Over a year after New York State announced a new Tappan Zee Bridge project, yesterday the New York State Thruway Authority released basic sketches and cost estimates for the three Tappan Zee Bridge replacement proposals being considered. The three bid proposals were priced at $3.14 billion, $3.99 billion and $4.06 billion, significantly lower than the state’s projections of $5.2 billion. The proposal estimates excluded $600-$800 million in “additional costs.” The lowest bid, submitted by Tappan Zee Constructors, won the state advisory committee’s recommendation.
However, even with the lowest estimated price tag of $3.7 billion ($3.1 billion bridge cost plus approximately $600 million in additional costs), there remains the critical unanswered question of how the state will finance this project.
On August 20, 2012, Governor Cuomo held a press conference signaling the state’s commencement of the TIFIA loan submission process. [The same day, the Governor also announced that a regional transit task force would be created.] The state’s application requested $2.9 billion in TIFIA loan funds, the maximum allowable ask for the $5.2 billion Tappan Zee Bridge project under revised TIFIA requirements. Now, with estimated bridge costs $2 billion less than the original bridge cost estimate, the state can expect to only receive 49% of the lower cost—around $1.5 billion dollars. However, without a financing plan for the bridge, the federal government will not move forward with the state’s TIFIA loan application. TIFIA requirements very explicitly state a financing plan is necessary.
Additionally, the Authority’s financial house is not yet in order making it a questionable candidate for TIFIA loan approval. The Authority has indicated several cost efficiency and revenue generating measures it plans to undertake to shore up its credit outlook. One such measure is a proposed 45% commercial toll increase which is needed for the Authority’s existing capital budget. The revenue generated from this proposed increase would not be used to directly finance the new bridge, but would indirectly impact the possibility of low cost borrowing for the new project. In June of this year, both Moody’s and S&P downgraded the credit outlook for the Authority to “negative” potentially leading to higher interest rates in the absence of sustainable revenue streams from sources such as tolls.
The public is still waiting for the projected toll increase for passenger vehicles. Now that the estimates for the bridge have been released, this projection should be forthcoming, as well as the financing plan.