The best public private partnership is NO public private partnership.
Length of public-private road contracts questioned
By David Tanner, Land Line associate editor
March 5, 2014
Some public-private partnerships involving toll roads are only a few years into long-term contracts but are already falling short on traffic and revenue. Members of a U.S. House panel questioned the length of the contracts and urged accountability for so-called PPPs during a hearing Wednesday, March 5, on Capitol Hill.
The House Panel on Public-Private Partnerships, created by the Transportation and Infrastructure Committee and chaired by Rep. John. J. Duncan Jr., R-Tenn., discussed an overview of public-private partnerships and their effects on highway and transit projects.
Duncan, although generally supportive of private-sector involvement in transportation, said he was concerned about the length of some of the contracts. “One of the main concerns about PPPs is where we leave taxpayers 30 years down the road paying for it,” Duncan said.
The ranking Democrat on the panel, Rep. Michael Capuano of Massachusetts cut right to the chase on some PPP contracts that last 75 or even 99 years.
“I’m concerned about spending tomorrow’s money today,” he said during a discussion of the Indiana Toll Road. Back in 2006, then Gov. Mitch Daniels leased the toll road for 75 years, allowing a private firm from Spain and Australia to keep the toll revenue until 2081 in exchange for operation and maintenance of the roadway. Truckers have seen tolls on the Indiana Toll Road more than double since 2006 to help the private investors recoup the $3.85 billion they spent to control the roadway.
Public-private partnerships for new construction can generally speed up project delivery, according to a representative from the Congressional Budget Office who testified during the hearing. “PPPs have built roads slightly less expensively, and slightly more quickly, than traditional methods,” CBO’s John Kile said.
Capuano later turned the topic back to spending tomorrow’s money today to complete a project. “You move up a project 17 years, and that’s great,” he said during one exchange. “What happens when the next guy 17 years from now needs to build a road or a bridge? We’ve spent his money. I’m not interested in a drunken night out spending the family jewels.”
The legislative panel will have a few more hearings before making recommendations to the full Transportation and Infrastructure Committee. The full committee will use the recommendations as it decides what to put into the next surface transportation authorization bill concerning PPPs.
OOIDA has had a position on public-private partnerships for years. The Association does not support the lease or sale of public roadways to the private sector, and does not support efforts to toll existing toll-free infrastructure paid for with federal tax dollars.
“People make this claim that lifecycle costs are where they’re going to find savings for transportation projects, but over time, the truth is that the money used to pay private investors for these projects is gone very quickly, leaving the taxpayer holding the bag,” said OOIDA Assistant Director of Legislative Affairs Ben Siegrist, who attended the hearing.
“I found this interesting. As they were closing out the hearing, they talked about the reason states and municipalities reach out and go for these public-private partnerships, but it’s because they have to,” Siegrist said. “And it’s because Congress lacks the backbone to use Highway Trust Fund dollars the way they’re supposed to be used.”