Taxpayers Lose and Banks Win in This Trump Infrastructure Deal
In one year, the cost of the Route 95 Viaduct Reconstruction project in Rhode Island increased more than 50 percent. Photo: Rhode Island DOT
The Trump administration's insistence on paying for infrastructure with private finance risks draining public coffers to pad profits for banks. In fact, a story from Rhode Island suggests that's already happening.
The projected cost of a local highway project -- the Route 95 viaduct -- has ballooned more than 50 percent in a year, the Providence Journal reports. Much of the increase is due to special perks for private lenders that the state hopes will win favor from the Trump DOT.
The Journal's Patrick Anderson reports:
The state last month applied for a $60-million grant from the U.S. Department of Transportation’s [Trump Administration-enacted] “INFRA” program for the reconstruction of the Route 95 Northbound Providence Viaduct, roughly the same project it sought a $59-million grant for a year ago under the Obama administration’s predecessor “FASTLANE” program.
But the estimated cost of the underlying project — replacing the decrepit Route 95 North bridges and interchange in the center of the city while adding new travel lanes — has grown from $226.1 million to $342.9 million, according to the respective grant applications from the Rhode Island Department of Transportation.
A big chunk of that cost increase is connected to financing and the private part of the project. This year’s grant application says the “estimated design-build cost” is $264 million. The new plan then adds interest on a $45-million private loan and a “15-percent return to the private partner.”
Why would Rhode Island spend all that money on private financing when it can borrow directly at a lower rate? There aren't even tolls on this stretch of highway, so there is no projected-related revenue stream to pay back the loan.
Rhode Island DOT spokeswoman Lisbeth Pettengill admitted to the Journal that including the loan will help the agency win a federal grant. She told Anderson:
The new [Trump-era] guidelines encourage states to find private partners and to take more of a role in funding projects. With these guidelines in mind, we redefined the project to fit those new grant requirements.
Private finance deals are often sold as a way to get more infrastructure for the public's money. But as this case demonstrates, they often just funnel more money into bankers' pockets at the public's expense.
Hat tip to former Streetsblog reporter Stephen Miller for catching this story.
Read More:
Stay in touch
Sign up for our free newsletter
More from Streetsblog USA
To Help Save the Planet, Take the ‘Week Without Driving’ Challenge
Former Sierra Club President Ramón Cruz is urging Americans to give up driving for seven days — and support policies to make it optional for everyone.
Labor Gains: NYC Judge Tosses App Giants’ Suit to Stop Deliverista Minimum Wage
Justice Nicholas Moyne cleared the way for a long-delayed wage hike for workers who brave dangerous roads to bring food directly to New Yorkers.
Friday’s Headlines Are Charged Up
Expect a lot fewer ordinary gas stations and a few more Buc-ee's in your area as the electric vehicle transition continues.
Commentary: Let’s Talk About the Real “Fatal Flaw” on Valencia
How many people have to die before professional advocates stop endorsing the Valencia Street "experiment" on people?
Talking Headways Podcast: Beyond Greenways
This week we’re joined by Bob Searns to talk about his new book and grand ideas for walking trails that circle whole regions and more local routes that make up a new mode of green infrastructure in cities.
