New York state “may have to sell off roads, bridges and tunnels” to address a growing budget deficit, the New York Post reported Wednesday. How would you go about selling someone a bridge in Brooklyn?
Start by offering a long lease with lots of conditions. (New York Gov. David Paterson has clarified that he doesn’t want to sell the state’s infrastructure outright.) The agreement would transfer control of the bridge—and the right to collect tolls—to a private company in exchange for a large upfront payment. The company would then be responsible for maintaining and operating the bridge for a specified period of time—perhaps the traditional 99 years. Under the terms of the lease, the state and the operator would agree to hundreds of provisions outlining, for example, how much the operator could raise tolls, what kind of safety standards must be maintained, and who would pay in case the bridge were expanded.
If Paterson wants to lease out bridges or tunnels, he’ll need to convince the state legislature to give the New York Department of Transportation the right to negotiate a contract with a private company. That legislation could be very broad—giving the state the right to lease out infrastructure more generally—or it could apply to specific projects. (For a model enabling bill presented on the U.S. Department of Transportation’s Web site, click here.) Former Gov. George Pataki proposed similar legislation in 2005—the Tappan Zee Bridge was mentioned as a prime candidate for a “public-private partnership“—but his bill didn’t go anywhere in Albany.
One high-profile model for leasing out a New York bridge is the Chicago Skyway, a 7.8-mile toll road that had been under public control since 1958. In 2004, the city of Chicago agreed to lease out the Skyway to a private Spanish-Australian consortium for 99 years at a total cost of $1.83 billion. The terms of the agreement—which can be found here (PDF)—specify maximum toll fees through 2017, after which point they will be determined by a formula that takes into account inflation and economic growth. The agreement also specifies how quickly potholes must be repaired (within 24 hours), how often the shoulder must be swept (three times a week), and when grass by the side of the road must be mowed (before the turf gets to be more than 6 inches tall). Similar deals have been signed in Indiana and Virginia. (For Slate columnist Daniel Gross’ take on why these deals might not be such a good idea, click here.)
In theory, New York might also be able to sell its bridges outright, but such arrangements are very rare today. Through the 19th century, it was much more common for governments to issue charters that gave companies the right to build and operate their own toll roads or bridges. (The Brooklyn Bridge itself was initially owned by the private New York Bridge Co., but the corporation got caught up in a political corruption scandal, and its charter was revoked during construction.) There are still a handful of privately owned bridges left in the United States, like the Dingmans Bridge between New Jersey and Pennsylvania, which was created under an 1834 charter that specified it wouldn’t charge people traveling to funerals or to church—a rule the bridge still follows today.
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Explainer thanks Maria Doulis of the Citizens Budget Commission, Karen Hedlund of Nossaman LLP, and Peter Samuel of TOLLROADSnews.
