Cuomo Aims to Speed New York Sandy Recovery With Private Funding

New York Governor Andrew Cuomo proposed a bill in his $136.5 billion budget aimed at speeding recovery from Hurricane Sandy by allowing private companies to finance public infrastructure projects.

If approved, the measure would mark the first time private entities could play a role in financing construction of state roadways, buildings and flood-control projects, according to budget officials. Private companies would pay upfront building costs, and New York would pay them back using federal funds it expects to get from Congress, according to a memo attached to the bill.

Cuomo’s proposal grew out of the state’s experience with the $3.1 billion replacement for the Tappan Zee Bridge.

After more than a decade of delay among state agencies, Cuomo used a law passed in December 2011 to have groups of private companies design and build the 3.1-mile (5-kilometer) span over the Hudson River. Under the so-called design-build method, it took the state one year to execute a contract for construction.

“Design-build contracts have been very successful in building things smarter and more innovatively,” Morris Peters, a spokesman for Cuomo’s budget division, said today in an e- mailed statement. “To speed the state’s recovery from superstorm Sandy, we are expanding the program so that a single- entity contract will provide the project’s design, construction and financing.”

Expanding Design-Build

Under existing law, design-build can be used only by the Thruway Authority, which owns the Tappan Zee, and the transportation, parks and recreation, and environmental conservation departments. Cuomo’s bill expands it to every state agency, authority or commission that has at least one board member appointed by the governor. The budget for the fiscal year beginning April 1, which Cuomo submitted yesterday, must be approved by the legislature.

Cuomo is seeking to repair New York’s infrastructure after the superstorm struck Oct. 29, knocking out power to 2.1 million customers, destroying or damaging more than 300,000 homes and causing the worst flooding in the more than 100-year history of the New York City subway system.

The U.S. House appropriated $60 billion to the states affected by the storm, half of which will go to New York, Cuomo said yesterday when he presented his budget. The U.S. Senate, which approved the measure last year, has to vote on it again in the new term.

The financing proposal falls short of allowing private companies to take control of state assets. At least 34 states and Puerto Rico have laws that allow private investment in public projects, said Richard Norment, executive director of the National Council for Public-Private Partnerships, an Arlington, Virginia-based group.

“This is at least a step toward allowing the full use of public-private partnerships and the innovative financing they often include,” Norment said in an e-mailed statement. “Hopefully, this precedent will encourage the legislators to expand this provision to help with many of the Empire State’s infrastructure needs, and not just recover from Sandy.”

To contact the reporter on this story: Freeman Klopott in Albany, New York, at fklopott@bloomberg.net

To contact the editor responsible for this story: William Glasgall at wglasgall@bloomberg.net.

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