September 23, 2021

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Power failure: Cuomo’s $106M bridge light show fades to black – Politico

10 min read

Instead, critics questioned why the Metropolitan Transportation Authority, the Cuomo-controlled agency that owns the bridges, would spend money on optics while complaints about extensive, nearly daily subway delays and shoddy service escalated in 2017 during what became known as the “Summer of Hell” for public transit riders.

Explanations from Cuomo’s administration about how the project would be paid for shifted repeatedly and the endeavor was quietly halted, with no signs of movement half a decade after its inception.

Now, newly released documents reviewed by POLITICO show for the first time that taxpayers spent $106 million on the project, including about $37 million for LED lights. Those 4-year-old lights are still sitting in a warehouse, with no immediate practical use in mind after the project appeared to be left for dead.

“It’s terrible that we blew $106 million of taxpayer money on a project that never should’ve gotten off the drawing board,” said state Sen. Liz Krueger, the chair of the Senate Finance Committee and a leading Democratic lawmaker. “I’m still happy the project did not go forward.”

But after POLITICO asked about the plans and the money that had been spent, Cuomo spokesperson Rich Azzopardi said on Friday the endeavor would still happen — and cited tourism dollars from bridge lightings in San Francisco as evidence of the potential benefits, as well as attractions in London, Montreal, Paris and Philadelphia.

“This project will drive tourism — helping to rebuild an incredibly important part of New York’s economy that was destroyed by this pandemic — and make New York an even more dynamic place to live and open a business,” Azzopardi said in a statement. He said it was “no secret” that Covid-19 and other infrastructure plans “took precedence, but we continue to be excited about the Harbor of Lights project and intend to see it through.”

Krueger, told of the governor’s desire to resurrect the project, said she doesn’t believe “it’s a very good use of the public’s money” and doesn’t “believe the process was kosher.” She worries, if the project actually happens, the lights will be disruptive to New York City residents.

“They didn’t remember that stupid idea until you came along,” Krueger said in an interview Friday.

Cuomo has a penchant for focusing on aesthetics and getting involved in the minute details of the New York mega projects he takes up as his own. The three-term governor has likened himself to a latter-day Robert Moses — boasting of his track record on building big things, like the Mario M. Cuomo bridge over the Hudson River and the Moynihan Train Hall in Manhattan.

But as Cuomo faces multiple investigations related to misconduct allegations and other scandals tied to his administration, including one that could lead to his impeachment, a growing number of his legacy-boosting infrastructure projects seem to be ending in embarrassment — or bigger trouble.

This isn’t the first time taxpayers have been on the hook for problematic projects ostensibly intended to boost New York’s tourism profile. The state spent millions of dollars installing “I LOVE NEW YORK” tourism signs along highways only to be informed by federal officials that they were illegal and had to be removed. Cuomo was also reportedly involved in changing the tile color on MTA tunnels mid-stream at a multimillion-dollar cost.

And then there’s the Mario Cuomo Bridge. Cuomo’s inaugural ride across the new span, which replaced the Tappan Zee bridge and is named for his father, took place with much fanfare but no acknowledgement of an ongoing investigation into alleged structural issues

For the bridge lighting project, the effects went beyond the cost of the equipment that was never used. The effort took so long to reach a conclusion that a key agency involved in the undertaking — the New York Power Authority — had to carry the project’s costs for years, leaving it without the ability to sell long-term public bonds, according to a former official.

The agency, known as NYPA, says the bridge project was well within its mandate.

“This economic development and energy-efficiency project is part of a larger, transformational plan to reimagine New York’s bridges and tunnels for the 21st century, and it was put on hold as other projects took priority and the pandemic caused further disruptions,” NYPA spokesperson Sue Craig said in a statement on the project, which was put on hold long before the pandemic.

“We remain committed to working with our partners in government to invest strategically to modernize our infrastructure, improve transportation, and advance cutting-edge technology and innovation that benefits all New Yorkers and our economy,” Craig said.

The lack of transparency and approval from either the NYPA or MTA boards raises serious concerns, said John Kaehny, the executive director of watchdog group Reinvent Albany. He said the Legislature should investigate the “secret expenditure” and the issue should be part of the Assembly’s ongoing impeachment investigation.

“This is something that popped out of the governor’s forehead,” Kaehny said. “So do you have a functioning democracy if you have a governor that can just call up an agency and order them to spend $37 million off budget?… That’s authoritarian.”

The free spending on a project with no practical purpose stands in sharp contrast to Cuomo’s recent grousing over the Gateway Program, which includes a plan to rebuild the Hudson River rail tunnel that he and others have said is a critical necessity for the regional economy.

The project was delayed for years while President Donald Trump was in the White House. But now that it’s time to move forward with a friendlier federal government, Cuomo seems to have some qualms on New York’s share of the bill for the $13 billion new tunnel.

“If the federal government wants to do stupid, they can do stupid with their money,” Cuomo said recently, after years of pressing the Trump administration for action on Gateway. “But we’re not going to do stupid with our money.”

Shifting explanations

The Power Authority, which runs the state’s hydropower dams and has a strong cash flow, oversaw Cuomo’s bridge lighting project thanks to the energy solutions it provides customers.

The Power Authority offers energy efficiency services to government entities it supplies power to — including design, construction and installation of LED lighting to lower energy bills. The MTA was and is a NYPA customer, getting low-cost electricity and employing the agency as it tries to cut energy usage with more efficient lights.

NYPA relies on contractors to get the work done, pays the up-front costs and then charges its customers a fee and a low interest rate to pay off the capital cost over several years. The usual goal is to have the investments lower monthly energy bills enough to provide a net savings.

