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Governor, partners push for public-private infrastructure projects
Public-private partnerships (PPPs)
may be the wave of the future for infrastructure projects if three state
governors have their way. In a blog post on the influential Huffington Post
website earlier this month, New York State's David Paterson, California's Arnold Schwarzenegger, and Pennsylvania's
Ed Rendell pressed the federal government and state officials to seriously
consider PPPs as a solution for improving the nation's decrepit infrastructure.
“The moment for public-private partnerships is now,” said the governors' piece.
“Our nation's infrastructure needs to be repaired and expanded. With 10 million
Americans out of work, we need to create jobs. And, due to the recession, states
and local governments are facing large deficits, limiting our ability to build.”
Public-private partnerships involve private companies' investing their own money
in public projects in return for a financial stake. Usually, the companies are
responsible for maintaining and operating the project with minimal government
oversight for a determined period of time, after which the government can either
re-lease management to a private company or manage the project themselves.
The governors' stressed that the American Recovery and Reinvestment Act,
which is pumping over $100 billion into infrastructure improvements, aims to
stimulate the economy by creating jobs and, accordingly, does not provide the
financial investment required to adequately upgrade the nation's infrastructure.
“By combining government oversight with private-sector efficiencies, we can
build more projects; we can build them more quickly; we can improve services for
our citizens; and we can lower costs for taxpayers.”
The New York State Asset Maximization Board – which is tasked with studying the
feasibility and potential benefits of proposed PPPs in the state - has already
identified pilot projects that can utilitize PPPs. The list of projects include:
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Renovating hundreds of bridges across the state;
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Placing privately owned wind turbines on offshore state property, generating
clean, low cost energy while raising revenue for the state; and
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Bringing together the state's Department of Transportation, private railroad
companies and rail service providers to develop a high-speed rail link from New
York City, to Albany to Buffalo.
The Governor Paterson has responded positively to the board's
recommendations.
“In the midst of these economic challenges, we must now, more than ever, make
long-term investments to spur economic growth and think creatively about
innovative ways to enhance the performance of vital infrastructure assets,” said
the governor. “This report provides us with a series of ideas for asset
maximization projects that could accelerate construction, jumpstart job
creation, and provide for substantial savings in the years to come.”
While there are many advocates of the partnerships, some academic studies have
discovered that the benefits of private participation are often exaggerated.
Furthermore, the detractors say that soaring project costs and delays are
frequently downplayed and that the private companies expected returns are often
overestimated.
To read the governors' full blog post,
visit:
http://www.huffingtonpost.com/gov-david-a-paterson/the-moment-for-
public-pri_b_210972.html
To read the New York State Asset Maximization Board report to Governor David
Paterson, visit:
http://www.ny.gov/governor/press/press_0601092.html
Exodus of leaders from
state development agency
The Empire State Development Corporation (ESDC) has seen two of its leaders
depart this month as the state grapples with unemployment and a stagnant
economy. After just eight months at the agency, Marisa Lago announced on June 6
that she was
stepping down as president and CEO of the ESDC to pursue opportunities outside
of the government. Less than a week later, Robert Wilmers, the ESDC's
chairman, resigned to manage his bank, M&T Bank Corp.
Lago and Wilmers were reportedly at loggerheads over a myriad
of issues, and their tenure has been marred by stalled projects and general
inaction.
New York State Governor David Paterson has nominated Dennis Mullen – formerly
the manager of the ESDC's upstate division – to replace Wilmers. Paterson
originally tapped Mullen for Lago's seat after her departure was announced. At
the time of this article's writing, it is unclear whether Mullen will fill the
three positions held by Lago and Wilmer.
The ESDC is responsible for promoting and facilitating job creation and economic
development in New York State. However, some public officials and commentators have
complained that the agency lacks a defined purpose and, consequently, is
ineffective in fulfilling its mission.
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