MuniLand

Hurricane Sandy blasted through New York City and left a swath of wreckage. The cost of repairing the region’s infrastructure hasn’t been totaled yet, but Joe Lhota, head of the Metropolitan Transportation Authority (MTA), said this:

As of last night, seven subway tunnels under the East River flooded. Metro-North Railroad lost power from 59th Street to Croton-Harmon on the Hudson Line and to New Haven on the New Haven Line. The Long Island Rail Road evacuated its West Side Yards and suffered flooding in one East River tunnel. The Hugh L. Carey Tunnel is flooded from end to end and the Queens Midtown Tunnel also took on water and was closed. Six bus garages were disabled by high water. We are assessing the extent of the damage and beginning the process of recovery.

The MTA currently has a fully committed 2010-2014 capital budget of $24 billion, which does not take into account any spending needs that arise from Sandy. Here is where the current funding comes from (page 15):

$10.5 billion in MTA Bonds

$2 billion in MTA Bridges and Tunnels dedicated funds

$6.3 billion in Federal Funds

$167 million in MTA Bus Federal and City Match

$762 million from City Capital Funds

$1.4 billion from other sources

Also included is a $2.2 billion Railroad Rehabilitation & Improvement Financing (“RRIF”) loan to support East Side Access, administered by the Federal Railroad Administration, and $770 million in State Assistance funds added to re-establish a traditional funding partnership.

The other regional infrastructure group, the Port Authority of New York and New Jersey, which owns airports, bridges, tunnels and marine terminals, has not tallied the sum of damages from Sandy, but it was already facing extraordinary unfunded infrastructure needs even before the hurricane hit. From a September Port Authority release detailing two reports on their organizational reforms and capital capacity (emphasis mine):

With Hurricane Sandy descending on the mid-Atlantic coastline, I looked back at what I wrote when Hurricane Irene was making landfall last August:

Hurricane Irene, an enormous storm of unimaginable power, is bearing down on the East Coast. Although there could be loss of life and substantial property devastation, America has more than enough resources to meet her and survive mostly intact. Unlike third-world countries we have the people, equipment and money in reserve to clean up…

… Cities, counties, states and utility companies are on standby. Funds have been reserved to respond to emergencies and the federal government has a large department, the Federal Emergency Management Agency, ready to provide local assistance. The public sector is ready to go.

Reuters reported this week that New Orleans was lucky to escape major damage from Hurricane Isaac, which dumped heavy rains and high winds on the city. Reactive defenses that were put in place after Hurricane Katrina in 2005 appear to have worked in protecting the city from severe damage. More importantly, the fiscal condition of New Orleans seems to have survived the collapse of the economy after the last disaster.

Just as Hurricane Isaac was making landfall this week, New Orleans was in the municipal bond market with a $167 million general obligation bond offering — A sign of the rebound. However, the bond offering was not painless. The city had to pay 1.31% more to investors for 10-year bonds than comparable AAA-rated securities, according to Thomson Reuters Municipal Market Data.

New Orleans is rated A3 by Moody’s, BBB by Standard & Poor’s and A- by Fitch; all lower investment-grade ratings. This offers a mixed-to-good economic picture for the city. Fitch Ratings details some positives: