With interest rates on the rise, does waiting on key transit capital improvements make fiscal sense?
by Vincent Pellecchia, Tri-State Transportation Campaign
It’s been over a year since the Federal Highway Administration (FHWA) issued its Record of Decision approving the new Tappan Zee Bridge environmental review process. It’s also been over a year since the New York State Thruway Authority formally initiated the process for obtaining a federal Transportation Infrastructure Finance and Innovation Act (TIFIA) loan to help pay for the project.
The current interest rate on a 35-year TIFIA loan is 3.9 percent, up from 3.1 percent six months ago and up almost a full percentage point since October of last year when it was 2.93 percent. It is not clear how these changes will affect tolls since the Thruway Authority still hasn’t released a financial plan of how it plans to pay for the bridge. A financial plan and a final decision on the TIFIA loan are anticipated next month. We don’t know if the State will announce what the tolls for the new bridge will be, but what is clear is that with interest rates on the rise, serious concerns are being raised regarding the ability to pay for large projects.
As the Tappan Zee Bridge Mass Transit Task Force, of which TSTC is a member, deliberates towards a transit solution (bus rapid transit has emerged as the preferred option) and financing mechanism for the I-287/TZB corridor, it is important to consider the growing costs for pushing key capital investments into the future. Currently, the “mid-term” timeline for potential transit improvements is 15 years from the completion of the new bridge. In the event federal loans become part of the funding plan and with interest rates for borrowing on the rise, does waiting that long to make some key transit capital improvements make fiscal sense?
Vincent Pellecchia is General Counsel at the Tri-State Transportation Campaign, a non-profit organization working toward a more balanced, transit-friendly and equitable transportation system in Connecticut, New York and New Jersey
Photo Credit: ©2013 Alison Perry