Sunday, January 27, 2008

Compelling - Private money funding public works projects

With this countries infrastructure in dire need of upgrading and lack of public monies to complete these projects - this could be a new model for financing. Public works projects are notorious for cost overruns and delays, think Boston's Big Dig, as their is no accountability or bottom line concerns(who cares about the publics money?). If the private sector were running the show their would be a strong incentive to build on time and on budget resulting in a win-win. Some might argue that $25 is too much to charge consumers to use this tunnel but it's a very simliar concept to congestion pricing. Using market forces (namely charging a premium for something) to control congestion and to some extent help the environment as this would encourage "rationing" and wider use of public transportation.

An interesting angle may be to pass legislation similar to Historic Tax Credits that would provide equity funds that would go towards the capital stack to fund these public works projects that would have cash flow. In addition, to the extent these projects offset carbon emissions into the atmosphere they should be entitled carbon offsets which they could sell on the Chicago Climate Exchange or other commodities exchange or directly to a user (an energy company or the like) in a private transaction.

OYSTER BAY, N.Y. (AP) - It would be the world's longest highway tunnel, running more than 16 miles under the west end of Long Island Sound.

The cost is estimated at $10 billion - and it wouldn't cost taxpayers a dime. A developer wants to build the tunnel with private money, recouping his costs by charging drivers $25 each way and by selling advertising.

Developer Vincent Polimeni says the tunnel between Oyster Bay and Rye on the New York mainland would let travelers going between Long Island and New England avoid crowded New York City highways and help alleviate traffic congestion.

While not expected to be completed before 2025, the proposal received renewed attention this past week when a state Senate committee held a hearing.

Polimeni acknowledges his idea was initially met with "smirks and skepticism." But he added: "The more people looked at the plan, the larger circle of intrigued citizens who said 'tell me more.'"

The tunnel also brought back memories of Robert Moses, the powerful New York municipal planner who was rebuffed in his bid to build a bridge over Long Island Sound three decades ago. Long Island officials savaged Moses for his plan.


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