The need for public-private partnerships to help rebuild the nation's overburdened and underfunded surface transportation network is growing. Even before gas prices spiked and gas tax hike prospects dived, the Washington State Transportation Commission was calling for "P3s." It did so in this January 2007 report [4.8 MB PDF] and then again here [3.6 MB PDF].
The January 2007 report states that P3s should be closely examined as a potential strategy for completing planned major projects including the Interstate 5 Columbia River Crossing, the Highway 167 extension to the Port of Tacoma, Interstate 90 Snoqualmie Pass improvements, "cross-base" Highway 704 in Pierce County, improvements to the state ferry system's busiest terminal, Colman Dock in downtown Seattle, and for other ferry terminal, freight rail capacity, and "transloading" improvements. Two other P3 candidates would be the unfunded and badly needed $2 billion worth of pavement and interchange work on I-5 in Seattle and treacherous, deadly Highway 2 in Snohomish County, which is also in need of about $2 billion worth of work. That's money which, again, the state doesn't have.
Legislators are taking notice. At Cascadia Center's West Coast Tolling and Traffic Management workshop in late June, state Senate Majority Caucus Vice Chair Ed Murray, D-Seattle, voiced his strong support for surface transportation P3s. Public radio station KPLU-FM reported:
ANCHOR: Western Washington is coming up tens of billions of dollars short of what's needed for highway improvements, bridge replacements and transit infrastructure. Tolls and more involvement by the private sector were among the solutions discussed at a workshop in Seattle Thursday. ...
REPORTER: The gathering, sponsored by the non-profit Cascadia Center, brought together public officials, entrepreneurs and policy-makers, wrestling with the region's growing transportation woes. Democrat Ed Murray is vice-chair of the senate transportation committee in Olympia. He told the group that traditional sources of transportation funding are drying up.
STATE SEN. ED MURRAY: There is simply not enough revenue to do what we need to do, in this state, anyway, for education, for health care, and to use the amount of money we would need to use — $50 billion — to finance a transportation system [in central Puget Sound].
REPORTER: Murray says government is likely to move toward more contracts with private sector businesses to build and operate toll highways and transit systems. ...
Those, and bridges or tunnels, may come to mind first when contemplating transportation P3s. But other sectors, such as maritime cargo, are stimulating public-private deals, too. Freight rail — expected to double in the U.S. over the next 30 years — is also ripe for P3s. The Seattle Times reported recently that the non-profit research group Rand, in a new study, estimates $148 billion in needed improvements to the U.S. freight rail infrastructure and adds that a third of that will need to be covered either by P3s or tax incentives.
There's a spotlight on the whole arena. Foreign- and domestic-based private infrastructure investment funds backed by U.S. public employee and building trade union pension funds have been buying into North American transportation infrastructure projects more and more in recent years. In Europe, Canada, and Australia, transportation P3s are already well-established.
An article published recently in The New York Times mentions several of the union pension funds which are now investing or are planning to invest in surface transportation infrastructure. The list includes the Washington State Investment Board, which has $81.9 billion under management. The board invests on behalf of 17 funds for public employees, including teachers, other school workers, law enforcement officers, and firefighters, and on behalf of another 21 funds supporting industrial insurance, higher education, developmental disabilities, and wildlife protection. Here's the NYT:
Some American pension funds see an investment opportunity. "Our infrastructure is crumbling, from bridges in Minnesota to our airports and freeways," said Christopher Ailman, the head of the California State Teachers' Retirement System. His board recently authorized up to about $800 million to invest in infrastructure projects. Nearby, the California Public Employees' Retirement System, with coffers totaling $234 billion, has earmarked $7 billion for infrastructure investments through 2010. The Washington State Investment Board has allocated 5 percent of its fund to such investments.
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