Bloomberg News

Cuomo Gets Deal With Unions to Save $452 Million on Tappan Zee

June 18, 2012

New York Governor Andrew Cuomo struck a deal with unions to save $452 million on the construction of a new $5.2 billion Tappan Zee Bridge over the Hudson River.

The project labor agreement between the New York Thruway Authority and 14 unions guarantees no strikes, and allows for a four-day workweek and 10-hour days on one of the biggest public infrastructure projects in the U.S., Cuomo said today in a statement.

“This agreement will save taxpayers hundreds of millions of dollars, while putting in place important protections for our workers,” Cuomo said. “For too long we have talked about replacing the Tappan Zee, and we cannot wait any longer.”

Cuomo, a 54-year-old Democrat, has made building a new Tappan Zee a priority. Plans to replace the bridge have been discussed for more than a decade, and Cuomo says getting the project done would be an example of the state government moving beyond the political dysfunction that thwarted past efforts. He has compared its importance to the construction of the Erie Canal in the 19th century.

The deal is similar to an accord reached between unions and the Thruway Authority in 1994 for renovations to the existing 56-year-old span, said Ross Pepe, president of the Construction Industry Council of Westchester and Hudson Valley Inc., a group representing 500 building companies.

‘Vital’ Agreement

“The project labor agreement is vital for a complex and large project like replacement of the Tappan Zee Bridge,” Pepe said today in the statement.

The three-mile-long (4.8-kilometer) Tappan Zee, which connects Rockland and Westchester counties as part of the Thruway system, carries 138,000 vehicles a day, 40 percent more than it was designed to handle.

The biggest savings, about $123 million, will come from greater flexibility in the work schedule provided by the 10-hour workday, which reduces overtime, according to the statement.

The savings will be incorporated into the bids from four construction teams put on a short list in February to win the project, Tom Madison, Thruway Authority executive director, said in an April 20 interview in Tarrytown, New York, before the deal was finished.

Obama Support

The construction teams selected include Fluor Corp. (FLR:US), Bechtel Group Inc., Skanska AB (SKAB) and Grupo Dragados SA. Final proposals for the project, which would create more than 45,000 jobs, are due next month, with a winner announced in September, according to Cuomo and the request for proposals.

Cuomo has said the project is moving at a “phenomenally rapid” pace with the help of President Barack Obama, who named building a new Tappan Zee Bridge as one of 14 U.S. projects to be sped through federal oversight protocols, and the so-called design-build process. Approved by lawmakers in December, the process puts private companies in charge of designing and building the project, rather than having the state develop the plan and then put it out for bid.

New York has applied for a $2 billion federal Transportation Infrastructure Finance and Innovation Act loan. The request is more than the program has available, and the state suggested in its application the loan could be spread out over several years.

Most of the funding will come from debt issued by the authority, Moody’s Investors Service said today as it revised the outlook on the agency’s A1 long-term rating, the fifth- highest level, to negative from stable. Standard & Poor’s took similar action this month.

The authority is considering a 45 percent toll increase for trucks to help pay for a $1.5 billion highway-improvement program and refinance debt, not a new Tappan Zee. Moody’s said “substantial toll increases” beyond the 45 percent will be needed to maintain targeted debt-service coverage ratios.

“The negative outlook also reflects the potential impact of an uncertain economy on financial performance as the authority doubles or triples its debt load in the face of very limited volume growth,” Moody’s said.

To contact the reporter on this story: Freeman Klopott in Albany at fklopott@bloomberg.net

To contact the editor responsible for this story: Mark Schoifet at mschoifet@bloomberg.net


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