier but was not listened to.

Michael Anderson, director for the Tappan Zee Bridge / I–287 Corridor project, confirmed that the estimated cost of the project was indeed $16 billion and that a bridge replacement alone would cost $6 billion to $9 billion. But he vigorously defended the mass transit element as a crucial part of the project.

“Any notion that the cost of the mass transit components is holding back progress with the bridge replacement is incorrect,” Anderson wrote in a statement to Infrastructure Investor. That’s because “the project is being advanced in such a manner as to satisfy federal and state environmental process requirements, while prioritising the replacement of the bridge as the initial phase of project implementation.  We have been proceeding on the assumption that the sequencing of the project would entail bridge and highway work first, followed by the new Bus Rapid Transit System (BRT), and then implementation of the Commuter Rail system (CRT) as the last phase of the project”.

Way forward

Perhaps there is a way to find middle ground here. Both sides clearly agree that replacing the bridge first is the most reasonable course of action. So why not have the private sector take care of the bridge replacement itself as a public-private partnership and then proceed with the other phases afterwards using the appropriate mix of public and, where appropriate, private finance to help finish the job? As demonstrated by the Macquarie executives’ comments, there is clearly private sector interest in the actual bridge replacement part of the project, while the mass transit elements seem better left for delivery by the public sector.

Anderson said a public-private partnership is “included in the range of financing options under consideration”, though no schedule for financing or procurement has yet been set. If and when it is set, a divide-and-conquer strategy may make a lot of sense.