Must Finish Projects Pension Funds Showing Interest in Infrastructure

Gary LaBarbera

By MARK TOOR

Are you a big city looking for big money to invest in your infrastructure? Union pension funds could be your ticket.

“Organized labor is very interested and willing to make significant investments not only in the city but in the nation,” Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, said July 19 at a panel discussion sponsored by Crain’s New York. That goes for both public- and private-sector unions, he said, adding that he hopes to see discussions on public-private partnerships in the city begin “in short order.”

Some Partnerships Exist

Deputy Mayor Stephen Goldsmith said that New York is already involved in more public-private partnerships than any other city in the world, but he would like to see more of them.

The panelists, who included Metropolitan Transportation Authority Chairman Jay H. Walder and Felicity Gates of City Infrastructure Investors, noted the number of major projects going on at a time when the economic crisis is threatening state and Federal aid. They stressed that these projects, which include the Long Island Rail Road’s East Side Access Project and the Second Avenue Subway line, must be completed in order to retain public trust.

“We have to show people that not only can we start projects like this, we can finish projects like this,” Mr. Walder said. “The challenge is how we’re going to do that in an environment in which public resources are so limited.”

The public has made clear there is no appetite for tax increases, fare hikes or service cuts, he said.


‘An Attack on the City’

“If we can’t figure out a way to keep these projects funded, it’s a tremendous attack on the city of New York,” Mr. LaBarbera said. “What we have started we must finish.”

Mr. Walder mentioned the “MTA premium”—the extra costs contractors build into their estimates to make up for the complicated procedures enforced by the agency.

'Spending More Than We Should'

“Rules and mandates get in the way,” Mr. Goldsmith said. “We’re spending more per project than we should.”

The cost of construction in the city rose 120 percent between 2000 and 2008, Mr. LaBarbera said. During that same period, labor costs rose about 3.5 percent a year, for a total of about 26 percent, he said. The rest, he said, is “an abyss, with contractors, subcontractors, sub-subcontractors...We need to figure out why” costs are increasing at such a rapid rate. He agreed with other panel members that “we need to demonstrate a real cost savings for the taxpayer.”

Mr. Goldsmith talked of the possibility of selling city-owned office buildings to raise money, although he noted that some level of debt is prudent. Ms. Gates said that in her native Australia, the government has privatized assets such as airports, often gaining better service for the public because the airports can compete with each other.

In any case, the panel members agreed that infrastructure funding was a problem that must be solved. “Without a sustainable infrastructure, New York City cannot continue to grow,” Mr. LaBarbera said.