The state Environmental Facilities Corp. (EFC) is loaning $511 million to the state Thruway Authority for support of the Tappan Zee bridge construction project, Governor Cuomo announced today. The money, a press release from his office says, will be combined with federal TIFIA loan funds to “help keep tolls on the new bridge as low as possible.”

The mission of the EFC is “to provide low-cost capital and expert technical assistance for environmental projects in New York State,” which doesn’t instantly call to mind the building of bridges.

However, what Cuomo has dubbed the New NY Bridge will go over water —and not just any water, but a federally designated Estuary of National Significance. And so, presto:

The loans will be made from EFC’s Clean Water State Revolving Fund (CWSRF) , which is used to support construction expenses that align with the environmental standards including those outlined in the New York-New Jersey Estuary’s Comprehensive Conservation and Management Plan. The EFC loans will go toward environmental projects that will protect water quality and marine life in the Hudson River estuary, including protection of endangered sturgeon, oyster beds and other habitats, during and after construction of the New NY Bridge.

“As we continue to see progress on the New NY Bridge, it is essential that actions are taken to protect wildlife and address the project’s environmental impacts – but in a way that doesn’t overburden taxpayers and drivers,” Governor Cuomo said. “This $500 million low-cost loan will reduce the financial burden of these necessary environmental measures, and enable the Thruway Authority to continue moving full-steam ahead on this important project.”

The $511.45 million in EFC CWSRF financing – including a no-interest loan of up to $256 million and a low-cost loan of up to $256 million– will help the Thruway Authority fund costs associated with stringent environmental measures that have been put in place during the construction of the new bridge and the demolition and removal of the existing bridge, and with the protection of the estuary environment throughout the entire project.

The EFC loans will help keep any potential future toll increases down by greatly reducing the interest rates and financing costs for a significant portion of project’s overall $3.9 billion estimated cost [emphasis added].

That last paragraph is the most important. While the Thruway Authority still hasn’t issued a financing plan for the $3.9 billion project, or even formed a promised Task Force to study the issue, the EFC loan is the sort of creative financing gambit the Authority may have had in mind when it disclosed in a bond prospectus last year that “additional sourced of funding for the New NY Bridge Project may include Junior Indebtedness Obligation Anticipation Notes issued in connection with a below-market financing program managed by a State public benefit corporation.”

Who knows—before it’s all over, this project may win someone a Deal of the Year Award. This description of the EFC deal from today’s release may deserve an award all its own:

“Governor Cuomo tasked all of his infrastructure agencies to break down the silos that have prevented cooperation and cost savings in the past and, instead, go forward with innovative solutions to finance critical state infrastructure,” said EFC President and CEO Matthew Driscoll. “I am delighted that EFC through the Clean Water State Revolving Fund can simultaneously protect the Hudson River Estuary and keep costs down for travelling motorists.”

A report from the Albany Times Union clarifies  important details

The Thruway Authority would repay some portion of that debt over five years, with whatever is left to be refinanced by the EFC with a new 30-year bond issue, he said. Driscoll could not provide estimated figures on how much of the debt would remain unpaid and need to be refinanced.

Using this approach puts some of the bridge financing on the books of the financially-stronger EFC, which has a better credit rating than the Thruway Authority. Last fall, both the major Wall Street bond rating agencies dropped the Thruway’s Authority’s credit rating, citing concerns that the financially-stressed agency could be overburdened with debt.

Driscoll said questions about how the Thruway will repay the loan should be asked of Thruway officials. There spokesman Dan Weiller said the debt would be repaid using tolls _ which are the authority’s only real source of revenue. He could not say whether projections call for tolls having to increase in over to cover the debt payments.