April 25 (Bloomberg) -- A group led by Kiewit Corp. and a Macquarie Group Ltd. unit won a Port Authority of New York and New Jersey contract to finance, design and build a $1.5 billion replacement for the 85-year-old Goethals Bridge.
The span connecting New Jersey to New York City’s Staten Island is a key route for trucks and commuters in the metropolitan region. Known for its four narrow and congested lanes, the bridge provides a link to Newark Liberty International Airport and the Elizabeth-Port Authority Marine Terminal.
“As we move forward with continuing constraints on our resources, we’re financing necessary infrastructure and at the same time minimizing the use of public funds and public debt capacity,” Port Authority Executive Director Pat Foye said yesterday at a board meeting in Manhattan.
Kiewit Infrastructure Co., a unit of the Omaha, Nebraska-based mining and construction company, will lead the design and building of the bridge, while Macquarie Infrastructure and Real Assets Inc., a unit of the Sydney-based company, is heading up the financing, said Chris Valens, a Port Authority spokesman. Other members of the consortium include Washington-based Parsons Transportation Group, Cranford, New Jersey-based Weeks Marine Inc. and Kansas City, Missouri-based Massman Construction Co.
The financing will consist of $100 million in equity, a $500 million federal loan, tax-exempt bonds and a bank loan, Foye said. The Port Authority will pay back the consortium over 40 years, making annual payments that start at $60 million.
The Goethals project marks the transportation agency’s most extensive use of a public-private partnership to build infrastructure, an approach backed by President Barack Obama.
It’s also the second major bridge replacement in the metropolitan region. The state of New York is building a new $3.9 billion Tappan Zee Bridge across the Hudson River.
The Port Authority board also approved a $1.3 billion program to raise the Bayonne Bridge, which connects the New Jersey city with Staten Island, to allow bigger container ships to reach New York-area ports. A separate joint venture between Kiewit and a unit of Skanska AB was awarded the contract to raise the span’s roadway to 215 feet (66 meters) from 151 feet.
Combined, the two bridge projects are expected to create more than 4,750 construction jobs, paying about $600 million in wages, agency officials said.
Traffic volume on the Goethals, which opened in 1928 and is named after Major General George W. Goethals, builder of the Panama Canal, reached 14 million New York-bound vehicles in 2010, according to the Port Authority.
“If you have the misfortune to be on that bridge the same time a tractor trailer is going over the bridge, you essentially have one lane moving,” said Port Authority Chairman David Samson.
The new 900-foot-long span will be located south of the existing structure, over the Arthur Kill, a channel separating New Jersey and Staten Island.
Construction is expected to begin this year and will be finished in late 2017. The Port Authority said it won’t start paying the developer until 70 percent of the bridge is constructed, minimizing the risk.
The new span will have six 12-foot-wide lanes and 12-foot-wide shoulders and include a central strip wide enough to accommodate mass-transit service. A 10-foot-wide sidewalk and bike path will run along the northern edge of the New Jersey-bound roadway.
The agency will own the bridge, continue to set tolls and manage day-to-day operations, Foye said. Drivers crossing the Goethals currently pay a toll of $13 cash or $10.25 with an E-ZPass. The charge is for vehicles heading into New York.
The project will benefit from a $500 million federal loan and tax-exempt private-activity bonds. The loan, with interest rates comparable to U.S. Treasury bonds, has a repayment term of as long as 35 years. Thirty-year Treasury bonds had a yield of 2.9 percent yesterday, according to data compiled by Bloomberg.
The public-private partnership for the new Goethals will save the Port Authority 10 percent in construction and maintenance costs, Foye said.
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