MTA nominee Walder on private-public partnerships

| NY Torch

Jay Walder, Gov. Paterson’s pick to head the Metropolitan Transportation Authority, took questions from Democratic senators today ahead of their Thursday vote on his nomination.

Of interest: Walder’s views on private-public partnerships and whether then can work in transit.

Regarding public-private partnerships on subway systems, Walder noted his experience in helping to run London’s transit system. In 2003, against the objections of Walder and other Tube officials, Britain’s national government privatized responsibility for the Tube to two construction consortia under 30-year contracts.

Walder correctly noted today that the Tube deal, which fell apart four years later, was a disaster for British taxpayers.

With that “deep, rich, not positive experience” in mind, Walder said, “I don’t believe private-public partnerships for the New York subway make any sense at all. It does not fit for the subway system.”

Walder’s right. If there’s a way for the public sector to fob off responsibility for a major subway transit system to private-sector companies whose loss and role is necessarily limited by bankruptcy, nobody has figured it out, and it’s a dubious use of political energy and taxpayer money to keep trying.

But Walder had a more nuanced view on PPPs in general, saying that “there have been private-public partnerships used effectively in London” in other areas of government.

One wonders if he means the buses.

Walder was quiet on PPPs as they relate to buses, and no senator caught it.

But London has an effective, efficient bus system largely run by long-term competitive contractors under competent government management (an important ingredient!).

Bus service is better suited for public-private partnerships than is subway maintenance and construction. Bus service can be broken into small batches and contracted out to many different operators, so if one contractor goes bankrupt, another one, or the government, can easily step in and take over.

Plus, start-up bus operators can secure financing relatively easily, because lenders can repossess the buses and sell them to other operators to recoup their money if it doesn’t work out — whereas lenders can’t exactly repossess the Tube or its assets.

Walder said that his more general experience in London opened his eyes “to the critical importance of the bus system.” He noted that London’s buses move six million people daily, via dedicated bus lanes with good city enforcement.

While Walder didn’t say so today, London’s sytem is a good example of how the government can competently do its job in providing the critical public infrastructure — the well-policed bus lanes — and then managing private-sector contractors to make sure that they competently do their jobs.

If Walder is bent on expanding and improving New York’s bus service, as he said that he is, his careful comments on PPPs and the Tube didn’t foreclose the possibility that he’ll try to do so under a private-public partnership model.*

*Legislative approval, federal approval, and/or successful union negotiations would be required — but that’s another post.