Dispatches From America

Could Bridges Pay Us?

 It’s a great idea and one which other countries, like Australia, know well. Cuomo is trying to determine how to use investments of private pension funds to rebuild the Tappan Zee bridge. Infrastructure, like bridges and toll roads, form a fairly stable asset class. Great for long-term investment, which is what smart pension funds look for. This kind of creative thinking is fun to follow.

Responses to “Could Bridges Pay Us?”

  1. I’m not quite sure I would be so quick as to say that bridges and toll roads form a stable asset class. Toll revenue and traffic flow is subject macro economic factors such as GDP and unemployment. Deals for projects such as the Chicago Skyway, Indiana Toll Road and California’s SR-91 did not do so well performance-wise. Another factor to consider is that msot pension plans are subject to laws such as ERISA (Employee Retirement and Income Savings Act of 1974), Taft-Hartley, or some Government equivalent. ERISA also is referred to as the “Prudent Man” law, which basically states that corporations cannot invest their pension assets in high risk or non-sensible investments.

    Quite frankly, I think unions, inclduing the AFL-CIO, are pushing to invest their pension plans in to constructing a new TZ bridge because they don’t want one of the Wall Street firms to come in, cut wages for construction workers, not provide prevailing wages, or go with a foreign construction company altogether.

    Victor Kwon
  2. Dear Victor, you make some fascinating points here. What gives you the background on your insights?

    Eliza