The Port Authority of New York and New Jersey has issued a Request for Qualifications from private entities interested in working with the authority to rebuild the main terminal at LaGuardia Airport in Queens.
The RFQ represents the authority’s second foray into the world of public-private partnerships, or P3.
It is also considering proposals from private consortiums to rebuild the Goethals Bridge between Staten Island and New Jersey.
The LaGuardia RFQ is a chance for developers and investors to pre-qualify to compete in a Request for Proposals process, and a way for the authority to gauge the viability of a P3 approach to the new terminal, according to a Port Authority spokesperson.
The scope of work laid out in the RFQ includes demolishing the current central terminal, its parking garage and four concourses; designing and building a new terminal and a number of supporting demolition and construction projects.
Once the construction is complete, the partnership would extend to the operation and maintenance of the terminal.
The structure of public-private partnerships vary from one project to the next, but generally involve a transfer of the risk and reward associated with a project to the private entity in exchange for funding and expertise.
Private investors involved in P3 projects expect returns on their investments of between 12 and 15 percent, according to Christophe Petit of Star America Infrastructure Partners. Petit participated in a recent roundtable discussion on the topic of P3s hosted by the law firm McCarter & English.
That rate of return only applies to the portion of a project’s total funding that is supplied by the private partners, Petit said, and the majority of the funding for the often multi-billion dollar public works projects still comes from public sources.
“There’s a perception that P3 is a free ride for the authorities, and that is not the case,” he said.
The private partners’ expertise, as well as the competitive bidding process that takes place between potential partners, means more value for the public overall, Petit argued.
“We feel we can bring a lot of value compared to the public sector,” he said.
Other roundtable participants were more cautious, while also noting that the idea of private investment in public infrastructure is not new.
The private sector had a role in building infrastructure for transportation in the 19th century and energy in the 20th century, said Joyce Miller of Kaminski Partners.
Today, the public sector is turning to P3 “out of desperation,” said Jayne Czik, general counsel for Citnalta Construction Corp. “The catalyst for P3 right now is the economy.”
Responses to the LaGuardia RFQ are due on Dec 7, and the authority plans to issue a more in-depth Request for Proposals to successful respondents by the second quarter of next year.