NY 'will' for privatization may trump a new law
(This report is part of a Reuters series on infrastructure)
By Joan Gralla
NEW YORK, May 12 (Reuters) - New York state's "political will" for public-private partnerships could be more important than whether the state government enacts a law permitting long-term leases for roads, bridges, or high speed rail, a Fluor Corp (FLR.N) executive said on Tuesday.
After a public backlash sank megadeals in New Jersey, Pennsylvania, and Texas, developers and funds that hoped to capture the double-digit returns such deals have reaped in Europe and Asia have grown wary of sinking money into the analysis needed to submit a bid, only to see the deal collapse.
"There's not really going to be a lot of smart money chasing P-3 in New York," said Robert Prieto, a Fluor Corp senior vice president, at an infrastructure conference held by law firm McKenna Long & Aldridge. The term P-3 refers to public-private partnerships.
He added: "I'm not sure that we need new legislation. I think that what we need is a heavy dose of political will right now."
Governor David Paterson said on May 4 that his aides were exploring legislation for public-private partnerships. But the state "Asset Maximization Commission," which is studying the issues, missed its April deadline for a final report.
The list of uncertainties includes how unions would be treated and whether developers will get non-compete clauses. Another question is whether the Empire State Development Corporation, the economic development agency, already has the legal authority needed for public-private partnerships.
Amy Solomon, a managing director with law firm McKenna Long & Aldridge, speaking after the infrastructure panel, said: "I do think the possibility exists that the Empire State Development Corporation does have some kind of mechanism for doing that."
A Paterson spokesman had no comment on Tuesday.
According to a source familiar with the issues, the state likely will start exploring privatizing with "small pilot projects." It would begin with developing surplus land owned by the state university system to help pay for higher learning.
The State University of New York is one of the nation's biggest, with more than 427,000 full and part-time students on 64 campuses ranging from densely developed Long Island, where real estate is particularly desirable, to upstate communities like Albany, Buffalo and Plattsburgh.
Other pilots might involve small schools or bridges.
Like many states, New York's revenues have fallen with the recession. As a result, private capital is viewed as more desirable funding for assets such as off-shore wind farms, broadband links and other infrastructure projects.
The Tappan Zee Bridge ranks high on the list. Replacing the 1950s era Hudson River bridge could cost as much as $32 billion if mass transit links are included. For more details, please see: [ID:N20435037]. (For more on infrastructure, please visit: here) (Reporting by Joan Gralla; editing by Dan Grebler)
