How will Cuomo pay for it?
In the runup to Christmas, Gov. Cuomo just presented a great bargain for New York "shoppers": The state Thruway Authority will build the new Tappan Zee Bridge by 2018 for $3.1 billion, plus $500 million to $800 million in a reserve for financing and unexpected costs when the pricetag as recently as this summer was at least $5.3 billion.
But as with everything else in Albany, what could trip Cuomo up is where, when and how to get the cash.
The governor deserves huge credit for announcing this cost underrun unusual even at this early stage for a mega-project. If (and only if) he sticks to time and budget, it could be a model for other projects in New York and around the country.
Why the savings?
Technical reasons, partly: A lighter structure made of steel, not concrete, will require less dredging and thus take less time (without costing more down the road).
And workers will assemble much of the steel off-site, allowing them to work longer hours without disrupting commutes and nearby residents sleep. That, too, saves time and money.
Plus, the governor got Albany to pass new legislation governing construction contracts. The winning contractors American Bridge Co. and Fluor will be financially responsible for constructing the project theyve drawn up themselves.
Thats a departure from normal New York practice: Usually, one architectural firm produces a design, then the state hires other contractors to build the thing.
That disconnect can cause huge cost overruns. Just think: If the designers who came up with the "soaring" Calatrava PATH station downtown knew they actually had to build it, theyd have stuck to basics in their drawings.
(Of course, no contracting structure can completely control for government incompetence. If the governor decides to change the bridge specs halfway through, taxpayers would still have to pay for the overruns.)
Most important, though, is that Cuomo (unlike his three predecessors) made clear to everyone Thruway honchos and bidders included that he cares about getting the Tappan Zee done.
Putting political capital behind the project reduced the political risk that the bidders had to take that is, the risk that hed suddenly cancel it.
That encouraged three separate bidders to submit thoughtful proposals, without having to worry that they were wasting their money. Competition is (almost) always good for costs.
Good so far so lets see if it works on the ground.
Now the bad news: Behind the mockups of a shiny new bridge, there are already some seriously rusty finances.
Even at the low end, $3.6 billion is a lot of money. Assume the Thruway can borrow at around 4.5 percent for 30 years, and that the state gets a federal loan for the project. The debt then would cost about $200 million a year, plus a little extra to keep bond analysts happy.
But the Tappan Zee with its current $4.75 round-trip toll only takes in about $130 million a year. Yes, expenses may fall on the new bridge. Still, raking in close to $200 million more would require more than doubling the toll, bringing it to $11 or so.
So youd think the governor would be easing some toll hikes in now, to build up some cash and avoid an abrupt hike. Instead, Cuomo said clearly over the summer that he doesnt want bridge tolls going up much and he didnt say much at all on the subject this week.
In fact, on the rest of the Thruway system, the governor is going in the wrong direction. Monday, the Thruway announced "a new cost-saving plan that does not include any toll hike."
Doing more for less, part of the governors plan, is fine. But a big reason the Thruway wont hike tolls this year is that Cuomo has decided to give the public authority some money out of the general state budget.
The state will start reimbursing the Thruway for state-police costs as well as other operating costs, totaling $85 million a year. Thats not a real "savings," though its just hoping that taxpayers wont notice the cost and scream, where tollpayers would have.
The governors stand on Tappan Zee tolls shows one thing: Nobody ever likes to raise tolls and that probably wont change in the next few years.
But were still waiting to see what legerdemain hell come up with to pay for the new Tappan Zee. Expect the financial engineering on the bridge to be far more complicated than the actual engineering.
Original Source: http://www.nypost.com/p/news/opinion/opedcolumnists/tappan_zee_mystery_uoKHJRoM8RNmoRZ1QoMwnK