New York cautioned about public-private partnerships

By David Tanner, Land Line associate editor | 6/12/2013

For the second time since 2011, the New York state comptroller is recommending strong oversight and taxpayer protections for transportation contracts known as public-private partnerships.

Comptroller Thomas DiNapoli issued a list of recommendations June 5, urging independent reviews, competitive bidding, transparency and reduced taxpayer costs associated with PPP or P3 projects.

The New York State Thruway Authority recently hired a private firm to design and build the replacement Tappan Zee Bridge. A five-axle truck traveling southbound currently pays $16.38 to 32.75 on the existing bridge depending on time of day. While no toll increase is planned for 2014, truck tolls could be significantly higher once the new bridge is built.

DiNapoli says he wants to make sure the public is safeguarded in similar deals.

“New York’s aging infrastructure needs to be rebuilt and repaired, but the state’s ability to pay for this important work is limited,” Comptroller Thomas DiNapoli said.

“If New York allows private companies to finance public infrastructure projects, they should protect taxpayers and include safeguards to avert costly mistakes down the road. This may seem like an easy-money solution to a complex and growing problem, but poorly structured agreements have significantly cost taxpayers in other states.”

In 2011, DiNapoli highlighted what he called primary risks associated with public-private partnerships for transportation projects, such as unfavorable pricing mechanisms, unrealistic expectations, failure to identify full value of public property and “budget gimmickry.”

“Protecting the public from these risks may mean limiting private sector profits, which in turn may make P3 projects less attractive to the private sector,” he said in 2011. “Nonetheless, it is the state’s obligation and responsibility to ensure that the public’s interests are protected.

A mutually beneficial P3 agreement can be reached only if the interests of both public and private sector partners are known and accommodated.”

Others have cautioned states about allowing the private sector to control and profit from transportation projects by signing one-sided deals.

The U.S. Public Interest Research Group, or PIRG, and its state affiliates have been vocal about protecting the public in roadway privatization deals, especially toll roads.

“The public can’t be confident of getting full value when selling off toll roads,” the Texas affiliate of PIRG recently said. “An analysis of the Chicago Skyway and Indiana Toll Road privatization deals found that private investors will likely recoup their investments in less than 20 years – even though the private operators will charge tolls for 99 and 75 years, respectively.”

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