When California recently resolved its mammoth budget deficit, it also moved to ease restrictions on transportation public-private partnerships, a politically controversial idea that over the long run could help control costs to taxpayers of improving overloaded roads, rails, and freight facilities.
P3s, as the arrangements are called, draw from among construction, engineering, highway management, and infrastructure investment firms (often funded partly by public employee and building trades union pension funds) to form consortiums that get important transportation projects built more efficiently, and sooner versus later or never. A P3 consortium may provide consolidated services such as designing and building a toll bridge or highway section, and can also provide upfront capital if public funds are constricted, as is often the case, particularly now.
The private consortiums may not only design, build, and help finance variably-tolled facilities; they may operate and maintain them too, doing so for several decades under a lease agreement with their public partner, such as a state department of transportation. (The public agencies can retain ownership, control toll rates, and enforce contractual performance standards). Over the long haul, the private partners make back their investment and a profit, while the savings to taxpayers over a project's full life cycle accrue, compared with going it solely on the public's dime, and solely under public-sector management. P3s can also target transit, and crucial port and rail infrastructure. (Various types of P3 are described here by the Canadian Council For Public-Private Partnerships.)
Further, many of the P3 projects have a genuine green hue. Examples are "managed" lanes on highway sections, bridges, and tunnels where booth-less electronic tolls are set higher during peak hours and lower off-peak to maintain a steady traffic flow at speeds of 45 to 50 miles per hour while ride-share vehicles and transit go free. Increased telework at home, as well as off-site meetings, remote work centers and para-transit offer additional ways around the higher peak-hour tolls.
The P3 approach is still a politically hot topic, particularly in this state. Nonetheless, it is a tool increasingly being considered by elected officials. In a new report, the Pew Center On The States paints the backdrop:
In 2008, the federal Highway Trust Fund — one of the nation's primary sources of funding for highway renovation and construction — almost went broke. States, hurting from falling revenues of all kinds, including gas tax proceeds, lack the money to meet their own infrastructure needs. These funding problems have turned into a crisis. Every year the numbers worsen. Much-needed highway repairs are being neglected...The current trend is unsustainable. Congestion and pollution will continue to increase, public safety will be compromised, and states' economic growth and ability to attract and retain strong businesses will falter if the nation's transportation system fails to receive the investments it needs. Federal funding — through the stimulus package, a proposed infrastructure bank or both — will help. But the gap remains large, and as a result, state leaders are looking to partner with the private sector.
Senate Bill 4 is the game changer in California, signed into law in late February. Under restrictive 2005 pilot project legislation, California had allowed its state transportation department and regional transportation agencies to enter into only four P3 arrangements up until January 1, 2012. Under SB 4, unlimited transportation P3s are allowed between now and January 1, 2017.
Up the road a piece, Washington has unfunded transportation needs of $38 billion (in 2005 dollars) over the next 20 years, according to the state's transportation plan update issued in 2007, not counting local transit needs. The transportation commission in a 2007 report noted that:
A series of key state assessments have urged the P3 approach be more closely considered for major transportation projects. The Expert Review Panel on SR 99 Alaskan Way Viaduct Replacement and SR 520 bridge replacement stressed the value of regional tolling and P3s as finance tools, especially for the looming life-safety rebuild of the 520 bridge. The Regional Transportation Commission chaired by former Seattle Mayor Norm Rice and ex-Western Wireless CEO John Stanton recommended serious attention to possible long-term concessions and build-operate agreements with private partners. A report prepared for the legislature's Joint Transportation Committee stressed that P3s can attract new capital otherwise unavailable, accelerate project delivery, and offload government's construction cost overrun risk.
Like what you just read? Support high quality local journalism. Become a member of Crosscut today!