The New York Thruway Authority will sell $700 million in notes to fund construction of a new Tappan Zee Bridge as it waits for a federal loan to finish its financial plan for the $3.9 billion project.
The notes will mature at the end of this year, when the state expects to have a federal loan and long-term construction-spending plan in place, Thomas Madison, the authority’s executive director, said today at a board of directors’ meeting in Tarrytown, New York. The authority will use $500 million to pay off notes it sold in February and $200 million to fund construction, he said.
“We’re making progress with the loan, but in order to continue this progress we need to provide interim financing,” Madison said. The $700 million is “crucial” until the federal loan is closed, he said.
The authority will sell the notes to a unit of Citigroup Inc. at an interest rate of 0.189 percent, said Dan Weiller, a spokesman for the agency. That’s the same rate the authority got when it borrowed $500 million from Barclays Plc (BARC) in February. The debt from that sale matures at the end of this month.
Building the span is a priority for Governor Andrew Cuomo, who compares it in scope to the 19th-century construction of the Erie Canal. The project would double the agency’s $3.7 billion debt load, and rating companies, including Standard & Poor’s, have warned of credit-grade cuts if the financial plan doesn’t include spending reductions or revenue increases such as from tolls.
The Tappan Zee is one of the nation’s largest public-works projects and the federal Transportation Infrastructure Finance and Innovation Act loan of more than $1 billion that Cuomo requested would be the biggest awarded by the U.S. Transportation Department.
The 55-year-old Democrat is banking on the low-cost funds to keep cash tolls from almost tripling on the replacement for the 57-year-old bridge. Cuomo has said the majority of the financing will be through toll-backed bonds. The authority is waiting to find out the size of the loan before determining how much it’ll need to borrow with municipal debt.
The 3-mile-long Tappan Zee, which connects Rockland and Westchester counties about 20 miles (32 kilometers) north of New York, was designed to last 50 years. It carries 138,000 vehicles daily, 40 percent more than intended.
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