AP Photo/Mel Evans, File
This Aug. 17, 2015 file photo shows a view of the train tunnel under the Hudson River as seen from the back of an Amtrak train bound for New York's Penn Station. Delays this summer on trains between New York and New Jersey have been so bad lately that federal, state and city officials have begun talking with new urgency about long-stalled plans to build a second set of tunnels.
Last month, Senator Charles Schumer pitched the creation of a nonprofit development corporation tasked with funding new tunnels to go under the Hudson River. The entity would work with New York, New Jersey, the Port Authority, the MTA, Amtrak, and the federal government. It could also solicit funding from potential private sources. While the proposal lacked some important details, such as which agency would ultimately manage the new tunnels and how, if at all, they could obtain state and federal money-political leaders, transportation experts, and business organizations praised Schumer's idea as an important one worth exploring further.
"Input should come from all parties-everyone should have a seat at the table-but the planning and financing and implementation of [the new tunnels] should be driven by one conductor: the development corporation," Schumer said in an August speech at New York University.
Schumer's proposal could "solve a lot of long-standing, long-festering dysfunctional relationships," said Martin Robins, a transportation policy expert who has been involved in pushing for new Hudson River tunnels since the 1990s.
New tunnels are desperately needed. The only existing ones, which are more than 100 years old, are not expected to hold up for more than another decade or so, due to age and deterioration. The country would have had new tunnels built by 2017 through the Access to the Region's Core plan (ARC) but, as I argued in my winter 2015 cover story, Governor Chris Christie cancelled the bipartisan tunnel project in order to avoid raising taxes and preserve his national political ambitions.
Yesterday, McGraw Hill Financial and the Bipartisan Policy Center held a panel discussion in New York City on the challenges and opportunities of using private investment to fund infrastructure projects in the United States. One topic they discussed specifically was how they can leverage private dollars to help fund projects like new tunnels under the Hudson River.
The groups invited public sector officials, like Polly Trottenberg, NYC's transportation commissioner, and Patrick Foye, the executive director of the Port Authority of New York and New Jersey, as well as leaders from the financial world. The event lasted for 90 minutes, and the speakers discussed what makes public-private partnerships so difficult in general, but especially in the United States.
Public-private partnerships involve contracts between the public and private sector, where the latter typically shoulders a significant amount of upfront risk to complete a project. There are different types of public-private partnerships, and depending on how the contract is structured, taxpayers can be left with a relatively good deal, or a very bad one.
Doug Peterson, the President and CEO of McGraw Hill Financial opened the panel with some remarks about the dire state of American infrastructure. Every four years the American Society of Civil Engineers (ASCE) issues a report card, and its latest one found U.S. infrastructure to be in abysmal shape. ASCE says that to bring American infrastructure up to a state of good repair, an investment of over $3.6 trillion would be needed by 2020. Peterson said the United States lags far behind other countries in terms of adopting public-private partnerships, and has historically not supported them. "This needs to change," he said, arguing that such partnerships can develop new infrastructure, grow the nation's GDP, and create jobs.
The next speaker-the keynote-was Kathyrn Wylde, the president and CEO of the Partnership for New York City, a business organization that works with government, labor, and the civic sector to "build a stronger New York, with a focus on education, infrastructure and the economy." She joked that she was glad this panel was taking place in New York City, "the business capital", rather than in D.C., the political capital.
"We've gotten lost in the politics of P3s, [a short-hand for public-private partnerships] and we haven't got it done," Wylde said, noting that these projects seem to work better when they're out of the "political and public spotlight." The U.K., Wylde said, has finalized 625 public-private deals over the last two decades, with another 500 throughout the rest of Europe. By contrast, the United States has had about 10 a year over the past several years. "It's embarrassing," she said.
Wylde thinks part of the reasons public-private partnerships haven't been as popular in the United States is because of how they're framed, often ambitiously, and controversially. She also thinks they've been unpopular because there has been a "failure to bring organized labor into the conversation in a constructive way." She notes that proponents of public-private partnerships have failed to really engage with public sector union leaders who worry about job loss, or those who feel nervous about privatization and outsourcing more generally. For example, there were supposed to be at least 6,000 unionized construction jobs for the ARC plan that Christie vetoed in 2010, but under public-private partnerships that number could be dramatically less, or nonexistent.
Wylde stressed, however, that such conversations with labor must take place behind closed doors. "Once the [elected officials] get involved and you have a labor situation, it's never about the project, it's always about everyone else's agenda," she said.
This comment reflected a larger theme of the panel's focus: how to attract private investors while also shielding the projects from political destruction. As Chris Christie's reckless ARC cancellation reminds us, many important projects get killed for short-term political gain. One idea Wylde floated was to create new "depoliticized entities" to push large projects through. Senator Schumer's development corporation, she noted, might be such an entity.
Speakers also discussed the need to speed up the time it takes to get projects through the environmental inspection process. Building bridges and tunnels-even if you're just replacing old ones-takes at least six or seven years. These years are not only long but also expensive, as construction costs continually escalate. Such high costs, the panelists agreed, make it harder to garner the political support necessary to back infrastructure investment. Patrick Foye of the Port Authority said he'd like to see the federal government push for sensible reforms to the National Environmental Policy Act (NEPA). "We're all environmentalists and in favor of clean air and water, but the current application is a burden on the environment," Foye said. He thinks the NEPA inspection should be completed in one or two years.
"In European countries, they love the environment just as much, if not more, but they have an airtight, sound environmental process [for infrastructure projects]," said Trottenberg. "They can wrap it up."
While the speakers acknowledged that it's impossible to treat public-private partnerships just like straight business deals, it would have been helpful if they delved more deeply into some of the real concerns people have with them. There was a lot of discussion about risk for investors, but not very much focus on risks for citizens. And while there seemed to be a consensus that supporters must engage labor in the discussion if these projects are to succeed, it didn't seem like the panelists had any plans to engage them yesterday.
