The state’s budget is now signed, sealed and sent to the printer but can it sustain the promise of Gov. Andrew Cuomo’s dream of big ticket infrastructure projects?
For those of us who first proposed a Long Island Sound tunnel some eight years ago, the answer is found in the artful maneuvering to close a $4.4 billion deficit in a budget of $168 billion and the political need to outflank the loss of federal cap on state and local tax deductions.
Earlier this year the governor put down his political markers on an idea my company first proposed in 2010: building a cross sound tunnel that would link Long Island to Rye in Westchester. For a governor who continues to define himself as a potential presidential nominee, investing significant political capital in this multibillion dollar “moon shot” of infrastructure projects would have implications for his political future as well as crucial public works across the state of New York.
When the governor was attorney general he was briefed by Polimeni International on the technical aspects of what we dubbed The Sound Link Tunnel. The findings of our multimillion dollar engineering, hydrological and environmental study would be confirmed in a similar report recently commissioned by him as governor. His report revealed what we already knew. A Long Island Sound tunnel has no significant engineering or environmental obstacles.
Local opposition is already emerging for a sound tunnel but that certainly isn’t an obstacle for a chief executive who pushed through a replacement for the Tappan Zee Bridge, Third Track on Long Island, and the Second Avenue Subway in Manhattan. But the tunnel is profoundly different, as previous projects had an infrastructure baseline and an existing constituency. A cross sound tunnel starts with a concept, extensive engineering and environmental assessments, and little more.
And that’s where Cuomo is rolling dice at the political casino. Without the money, his vision is campaign rhetoric. He will need more than that.
When we proposed The Sound Link Tunnel, we called for a public-private partnership where the state and the developer would be partners. The private sector would manage construction, drive down costs to about $22 billion (as opposed to the state’s estimate of $40 billion), and secure a profit for taking the risks. Going to market for billions in bonds would need a business model that included tunnel congestion pricing, tax incentives and more in order to provide investors with confidence.
With the loss of President Donald Trump’s infrastructure chief D.J. Gribbin, Washington’s entire strategy to spend billions on improving U.S. infrastructure is in question. And were it to occur, New York would be last on the president’s list. The reality is that public-private partnership (P3) won’t be an option “for consideration” but a mandate if the governor wants a tunnel.
Cuomo will have to convince the financial markets that he is a reliable P3 ally because today’s private equity firms aren’t leaping on the P3 bandwagon. In a recent analysis, the Wall Street Journal noted, “Fund managers… are mainly looking for assets that are already privately owned — such as renewable energy, railroads, utilities and pipelines — and not the deteriorating government-owned infrastructure like roads and bridges…”
The Long Island Sound Tunnel is too big for the governor to play with house money, and the markets are now being selective about their P3 investments. That reality will require Cuomo to prove to his future presidential debating opponents, and current New York voters, that he as skillful at funding public works as he is at finding visionary projects to endorse. As always, the buck continues to stop on the chief executive’s desk.
Michael Polimeni is CEO of Polimeni International in Garden City.