Everyone agrees private money is needed for Gateway — but how much?

By Tom Bergeron
New Jersey | Mar 16, 2018 at 7:10 am
Editor’s Desk

How much private capital is to be used to fund the Gateway Tunnel project is one of the obstacles to getting the absolutely necessary infrastructure project going, Gov. Phil Murphy told the ROI-NJ editorial board in a conversation recently.

Murphy certainly favors more public money, especially money from the federal government.

President Donald Trump favors more private money.

While it seems like a setback, there are three solid takeaways.

For starters, the argument is over the funding, not the necessity of the project itself.

Secondly, the project has been proceeding as if private capital will play a significant role, so does not require a pivot in plans.

And, finally, private money is ready and eager to come in.

So said Tony Coscia, the prominent New Jersey lawyer at Windels Marx Lane & Mittendorf who is doing all he can to get the project going in his role as the head of Amtrak.

He made that point very clear during a lengthy conversation we had on the subject last December.

It’s why he’s been running Amtrak like a business (to much financial success). And why the Gateway Development Corp. is being run like a private company preparing for its IPO rather than an infrastructure project that knows taxpayers will pick up the overruns.

“I’ve been in business for over 30 years,” Coscia said. “People invest money in well-run enterprises, and they don’t invest money in enterprises that are poorly run.

“So, my objective is to have the Gateway Development Corp. run this project in a way where people have a level of confidence that, whatever amount of capital, whatever amount of money is provided to this project, people can trust that it’s going to be well spent and it’s going to be well managed.”

Coscia said private money is a necessity in all future public projects, for two good reasons: an overwhelming amount of need and an underwhelming amount of public money to pay for them.

It’s the result of pushing too many projects down the road.

It’s also the reality of the day.

“We all know that the models that have been used in the past are not going to be adequate to do this, so we have to sort of build that new model,” he said. “Whatever painful experience we have to go through to build that new model, to those of us who are involved in this business, it is absolutely worth it, because building a new model is sort of the first step in being able to then create something that could address the different infrastructure needs that exist.”

Coscia said private money is ready to come in.

There’s just one problem. It’s not a matter of working out what percentage of the project private money will pay, it’s figuring out what that dollar amount is — and who will pay for the expected overruns.

Coscia didn’t want to offer an answer. He’s not skirting the issue; he’s just being realistic.

How do you financially predict the cost of an unprecedented infrastructure project that could take a decade to complete?

“I think part of the problem is people use numbers that, at this point, are not certain,” Coscia said.

Which takes us back to the drawing board — or the discussion table. While the clock ticks.

That, Coscia said, only brings one guarantee.

“Whatever bad conversation we’re having right now, I guarantee you it’s going to be a worse conversation a year from now,” he said.

Somehow, some way, both sides are going to have find a way to meet in a middle that’s yet to be determined.