EPA to Cuomo: Paying for a Highway With Clean Water Funds? Not So Fast

So where's the "highway" section of the clean water fund? Governor Cuomo thinks it's hidden under "estuary." Image: EPA

Governor Andrew Cuomo wants to use “estuary protection” money from New York State’s clean water fund to build an enormous highway over the Hudson. Image: EPA

Will anyone stop Governor Andrew Cuomo from using the state’s clean water program to pay for a big new highway bridge to replace the Tappan Zee?

The governor wants to take out a $511 million low-interest loan to cover part of the multi-billion dollar Tappan Zee replacement. A panel of Cuomo appointees is expected to green-light the maneuver at an 11:30 a.m. vote today, but state legislators and good government advocates are putting up a fight, saying the deal sets a dangerous precedent for a program intended for projects like wastewater treatment plants.

Yesterday, the regional office of the EPA got involved, saying it wants the state to answer more questions before taking federal clean water funds designated for New York City and using them to build the new Tappan Zee.

The New York League of Conservation Voters is asking New Yorkers to contact members of the panel before the vote to urge them not to sign off on the loan.

Cuomo’s bridge funding ploy reeks of political desperation. Early in his term he committed to the Tappan Zee project as a symbol of his ability to get things done, but there’s no way to pay for the mega-bridge he wants to build without either large toll hikes or fiscal shenanigans and sleight of hand.

The governor is now entering a reelection campaign against Westchester County Executive Rob Astorino, who is acutely aware of the Tappan Zee toll situation. Hence the current monkey business with the clean water fund.

So far, Cuomo has skirted the question of paying for the new Tappan Zee, delaying appointments to a promised toll and financing task force. While he has secured a $1.5 billion low-interest federal loan, the largest ever approved by U.S. DOT, he’ll need more cheap money to finance the $3.9 billion bridge. Cuomo is looking outside the Thruway Authority and its at-risk bond rating to better-rated state authorities that have lots of cash.

Enter the Environmental Facilities Corporation, which administers the Clean Water State Revolving Fund. This program is overseen by the EPA and administered by each state, even though 80 percent is funded by the federal government. The state says the fund ”provides low-interest rate financing to municipalities to construct water quality protection projects such as sewers and wastewater treatment facilities.” Cuomo is having the Thruway Authority apply for a $511 million loan to finance the Tappan Zee project. Half is at a low interest rate, the other half is completely interest-free.

The Cuomo administration insists that a highway bridge replacement is an appropriate use of the funds, saying the loan won’t go directly to building the bridge but will help mitigate its negative impacts on the Hudson River estuary, including marsh restoration, relocating nesting areas for endangered falcons, building a bike-pedestrian path, and dredging [PDF].

Environmental advocates are not convinced. Design and engineering account for one in five dollars of the loan, said Peter Iwanowicz, executive director of Environmental Advocates of New York. The funds would also pay for dredging, which advocates note is environmentally harmful and was actually cut in half as part of an agreement with the Cuomo administration last year.

You can read the letter advocates sent to the state [PDF], the reply from the state [PDF], and advocates’ rebuttal [PDF].

There are three types of projects financed by the clean water fund: wastewater treatment, non-point pollution sources, and estuary protection. The Tappan Zee loan would be the largest estuary project ever funded by a clean water fund in any state. It would also be the first estuary project in the 25-year history of New York’s fund, comprising nearly 40 percent of the $1.3 billion the clean water fund is lending to projects statewide this year, said EFC spokesperson Jon Sorensen.

Despite the first-of-its-kind nature, the state only entered the loan application into the public record two weeks ago, before issuing a press release five days later. This has advocates worried. “It’s unprecedented in scope. It’s a significant amount of dollars,” Iwanowicz said. ”It really begs for thorough review.”

Iwanowicz says the state should ask EPA’s Environmental Financial Advisory Board if the Tappan Zee qualifies as an eligible estuary project under the clean water fund. This wouldn’t be a first: Last March, EFC received approval from the financial advisory board to finance a NYSERDA energy conservation program that EPA determined had water quality benefits [PDF].

While the state has not sought this approval for the Tappan Zee loan, it did brief Washington-based EPA staff on the project last month [PDF]. “We got indications from them that we can move forward,” EFC’s Sorensen said. “They agreed that these projects fall into the estuary eligibility.”

But yesterday, EPA regional administrator Judith Enck sent a letter to the state asking for more information about the project [PDF]. “We want to ensure that the process surrounding this decision is transparent… given the size, scope, and seemingly unconventional approach to the use of [the Clean Water State Revolving Fund],” she wrote.

I asked Sorensen if the loan was still on the agenda for today’s meeting, despite EPA’s hesitations. “Absolutely,” he said. ”They’re not saying in that letter, don’t vote.”

If the EFC board votes for the loan, the deal must then be approved by the Public Authorities Control Board, which has appointees from the governor and the legislature. Assembly Member Jim Brennan, who chairs the Committee on Corporations, Authorities, and Commissions, is skeptical of the loan. In a June 19 letter [PDF] co-signed by Assembly Members Daniel O’Donnell and Brian Kavanagh, Brennan raised “violation of state law” as his top concern about the deal.

Another issue the Assembly members raised: The funds that would be used for the Tappan Zee loan are supposed to go to clean water projects in New York City. “That the City may have declined to use these monies in the current fiscal year does not mean that such funds can legally be diverted to help construct the [Tappan Zee] Bridge,” the Assembly members wrote.

“We can only finance the eligible projects that are presented to us. We cannot order a local government to undertake a [Clean Water State Revolving Fund] project,” Matthew J. Driscoll, EFC President and CEO, replied yesterday in a letter defending the Tappan Zee loan [PDF]. “EFC strongly believes that the estuary projects proposed… are consistent and eligible for CWSRF financing under the federal Clean Water Act.”

Iwanowicz of Environmental Advocates doesn’t think “it qualifies, trust us” is enough. “We’ll continue our call for the New York state legislature to hold oversight hearings,” he said.