The New York Thruway Authority privately sold $500 million in notes to fund construction of a new $3.1 billion Tappan Zee Bridge without a financial plan for the project, state Comptroller Thomas DiNapoli’s office said.
The cash will go toward paying the first $125 million bill due this month to the Fluor Corp.-led group that was selected to construct the span across the Hudson River, according to a letter from Deputy Comptroller Pete Grannis to the authority.
Selling the notes privately without public disclosure of a long-term financing plan isn’t transparent and is reminiscent of the type of short-term borrowing without “realistic expectation of a revenue stream” that has weakened the authority’s finances, Grannis wrote in the letter, which the comptroller’s office distributed via e-mail.
The authority sold the notes, which mature in July, to Barclays Plc with an interest rate of 0.19 percent, said Dan Weiller, a spokesman for the agency. That level is about the same as the yield for top-rated bonds due in 12 months, data compiled by Bloomberg show. The bonds were put out for a competitive bid and the sale was approved by the comptroller’s office, Grannis said.
The authority issued the short-term debt through a private placement to lower issuance costs and meet the “brisk schedule” of the Tappan Zee project, Weiller said.
“We appreciate the approval of this bond issuance, which was first approved by the Thruway Board of Directors based on positive news about future Tifia support,” Weiller said in an e-mailed statement.
Both Moody’s Investors Service and Standard & Poor’s placed the authority on a negative outlook in June before it sold $1.1 billion in long-term notes to pay off short-term debt.
“The authority has a duty to provide full, timely and public disclosure regarding its capital plan, including costs associated with the project,” Grannis wrote. “Transparency demands that the authority make public a full financing plan, including the expected level of tolls, as soon as possible.”
Tolls on the new span may almost triple to $14 from the current $5 for cash customers when the new bridge opens, which is projected for 2016, state officials have said. The amount of the toll increase depends on the authority receiving a federal Transportation Infrastructure Finance and Innovation Act loan.
The state applied for a $2.9 billion loan through the program in September. Thomas Madison, the authority’s executive director, said in a Feb. 1 radio interview that the authority plans to pay off the $500 million with cash from the Tifia loan.
“We’re borrowing in anticipation of what we believe will be a long-term, low-interest loan from the federal government that we’re still in the process of negotiating,” Madison said.
Grannis said in the letter that “there continues to be uncertainty regarding the final outcome and timing” of the loan.
“If a Tifia loan is approved, the authority has indicated that it will take several months before the final loan terms can be agreed upon and the loan proceeds issued,” Grannis wrote.
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