But the flashy bridge lights wouldn’t save any money for the MTA, which already worked with NYPA to install more efficient LEDs on its bridges. NYPA has also helped finance other big Cuomo projects without a strong efficiency payback — including some funding for lights and screen displays at the Moynihan Train Hall, a former post office turned into an extension of Penn Station.

“I suspect when the governor was looking for a project that was never budgeted, he found extra money in NYPA, it’s often been a bank for special projects,” Krueger said. “Do I think that’s how any state funds should be spent? No, I think there should be a more transparent and participatory process.”

The $100 million cost appears to make the “Harbor Lights” project the most expensive undertaken by NYPA, according to publicly available data on completed NYPA efficiency projects.

As questions about the lighting project’s costs and wisdom were raised, the governor’s administration offered changing explanations about how NYPA would be repaid for the Harbor Lights.

The governor first announced the light show plan in October 2016. The president of MTA Bridges and Tunnels signed off on $6 million to design the project in December.

No subsequent agreements to cover repayment were signed by MTA officials. NYPA moved forward under “a standing energy efficiency master service agreement, established in the early 1990s,” Craig said.

In January 2017, NYPA trustees were told at a board meeting that MTA would ultimately pay for the project.

The lack of a concrete repayment agreement did not stop NYPA from having its contractor, construction firm LiRo, move forward with work on the light display. Invoices show subcontractors performed electrical work on the bridges in 2017. Lights were ordered from Phillips in March.

The MTA, beleaguered by service problems and other pressing capital demands, said in July 2017 the project was “definitively NOT being paid for by the MTA,” according to a spokesperson at the time.

Then the story shifted again: Empire State Development, the state’s umbrella economic development corporation, would provide the funds because the flashing lights would be a major tourist attraction. In December 2017, a NYPA spokesman said funding would come from “state infrastructure and economic development funds.”

The bridge lights were linked to other work being done on MTA’s bridges, including cashless tolling and security towers that drew scrutiny and outcry from board members because of the lack of information provided to them. A NYPA spokesperson said at the time the authority was also doing work on a conduit system for security purposes.

The state Authorities Budget Office reviewed the matter following complaints and provided fiduciary training to MTA board members.

Repayment issues

The lack of clarity on how NYPA would be reimbursed for the $100 million spent on the unfinished project had consequences, according to one former NYPA official. The burden effectively froze the agency’s long-term financing.

Former NYPA Treasurer Genevieve Fabela said employees were prohibited from discussing the magnitude of the bridge light costs externally.

From 2017 to 2019, the agency could not issue any public bonds because it could not meet the disclosure requirements, Fabela wrote in an email. She discussed the issue with POLITICO prior to settling an employment lawsuit against the authority.

“It was a known issue to our banking counterparties who constantly asked us when we were planning to come to market for a new debt issuance,” Fabela said. “We had expensive, callable debt on our books that were up for refinancing. For my entire time as treasurer I had to tell a story for why we weren’t coming to market.”

NYPA finally issued $1 billion in bonds in 2020. Before that, the last time it offered long-term bonds was in 2015. NYPA has plans for more major capital investments.

Craig said the authority disclosed the project in financial reports and other securities transactions, noting the authority did issue some debt during the preceding years. But NYPA only used shorter-term notes with lower disclosure requirements during that time, according to documents.

The authority used a portion of the 2020 bond revenues to pay off older, higher interest debt and recently issued short-term borrowings, according to financial statements.

“There’s much less due diligence and discovery” for short-term commercial paper, Kaehny said. “With the regular bond rating, they have much, much more stringent disclosure requirements.”

Kaehny said short-term borrowing also comes in much smaller amounts. He said the spending on the lighting projects raises questions about the independence and internal controls of NYPA. If it prevented NYPA from moving forward with capital investments, that’s also a major issue, he said.

“It’s about jamming up the Power Authority, which is one of the most important agencies to fight global warming,” he said.

NYPA continued to make capital investments in its hydropower plants and transmission system over the last few years, and increased funding for its energy efficiency programs as well. NYPA was fully repaid for the Harbor Lights project from state infrastructure and capital funds, with the last transfer made in early 2021, Craig said. State Division of Budget spokesperson Freeman Klopott confirmed the repayment.

Cuomo’s cost escalation

Cuomo’s engagement in the bridge lighting project is evident from the early days of its conception. His office pushed to accelerate completion of the project and keep it on a strict timeline — at one point even moving the deadline up four months from June 2018 to February 2018.

LiRo, NYPA and the MTA presented design and cost options for the bridges to the governor’s office in January 2017. Less than a week later, NYPA received approval from the governor’s office to move ahead with a more expensive design for three of the bridges, according to the documents.

The decision increased the estimated cost by roughly $80 million — from $138 million to $216 million. That number was expected to increase even more to meet the accelerated timeline.

Cuomo officials sought to downplay the $216 million estimate confirmed in the newly released documents at the time. An internal estimate reported by POLITICO at the time was even higher — more than $350 million.

Thousands of pages of invoices, purchase orders and work orders show that LiRo and its contractors performed many hours of design, engineering and ultimately construction work on the MTA’s bridges before the project was put on hold.

With mounting questions and criticism of the bridge lighting project, NYPA ordered its lead contractor LirRo to cancel the lighting order from Phillips in July 2017.

This led to a dispute the parties — NYPA, LiRo and Phillips — ultimately settled by having some of the equipment repurposed and the rest, now owned by NYPA, transferred to a warehouse, according to a December 2017 letter. NYPA, through LiRo, ultimately paid Phillips about $37 million for several thousand lights and related equipment.

NYPA has since paid $770,000 to store the material, Craig said in an email response to questions.

The fate of these thousands of LED bridge lights remains uncertain.

“The materials are in storage,” Craig wrote. “As they are in working order, many additional uses for the lights are being evaluated.”

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